QUESTION 1

A "switching cost" is:

		The cost a company incurs when it changes how it operates its business.
		The one time cost the buyer incurs when switching suppliers.
		The one time cost a company incurs when switching from one industry into another.
		The increase in price a consumer faces when switching from a low-priced brand to a higher priced one.

QUESTION 2

1. All else equal, an industry with high barriers to entry will be:

		Just as attractive as one with low barriers to entry.
		Unlikely to exhibit as high of profitability as an industry with low barriers to entry.
		An industry firms should always avoid because it is too expensive to enter.
		Likely to be a very attractive industry.

QUESTION 3

1. When considered as part of a five forces analysis of the sit-down restaurant business, a steak served at a steakhouse and a steak you buy from a store and cook at home are substitutes:

True

False

QUESTION 4

1. Suppose you are doing a five forces analysis of the running shoe industry. Adidas, Asics, Brooks, New Balance, Nike, and Puma are some of the rivals competing in the industry. From this perspective, what would Wal-Mart be in this industry?

		a supplier
		a rival
		a substitute
		a buyer

QUESTION 5

1. Substitutes are threats when:

		They are really cheap.
		Buyers see them as providing an attractive benefit for the price.
		They have high levels of technological sophistication.
		The economy enters recession.