What is a key characteristic of a fragmented industry?
a) High market concentration
b) No single firm has significant market share
c) Monopoly control by a few large firms
d) High barriers to entry
Answer: b) No single firm has significant market share

Which of the following is NOT a common challenge in fragmented industries?
a) Difficulty in achieving economies of scale
b) High brand loyalty
c) Low barriers to entry
d) Intense price competition
Answer: b) High brand loyalty

According to Michael Porter, what is one effective strategy for competing in a fragmented industry?
a) Merging with dominant players
b) Focusing on differentiation or cost leadership
c) Avoiding innovation
d) Reducing customer service efforts
Answer: b) Focusing on differentiation or cost leadership

What factor often leads to an industry being fragmented?
a) High regulatory control
b) Large economies of scale
c) Localized market demand
d) Dominance of a few large firms
Answer: c) Localized market demand

Why is branding important in fragmented industries?
a) It allows companies to charge higher prices
b) It makes it easier for firms to merge
c) It reduces the number of competitors
d) It helps create customer loyalty in a competitive market
Answer: d) It helps create customer loyalty in a competitive market

Which of the following is a strategic approach to overcoming fragmentation?
a) Building a strong distribution network
b) Avoiding competitive pricing
c) Limiting customer reach
d) Expanding into unrelated markets
Answer: a) Building a strong distribution network

In a fragmented industry, companies often struggle with:
a) High-profit margins
b) Differentiation and pricing power
c) Government protection
d) Lack of innovation
Answer: b) Differentiation and pricing power

Which of the following industries is typically fragmented?
a) Aircraft manufacturing
b) Restaurants
c) Social media platforms
d) Smartphones
Answer: b) Restaurants

One way a company can reduce fragmentation is by:
a) Consolidating competitors through mergers and acquisitions
b) Ignoring market trends
c) Avoiding new technology
d) Reducing product variety
Answer: a) Consolidating competitors through mergers and acquisitions

Why do fragmented industries tend to have low barriers to entry?
a) High startup costs
b) Strong customer brand loyalty
c) Lack of dominant firms controlling access
d) Government-imposed restrictions
Answer: c) Lack of dominant firms controlling access

Which strategy helps companies compete in fragmented industries?
a) Ignoring customer needs
b) Developing a niche market
c) Focusing only on cost reduction
d) Avoiding investment in marketing
Answer: b) Developing a niche market

What makes price competition intense in fragmented industries?
a) Differentiated product offerings
b) No single firm having market control
c) High brand loyalty
d) Limited customer choice
Answer: b) No single firm having market control

One challenge in fragmented industries is:
a) Consistent industry-wide profit margins
b) Differentiation among competitors
c) High economies of scale
d) Government-mandated mergers
Answer: b) Differentiation among competitors

Which of the following best describes a fragmented industry?
a) High level of brand recognition among few players
b) Many small firms with similar market shares
c) A single dominant firm setting prices
d) High regulatory entry barriers
Answer: b) Many small firms with similar market shares

A primary reason why fragmentation occurs is:
a) Market demand is highly localized
b) Large firms eliminate competition
c) Government restrictions limit growth
d) High investment in technology
Answer: a) Market demand is highly localized

What competitive strategy is most effective in a fragmented industry?
a) Avoiding expansion
b) Creating a strong brand identity
c) Ignoring operational efficiency
d) Reducing customer service investments
Answer: b) Creating a strong brand identity

A fragmented industry typically lacks:
a) High levels of competition
b) A clear market leader
c) A wide variety of small firms
d) Customer demand
Answer: b) A clear market leader

What challenge do companies in fragmented industries often face?
a) Inability to innovate
b) High cost of labor
c) Lack of pricing power
d) Excessive government support
Answer: c) Lack of pricing power

Why is differentiation difficult in fragmented industries?
a) Customers prefer only large companies
b) Competition is high with many similar offerings
c) High brand loyalty makes change unnecessary
d) All firms offer unique products
Answer: b) Competition is high with many similar offerings

One way a company can stand out in a fragmented industry is by:
a) Offering a unique product or service
b) Ignoring competition
c) Avoiding customer feedback
d) Reducing marketing efforts
Answer: a) Offering a unique product or service

