Business Intelligence and Competitive Analysis Quiz Answers

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By the end of 2019, it is clear that American Airlines (AAL), the world’s largest airline group and a SP500 company, is in trouble. With the growth rate of its stock price ranked at the bottom of all major US airlines and going in the opposite direction from the SP500 index, AAL needs to find out what is going on, and how to turn the company and its stock price around.

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Business Intelligence and Competitive Analysis Coursera Quiz Answers

Week 1: Competitive Intelligence Introduction Quiz

Q1. A competitive intelligence analysis may include three layers of analysis, which of the following may be one of the layers?

  • Industry analysis to assess the market potential, risk and competition intensity.
  • Competition positioning to determine where a company stands in the competitive landscape.
  • Enterprise diagnosis to discover the strengths and weaknesses of a company.

Q2. Industry analysis is a set of techniques used to compare industry to industry. Which of the following analyses may be included here?

  • Industry trend analysis
  • Value chain analysis
  • Market concentration and competition intensity analysis

Q3. Competition positioning is to position a company within an industry to see where it stands, and who are its league. Which of the following analyses may be included here?

  • Profit frontier analysis to determine how far the company is away from the most profitable companies
  • Return vs. risk analysis which positions the company on the map of two important KPIs: Return on Assets and Liability Asset Ratio.
  • Enterprise ranking
  • KPI examination – the “physical examination” of a company

Q4. Enterprise diagnosis is a set of techniques used to compare individual enterprises, which of the following analyses may be included here?

  • Value driver analysis to identify drivers and levers for a company’s financial performance.
  • Breakdown analysis to compare and analyze individual components of revenue and assets.
  • Strengths and weaknesses analysis to see the company’s advantages and disadvantages.

Q5. Why is an industry classification needed?

  • Government agencies need it to monitor economic conditions.
  • Securities analysts need it to construct portfolios.
  • Management consultants and business analysts need it to compare companies’ performance in order to discover and prioritize problems.

Q6. Name a few questions that you can answer by competitive intelligence.

  • What are the market potential, risk and entry barriers?
  • What are the strengths and weaknesses of a company relative to its peers?
  • What factors may drive companies’ financial performance in an industry?
  • What is most valuable segment on a supply chain? And who has the market (or bargaining) power?

Q7. The COVID-19 pandemic seems to have a significant impact on the total revenue and profits for which of the following industries in 2020?

  • Health Care, such as pharmaceuticals, health care equipment and hospitals.
  • Information technology, such as IT hardware and software.
  • Consumer discretionary, such as automobile, apparel and retail.
  • Industrials, such as machinery, transportation and commercial services.

Q8. What is the primary method of competitive intelligence?

  • Benchmarking
  • Data collection and cleaning
  • Surveying competitors, customers and suppliers

Q9. GICS is an industry classification system based on supply chains. In its energy sector, please find the sub-industry or sub-industries that are at the most up-stream stage of the oil / gas supply chain.

  • Oil & Gas Drilling
  • Oil & Gas Equipment & Services
  • Oil & Gas Exploration & Production
  • Oil & Gas Refining & Marketing
  • Oil & Gas Storage & Transportation

Q10. Name a few sub-industries from the list below that supply the “Construction & Engineering” sub-industry in GICS.

  • Construction Materials
  • Forest Products
  • Building Products
  • Home Furnishings

Week 2: Industry Analysis Quiz

Q1. The US health care sector has a large market size and profit, and a high growth but the lowest chance of breaking even. How do you explain these seemingly contradictory results?

  • The US health care sector has many small companies conducting innovative projects that are highly risky but also highly profitable if succeed.
  • It is not contradictory because most of the risk is taken by the vast amount of small companies; a few large companies enjoy a low risk and high profits.

Q2. What is the impact of COVID-19 on airlines, airfreight and airport services?

  • COVID-19 had a strong negative impact on all parts of the transportation industry, including airlines, airfreight and airport services.
  • COVID-19 had a different impact on different parts of the transportation industry; it had a strong negative impact on the airlines and airport services but a positive impact on airfreight.
  • COVID-19 had no or little impact on the transportation industry

Q3. What is the 4-firm concentration ratio? What does it imply?

  • The 4-firm concentration ratio is the aggregated market share of the largest 4 companies in the industry. It indicates the level of concentration of this industry.
  • 4-firm concentration ratio is the aggregated profit share of the largest 4 companies in the industry. It indicates the level of concentration of this industry.

