IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1311:

  Which factor most likely encourages entry into an existing market?

  A. Governmental subsidies for new investors.

  B. High product differentiation, principally produced by trademarks.

  C. Knowledge of the industry, wit high investments in development.

  D. Low fixed exit costs.

  Correct Answer: A

  Subsidies for new firms lower entry barriers. Thus, new firms may enter the industry and intensify competition. Government policy also may affect competition via regulations that encourages or discourage substitutes or affect costs, that govem competitive behavior, or that limit growth. Government also may be a buyer or supplier.

• Question 1312:

  Which condition does not increase the threat of new competitor entry into the industry?

  A. Strong brand identity.

  B. Existing firms do not enjoy the cost advantages of vertical integration.

  C. Few proprietary product differences.

  D. Low capital requirements.

  Correct Answer: D

  Strong brand identity decreases the new competitors will enter an industry. New competitors have difficulty because potential customers are loyal to established firms in the industry.

• Question 1313:

  Which industry factor does not contribute to competitive rivalry?

  A. Price-cutting, large advertising budgets, and frequent introduction of new products.

  B. A form's growth must come from winning, other firms' customers.

  C. High costs of switching suppliers.

  D. High fixed costs.

  Correct Answer: C

  If it is expensive to switch suppliers, customers will be less motivated to respond competitor advances.

• Question 1314:

  Logistics Corp. is performing research to determine the feasibility of entering the truck renal industry. The decision to enter the market is most likely to be deterred if

  A. Buyer switching costs are high

  B. Buyers view the product as differentiated

  C. The market is dominated by a small consortium of buyers

  D. Buyers enjoy large profit margins

  Correct Answer: C

  When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in capital-intensive industry such as trucking.

• Question 1315:

  Structural considerations affecting the threat of substitutes include all of the following except

  A. Relative prices

  B. Brand identity

  C. Cost of switching to substitutes

  D. Customers' inclination to use a substitute

  Correct Answer: B

  Substitutes are types of goods and services that serve the same purpose. All products that can replace a good or service should be considered substitutes. For example, bicycles and cars are substitutes for public transportation. Structural considerations determine the effect substitutes have on one another. However, because substitutes affecting the threat of substitutes.

• Question 1316:

  The prospect for the long-term profitability of an existing firm is greater when

  A. The firm operates in an industry with a steep learning curve in its production process

  B. The costs of switching suppliers is low

  C. New entrants are encouraged by government policy

  D. Distribution channels are willing to accept new products

  Correct Answer: A

  The prospects of long-term profitability are contingent upon the industry's exit and entry barriers. The entry of new firms in market decreases the prospect for long-term profitability. When a firm operates in an industry that has a steep learning curve, it ios more difficult for new firms to enter the market. Thus, the prospects of long-term profitability are greater for an existing firm.

• Question 1317:

  Intense rivalry among firms in an industry increases when there is

  l- A low degree of product differentiation ll- Low consumer switching costs

  A. l only

  B. ll only

  C. Both l and ll

  D. Neither l nor ll

  Correct Answer: C

  The degree of product differentiation and the costs of switching from one competitor's product to another increase the intensity of rivalry and competition in an industry. Less differentiation tends to heighten competition based on price, with price cutting leading to lower profits. Low costs of switching products also increase competition

• Question 1318:

  Which of the following factors is not typical of an industry that faces intense competitive rivalry?

  A. Price-cutting

  B. Large adverting budgets

  C. Frequent introduction of new products

  D. Inelastic demand

  Correct Answer: D

  Rivalry among existing firms will be intense when an industry has many strong competitors. Inelastic demand exists when quality purchased is not greatly affected by price changes. Thus, price cutting does not increase sales for the industry and is therefore atypical of an intensely competitive industry.

• Question 1319:

  Which of the following best describes a market synergy?

  A. Technology transfer from one product to another

  B. Bundling of products distributed through the same channels

  C. Production of multiple products at one facility

  D. Use of complementary management skills to achieve entry into a new market

  Correct Answer: B

  Market synergy arises when products or services have positive complementary effects. Shopping malls reflect this type of synergy. Also, bundling of products, distribution through the same distribution channels , and usage of the same sales force are other examples of market synergies.

• Question 1320:

  What type of synergy exists when products or services have positive complementary effects?

  A. Market synergy

  B. Cost Synergy

  C. Technological synergy

  D. Management synergy

  Correct Answer: A

  Market synergy arises when products or services have positive complementary effects Shopping mails reflect this type of synergy.