Which of the following is a disadvantage of competing in a fragmented industry?
a) Strong industry-wide collaboration
b) Lack of cost advantages due to scale
c) Limited government regulation
d) Monopolistic pricing power
Answer: b) Lack of cost advantages due to scale

Why do fragmented industries often attract new entrants?
a) Low barriers to entry
b) Dominance of a single large firm
c) High startup costs
d) Government monopolies
Answer: a) Low barriers to entry

One method of reducing fragmentation is:
a) Expanding through acquisitions
b) Offering the same services as competitors
c) Avoiding new technology
d) Keeping marketing strategies minimal
Answer: a) Expanding through acquisitions

Which of the following is NOT a challenge in fragmented industries?
a) High brand loyalty
b) Price competition
c) Low economies of scale
d) Differentiation difficulties
Answer: a) High brand loyalty

How can companies gain a competitive edge in fragmented industries?
a) Focusing on customer service and unique value propositions
b) Lowering product quality
c) Ignoring competitor movements
d) Avoiding expansion
Answer: a) Focusing on customer service and unique value propositions

What is a key reason many industries remain fragmented?
a) Market demand is uniform worldwide
b) Cost advantages favor small businesses
c) Localized needs and preferences
d) Government-controlled pricing
Answer: c) Localized needs and preferences

Why do economies of scale remain difficult to achieve in fragmented industries?
a) High fixed costs
b) Small, independent firms dominate the market
c) Government-imposed limits on production
d) Strict international trade regulations
Answer: b) Small, independent firms dominate the market

Which of the following can lead to market consolidation in a fragmented industry?
a) High competition reducing growth opportunities
b) Increasing differentiation among firms
c) A strong push for standardization
d) Reduction of competitive intensity
Answer: c) A strong push for standardization

A fragmented industry often has:
a) A few large firms dominating the market
b) A diverse group of small competitors
c) Complete market stability
d) High supplier concentration
Answer: b) A diverse group of small competitors

Why do firms in fragmented industries struggle to gain pricing power?
a) High market concentration
b) Lack of dominant market players
c) Strong government control over pricing
d) Monopolistic competition
Answer: b) Lack of dominant market players

Which of the following strategies helps companies scale in fragmented industries?
a) Standardizing products or services
b) Ignoring customer preferences
c) Limiting geographic expansion
d) Reducing marketing efforts
Answer: a) Standardizing products or services

How can a firm create differentiation in a fragmented industry?
a) By offering specialized services tailored to a niche market
b) By copying competitors’ products
c) By reducing product quality
d) By avoiding investments in branding
Answer: a) By offering specialized services tailored to a niche market

What role do economies of scale play in fragmented industries?
a) They are difficult to achieve due to small firm sizes
b) They provide significant cost advantages
c) They ensure monopoly control
d) They eliminate market fragmentation
Answer: a) They are difficult to achieve due to small firm sizes

Why is operational efficiency critical in fragmented industries?
a) It helps businesses reduce costs and improve profit margins
b) It eliminates competitors
c) It prevents government regulation
d) It discourages market expansion
Answer: a) It helps businesses reduce costs and improve profit margins

Which of the following is a strategy for overcoming fragmentation?
a) Building a strong brand reputation
b) Avoiding customer engagement
c) Offering a generic product
d) Focusing only on price competition
Answer: a) Building a strong brand reputation

How does geographic expansion help businesses in fragmented industries?
a) It reduces overall competition
b) It allows firms to scale and reach new markets
c) It eliminates the need for marketing
d) It decreases customer demand
Answer: b) It allows firms to scale and reach new markets

What is a common reason businesses struggle to consolidate fragmented industries?
a) High customer loyalty to large firms
b) Regulatory barriers to mergers
c) Differing local market conditions and customer preferences
d) Government-controlled pricing
Answer: c) Differing local market conditions and customer preferences

What advantage do firms gain by specializing in niche markets within fragmented industries?
a) They face less competition and can charge premium prices
b) They eliminate competitors
c) They reduce the need for innovation
d) They avoid regulatory scrutiny
Answer: a) They face less competition and can charge premium prices

