Test ch 6, 7, 8 and 9 (PESTanalysis)

Q1. PEST analysis is:

a) a broad framework to help managers understand the environment in which their business
operates.
b) a checklist to ask how political, economic, strategic or technological developments can
influence an industry and a company.
c) a checklist for forecasting political, economic, strategic or technological factors.
d) a framework for strategic analysis of internal and external environment.

Q2. What are the six elements of PESTLE?

A) Peace, Elements, Search, Tape, Legal, and Environment

B) Power, Environment, Science, Teaching, Legal, and Education
C) Paper, Element, Savings, Trust, Labels, and Entry
D) Political, Economic, Social, Technological, Legal, and Environmental

Q3. How does PESTLE help your strategic development team?

A) It helps you to identify the strengths of your company.

B) It helps you to find solutions to problems, create marketing strategies, and stay ahead
of your competition.
C) It helps you to find the weaknesses of your company.
D) It helps you to see how your company's financial well-being is affecting the
environment.

Q4. Which of the following are considered political elements of PESTLE?

A) Visa requirements and trading tariffs.

B) Weather and climate.
C) Currency inflation and interests rates.
D) Age and gender.
Q5. What is used to describe a framework for thee analysis of macroeconomic environment?
A) PEST Analysis
B) SWOT Analysis
C) Case Analysis
D) None of the above
Q6. Following are examples of economic factors except?
A) Economic Growth
B) Interest Rates
C) Trade restrictions and tariffs
D) None of the above
Q7. Which of the following is considered as a social factor?
A) Career Attitudes
B) R & D activity
C) Environmental regulation
D) All of the above
Q8. These factors include demographic and cultural aspects of the external macro
environment and affect customer needs and the size of potential markets?
A) Economic Factors
B) Political Factors
C) Social Factors
D) All of the above
Q9. Which of the following is not considered as an internal strength of firms strength that
succeed in cost leadership?
A) High level of expertise in manufacturing process engineering
B) Efficient distribution channels
C) Access to leading scientific Research
D) None of the above
Q10. This type of strategy calls for the development of a product or service that offers unique
attributes that are valued by the customers?
A) Cost Leadership Strategy
B) Differentiation strategy
C) Focus Strategy
D) None of the above
Q11. This strategy concentrates on a narrow segment and within that segment attempts to
achieve either a cost leadership or differentiation.
A) Cost Leadership Strategy
B) Differentiation strategy
C) Focus Strategy
D) None of the above
Q12. A smaller number of firms increase rivalry because fewer firms must compete for the
same customers and resources.
A) True
B) False
Q13. This indicates the percentage of market share held by the four largest firms.
A) Concentration Ratio
B) Market Ratio
C) Competition Ratio
Q14. Low switching cot increases rivalry. When a customer can freely switch from one
product to another, there is a greater struggle to capture customers.
A) True
B) False
Q15. Barriers to entry arises from following sources except:
A) Government
B) Patent and proprietary knowledge
C) Asset Specificity
D) None of the above
Q16. It is not easy to enter an industry if there is:
A) Patented of proprietary knowhow
B) Difficulty in brand switching
C) Restricted distribution channel
D) All of the above
Q17. This is related to the firm’s business position, and may include measures such as market
position and reputation:
A) Financial objective
B) Strategic objective
C) Business objective
D) All of the above
Q18. Which of the following is not a part of the technological appraisal of the PEST
analysis?
A) Government R&D level
B) Consumer attitude towards technology
C) S&T structure
D) Technological transfer channel
Q19. From the list below identify which factors does not form one of the six key areas of
PESTEL analysis.
A) Socio – cultural changes
B) Political changes
C) Environmental changes
D) Technological changes

Q20. Barriers to entry affect the ability of firms outside an industry to enter and take
advantage of profit opportunities. Which of the following is not an example of such a barrier?

A) Product differentiation
B) Economies of scale
C) Capital requirements
D) Switching costs
E) The relative size of existing firms in the industry

Q21. In Porter's five forces model, what is meant by the term 'substitute'?

A) A substitute is a rival firms offering the same product

B) A substitute refers to an alternative manufacturing process
C) A substitute is something else consumers would rather spend their money on
D) A substitute is an alternative product or service that performs the same function for
the consumer

Q22. Which of the following items is not a criticism of the five forces model?

i) The analysis is essentially static, whereas industries constantly change.

ii) No force is deemed more important an the others.

iii) In viewing all the forces as threats it does not allow for Co-operation.

iv) It stresses the environment to the exclusion of internal influences on strategy.

v) The model was developed in the 1970s and is now obsolete.

A) i and iii

B) v

C) i, ii, iii and iv

D) ii, iii and iv

Q23. Which of the following statements best defines market segmentation?

A) Market segmentation is the division of a geographical area into specific sales

territories
B) Market segmentation is the 'carving-up' of a market by firms so that they all share in
that market
C) Market segmentation is the division of a market into different geographical regions
D) Market segmentation is the identification of specific parts of a market and the
development of different market offerings that will be attractive to those segments.