In a fragmented industry, what is the effect of technological advancements?
a) It helps firms streamline operations and improve competitiveness
b) It makes consolidation impossible
c) It prevents firms from differentiating themselves
d) It decreases customer demand
Answer: a) It helps firms streamline operations and improve competitiveness

Which of the following is NOT a recommended strategy in fragmented industries?
a) Pursuing differentiation
b) Strengthening operational efficiency
c) Expanding through acquisitions
d) Ignoring branding and marketing
Answer: d) Ignoring branding and marketing

What is the role of franchise models in fragmented industries?
a) They provide scalability while maintaining localized control
b) They reduce customer satisfaction
c) They eliminate competition
d) They limit business expansion
Answer: a) They provide scalability while maintaining localized control

Why is standardization difficult in fragmented industries?
a) Firms operate in different geographic regions with unique market conditions
b) Customers always prefer customized products
c) The government mandates fragmentation
d) There is no need for consistency in service
Answer: a) Firms operate in different geographic regions with unique market conditions

How can businesses gain a competitive edge in fragmented industries?
a) By creating a recognizable brand and reputation
b) By avoiding innovation
c) By limiting customer service investments
d) By reducing product variety
Answer: a) By creating a recognizable brand and reputation

Which of the following is an example of a fragmented industry?
a) Global smartphone manufacturing
b) Restaurants and catering services
c) Commercial aircraft production
d) Global operating system providers
Answer: b) Restaurants and catering services

What is one challenge of achieving brand recognition in fragmented industries?
a) Heavy competition makes it hard to stand out
b) Brand loyalty is extremely high
c) Government regulations prevent advertising
d) Customers only buy from well-known brands
Answer: a) Heavy competition makes it hard to stand out

Why do fragmented industries typically have low switching costs for consumers?
a) Many competitors offer similar products and services
b) Customers are required to stay loyal to one brand
c) High barriers prevent customers from changing suppliers
d) Government regulations mandate long-term contracts
Answer: a) Many competitors offer similar products and services

One way companies in fragmented industries can improve efficiency is by:
a) Streamlining operations and reducing unnecessary costs
b) Expanding into unrelated industries
c) Ignoring competitor strategies
d) Avoiding process automation
Answer: a) Streamlining operations and reducing unnecessary costs

How does government regulation impact fragmented industries?
a) It guarantees success for all firms
b) It prevents any form of competition
c) It can create barriers to entry or consolidation
d) It eliminates market segmentation
Answer: c) It can create barriers to entry or consolidation

What is one way fragmented industries can become more consolidated over time?
a) Through mergers, acquisitions, or franchise expansions
b) By reducing customer options
c) By avoiding innovation
d) By limiting geographic expansion
Answer: a) Through mergers, acquisitions, or franchise expansions

Which of the following is a key reason many fragmented industries remain competitive?
a) Market conditions favor small, independent businesses
b) Large firms drive out small competitors
c) Technology eliminates small firms
d) Regulations prevent competition
Answer: a) Market conditions favor small, independent businesses

What is a fragmented industry according to Michael Porter’s Competitive Strategy?
A) An industry dominated by a few large firms
B) An industry composed of many small and medium-sized players
C) An industry with high barriers to entry
D) An industry with significant economies of scale
Answer: B) An industry composed of many small and medium-sized players

Which of the following is a characteristic of fragmented industries?
A) High barriers to entry
B) Low barriers to entry
C) Dominance by a few large firms
D) Significant economies of scale
Answer: B) Low barriers to entry

What is a key challenge in fragmented industries?
A) High coordination costs
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) High coordination costs

Which of the following is an example of a fragmented industry?
A) Automobile manufacturing
B) Restaurants
C) Aerospace
D) Telecommunications
Answer: B) Restaurants

What is the strategy of tightly managed decentralization in fragmented industries?
A) Operating as a collection of decentralized units with centralized control over key functions
B) Focusing on a specific niche or segment
C) Consolidating activities to achieve cost advantages
D) Acquiring or merging with competitors
Answer: A) Operating as a collection of decentralized units with centralized control over key functions

Which company is an example of using tightly managed decentralization?
A) McDonald’s
B) Boeing
C) Apple
D) ExxonMobil
Answer: A) McDonald’s

What is formula facilitation in fragmented industries?
A) Acquiring or merging with competitors
B) Focusing on a specific niche or segment
C) Consolidating activities to achieve cost advantages
D) Developing a standardized business model that can be replicated across locations
Answer: D) Developing a standardized business model that can be replicated across locations

Which company is an example of using formula facilitation?
A) Starbucks
B) General Motors
C) Microsoft
D) Shell
Answer: A) Starbucks

What is the strategy of increased economies of scale in fragmented industries?
A) Consolidating certain activities to achieve cost advantages
B) Focusing on a specific niche or segment
C) Operating as a collection of decentralized units
D) Acquiring or merging with competitors
Answer: A) Consolidating certain activities to achieve cost advantages

Which of the following is an example of increased economies of scale?
A) A group of independent pharmacies forming a buying cooperative
B) A restaurant specializing in vegan cuisine
C) A salon focusing on high-end hairstyling services
D) A boutique hotel offering personalized concierge services
Answer: A) A group of independent pharmacies forming a buying cooperative

What is the strategy of specialization in fragmented industries?
A) Focusing on a specific niche or segment
B) Consolidating activities to achieve cost advantages
C) Operating as a collection of decentralized units
D) Acquiring or merging with competitors
Answer: A) Focusing on a specific niche or segment

What is one reason why customer loyalty is typically low in fragmented industries?
a) High switching costs prevent movement
b) Companies enforce long-term contracts
c) Government regulations mandate single-brand usage
d) Customers have many alternative choices
Answer: d) Customers have many alternative choices

How can companies improve profitability in fragmented industries?
a) By ignoring competitive threats
b) By reducing customer service investments
c) By focusing on operational efficiencies and differentiation
d) By cutting prices indefinitely
Answer: c) By focusing on operational efficiencies and differentiation

What is a common reason why firms in fragmented industries struggle with economies of scale?
a) Small-scale operations limit cost advantages
b) Government regulations mandate high costs
c) They have a monopoly on supply chains
d) Customers prefer fewer product options
Answer: a) Small-scale operations limit cost advantages

Which of the following business models is well-suited for fragmented industries?
a) Franchise-based expansion
b) Single-location businesses only
c) Relying on government subsidies
d) Avoiding technology investment
Answer: a) Franchise-based expansion

What is a significant risk of competing primarily on price in a fragmented industry?
a) It reduces customer acquisition costs
b) It eliminates competition entirely
c) It guarantees long-term brand loyalty
d) It can lead to unsustainable profit margins
Answer: d) It can lead to unsustainable profit margins

One method companies use to overcome fragmentation is:
a) Merging with or acquiring competitors
b) Ignoring competitive pressures
c) Focusing only on short-term gains
d) Reducing investment in marketing
Answer: a) Merging with or acquiring competitors

Which factor contributes to industries remaining fragmented over time?
a) High operational costs
b) Diverse customer preferences requiring local adaptation
c) A single company controlling the market
d) High barriers to entry
Answer: b) Diverse customer preferences requiring local adaptation

What type of company is most likely to succeed in a fragmented industry?
a) One that differentiates its products and services
b) One that avoids marketing and branding
c) One that competes only on price
d) One that ignores customer service
Answer: a) One that differentiates its products and services

Why is cost leadership difficult in fragmented industries?
a) Companies struggle to reach economies of scale
b) The government regulates pricing
c) Consumers only buy premium products
d) Technology prevents cost reduction
Answer: a) Companies struggle to reach economies of scale

One of the main reasons consolidation occurs in fragmented industries is:
a) Government intervention forces consolidation
b) Firms realize operational efficiencies through mergers
c) Customer demand for variety decreases
d) Barriers to entry become higher
Answer: b) Firms realize operational efficiencies through mergers

Which of the following would be an effective way to scale a business in a fragmented industry?
a) Expanding through joint ventures and partnerships
b) Eliminating product variety
c) Reducing customer touchpoints
d) Avoiding investments in research and development
Answer: a) Expanding through joint ventures and partnerships

What is a major disadvantage of running a business in a fragmented industry?
a) Intense competition and limited differentiation
b) Low consumer demand
c) Complete lack of market opportunity
d) Strong government monopolies
Answer: a) Intense competition and limited differentiation

In fragmented industries, which strategy helps companies build brand loyalty?
a) Reducing innovation efforts
b) Ignoring customer preferences
c) Engaging in price wars with competitors
d) Offering consistent and high-quality products/services
Answer: d) Offering consistent and high-quality products/services

What is a common competitive advantage used in fragmented industries?
a) Competing exclusively on pricing
b) Expanding only within one geographic location
c) Offering highly specialized or niche products
d) Eliminating advertising and promotions
Answer: c) Offering highly specialized or niche products

Which of the following is an example of a fragmented industry?
a) Local landscaping and home services
b) Global semiconductor manufacturing
c) Commercial aircraft production
d) Internet search engines
Answer: a) Local landscaping and home services

How can firms in fragmented industries use technology to gain an advantage?
a) By reducing digital engagement
b) By avoiding investment in innovation
c) By automating processes to improve efficiency
d) By eliminating customer service touchpoints
Answer: c) By automating processes to improve efficiency

Why do fragmented industries often have low profit margins?
a) High competition leads to price pressures
b) The government regulates all pricing
c) Customers avoid small businesses
d) There is little consumer demand
Answer: a) High competition leads to price pressures

What is a benefit of having a strong brand in a fragmented industry?
a) It differentiates the business and builds customer trust
b) It guarantees a monopoly
c) It eliminates market competition
d) It removes the need for customer service
Answer: a) It differentiates the business and builds customer trust

How does offering unique customer experiences help companies compete in fragmented industries?
a) It ensures complete market domination
b) It reduces the need for employee training
c) It eliminates operational costs
d) It builds customer loyalty and reduces price sensitivity
Answer: d) It builds customer loyalty and reduces price sensitivity

Which of the following challenges is commonly faced by businesses in fragmented industries?
a) High brand awareness across all companies
b) Difficulty in maintaining pricing power
c) Government-imposed monopolies
d) Complete elimination of competition
Answer: b) Difficulty in maintaining pricing power

Which of the following is an example of specialization?
A) A restaurant specializing in vegan cuisine
B) A group of independent pharmacies forming a buying cooperative
C) A fast-food chain using franchising
D) A retail chain standardizing its store format
Answer: A) A restaurant specializing in vegan cuisine

What is the strategy of geographic focus in fragmented industries?
A) Concentrating on dominating a specific geographic area
B) Consolidating activities to achieve cost advantages
C) Operating as a collection of decentralized units
D) Acquiring or merging with competitors
Answer: A) Concentrating on dominating a specific geographic area

Which of the following is an example of geographic focus?
A) A restaurant specializing in vegan cuisine
B) A regional grocery chain dominating a specific state
C) A group of independent pharmacies forming a buying cooperative
D) A fast-food chain using franchising
Answer: B) A regional grocery chain dominating a specific state

What is the strategy of horizontal integration in fragmented industries?
A) Acquiring or merging with competitors to consolidate the industry
B) Focusing on a specific niche or segment
C) Consolidating activities to achieve cost advantages
D) Operating as a collection of decentralized units
Answer: A) Acquiring or merging with competitors to consolidate the industry

Which of the following is an example of horizontal integration?
A) A chain of auto repair shops acquiring smaller independent shops
B) A restaurant specializing in vegan cuisine
C) A group of independent pharmacies forming a buying cooperative
D) A fast-food chain using franchising
Answer: A) A chain of auto repair shops acquiring smaller independent shops

What is the strategy of value-added services in fragmented industries?
A) Offering additional services or features to differentiate from competitors
B) Focusing on a specific niche or segment
C) Consolidating activities to achieve cost advantages
D) Operating as a collection of decentralized units
Answer: A) Offering additional services or features to differentiate from competitors

Which of the following is an example of value-added services?
A) A boutique hotel offering personalized concierge services
B) A restaurant specializing in vegan cuisine
C) A group of independent pharmacies forming a buying cooperative
D) A fast-food chain using franchising
Answer: A) A boutique hotel offering personalized concierge services

What is the strategy of technological innovation in fragmented industries?
A) Using technology to streamline operations or create new business models
B) Focusing on a specific niche or segment
C) Consolidating activities to achieve cost advantages
D) Operating as a collection of decentralized units
Answer: A) Using technology to streamline operations or create new business models

Which of the following is an example of technological innovation?
A) Uber leveraging technology to disrupt the taxi industry
B) A restaurant specializing in vegan cuisine
C) A group of independent pharmacies forming a buying cooperative
D) A fast-food chain using franchising
Answer: A) Uber leveraging technology to disrupt the taxi industry

What is a key benefit of tightly managed decentralization?
A) Maintaining local presence while ensuring consistency in branding and operations
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Acquiring or merging with competitors
Answer: A) Maintaining local presence while ensuring consistency in branding and operations

What is a key benefit of formula facilitation?
A) Replicating a standardized business model across locations
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Acquiring or merging with competitors
Answer: A) Replicating a standardized business model across locations

What is a key benefit of increased economies of scale?
A) Maintaining local presence while ensuring consistency
B) Focusing on a specific niche or segment
C) Achieving cost advantages through consolidation
D) Acquiring or merging with competitors
Answer: C) Achieving cost advantages through consolidation

What is a key benefit of specialization?
A) Differentiating from competitors by focusing on a specific niche
B) Achieving significant economies of scale
C) Maintaining local presence while ensuring consistency
D) Acquiring or merging with competitors
Answer: A) Differentiating from competitors by focusing on a specific niche

What is a key benefit of geographic focus?
A) Dominating a specific geographic area
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Acquiring or merging with competitors
Answer: A) Dominating a specific geographic area

What is a key benefit of horizontal integration?
A) Consolidating the industry and reducing competition
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Maintaining local presence while ensuring consistency
Answer: A) Consolidating the industry and reducing competition

What is a key benefit of value-added services?
A) Differentiating from competitors by offering additional features
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Acquiring or merging with competitors
Answer: A) Differentiating from competitors by offering additional features

What is a key benefit of technological innovation?
A) Streamlining operations or creating new business models
B) Achieving significant economies of scale
C) Focusing on a specific niche or segment
D) Acquiring or merging with competitors
Answer: A) Streamlining operations or creating new business models

What is a challenge of tightly managed decentralization?
A) High coordination costs
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) High coordination costs

What is a challenge of formula facilitation?
A) Adapting to local market conditions while maintaining consistency
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) Adapting to local market conditions while maintaining consistency

What is a challenge of increased economies of scale?
A) Standardized customer needs
B) Low competition
C) High coordination costs
D) Achieving cost advantages in a fragmented industry
Answer: D) Achieving cost advantages in a fragmented industry

What is a challenge of specialization?
A) Focusing on a specific niche or segment
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) Focusing on a specific niche or segment

What is a challenge of geographic focus?
A) Dominating a specific geographic area
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) Dominating a specific geographic area

What is a challenge of horizontal integration?
A) Acquiring or merging with competitors
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) Acquiring or merging with competitors

What is a challenge of value-added services?
A) Offering additional features to differentiate from competitors
B) Low competition
C) High economies of scale
D) Standardized customer needs
Answer: A) Offering additional features to differentiate from competitors

What is a challenge of technological innovation?
A) High economies of scale
B) Low competition
C) Leveraging technology to streamline operations
D) Standardized customer needs
Answer: C) Leveraging technology to streamline operations

What is an example of a fragmented industry?
A) Hair salons
B) Automobile manufacturing
C) Aerospace
D) Telecommunications
Answer: A) Hair salons

What is an example of a fragmented industry?
A) Auto repair shops
B) Automobile manufacturing
C) Aerospace
D) Telecommunications
Answer: A) Auto repair shops

What is an example of a fragmented industry?
A) Boutique retail stores
B) Automobile manufacturing
C) Aerospace
D) Telecommunications
Answer: A) Boutique retail stores

What is an example of a fragmented industry?
A) Restaurants
B) Automobile manufacturing
C) Aerospace
D) Telecommunications
Answer: A) Restaurants