Q4. Comparing industry A with a high revenue growth but low profitability to industry B with a low revenue growth but high profitability, which industry is younger (or in an earlier stage of development)?

  • Industry A
  • Industry B
  • Cannot tell due to insufficient information

Q5. Health care has the highest operating cost (SG&A) over total revenue ratio, why?

  • Health care generally hires a lot of people and thus has a higher operating cost than other sectors.
  • Health care is one of most innovative sectors in the US, and is heavily involved in developing new drugs, therapies and medical equipment. Thus, its operating cost (including R&D) is relatively high.

Q6. Name a few questions that the concentration and competition intensity analysis can help to answer.

  • What are the largest players in an industry and their market shares?
  • Is the market relatively monopolized or competitive? Or equivalently, can small firms survive and grow in this industry?
  • Are the entry barriers high or low for this industry?

Q7. If an industry is growing rapidly in total revenue but its median company revenue is decreasing, what does it mean?

  • It means that the market is becoming increasingly monopolized and less competitive. Bad news for new companies to enter this industry.
  • It means that the market is becoming increasingly competitive and less monopolized. Good news for new companies to enter this industry.

Q8. If you are operating a fashion apparel manufacturing company, which up or down stream sub-industries can you diversify into?

  • Apparel retail
  • Textiles
  • Consumer Electronics
  • Semiconductors

Week 3: Competition Positioning Quiz

Q1. What does the slope of the regression line in the revenue vs. cost analysis mean?

  • The total revenue over total cost ratio
  • How much more total revenue can be made per unit of increase in total cost.

Q2. Why is the profit frontier typically decreasing as revenue increases?

  • Because profit margins (e.g., operating margin) are calculated as ratios using the total revenue as the denominator.
  • It is harder to achieve the same profit margins as revenue increases.

Q3. Does the return vs. risk analysis in competitive intelligence follow the same rule of higher risk leading to higher return in financial investment?

  • No it does not because the return vs. risk analysis in competitive intelligence is different from the return vs. risk analysis in in financial investment.
  • No it does not because a higher liability asset ratio (a higher risk) may lead to a lower return on assets (a lower return) in capital equipment intensive industries.
  • Yes, the return vs. risk analysis in competitive intelligence is the same as the return vs. risk analysis in in financial investment.

Q4. Name a few reasons for combining enterprise rankings by different measures, such as revenue and profits.

  • Enterprise ranking by revenue just indicates the size of the companies but not their profits.
  • The largest companies may not be the most profitable companies, that is, some companies may be large but weak.
  • Being strong (highly profitable, high ROA) may be more important than just being large.

Q5. How does KPI examination work?

  • KPI examination shows where an enterprise stands (percentile rank) among its peers in the same industry (population).
  • For a range of KPIs, KPI examination shows whether the enterprise under study is in the normal range or on the low / high side.
  • KPI examination provides the reference interval for each KPI for the enterprise.

Q6. Name a few questions that KPI examination can help to answer.

  • Are there any abnormalities in my KPIs that raise alarms and require attentions?
  • In which areas (or KPIs) am I out-performing (under-performing) my competitors?

Week 4: Enterprise Diagnosis Quiz

Q1. As an investor, which of the following KPIs matter most to you?

  • Return on investment
  • Return on equity
  • Return on invested capital

Q2. Name a few reasons why data analytics can improve the strength and weakness analysis?

  • Data analytics can quantify the strengths and weaknesses so we know by how much we are leading ahead or lagging behind.
  • Data analytics can provide more comprehensive assessment on the strengths and weaknesses because we can compare multiple KPIs.

Q3. What questions below can the value driver analysis help you answer?

  • What factors may drive a company’s financial performance in my industry?
  • What factors may have a significant impact on my bottom line?
  • How to set my strategic priorities and pour resources on things that matter the most to my company?

Q4. A correlation does not always mean a causal relationship, how can you find the value drivers and levers efficiently?

  • A random and exhaustive search by plotting the regression lines for every pair of KPIs.
  • Using imagination and understanding of the industry to guess the drivers and levers, then verify the guess by data analysis.
  • Using experience and intuition to set hypothesis on potential drivers and levers before plotting out the regression lines.

Q5. Which breakdown analysis should you use on your suppliers with whom you want to bargain and cut costs?

  • Revenue (and cost) breakdown to see their costs and margins so you know your suppliers’ bottom-line and the room for price cutting.
  • Assets breakdown to see their inventory and receivables so you know how much they can supply and how long they can wait for you to pay them.

Q6. Which breakdowns should you use on suppliers if you want to get into a strategic and long-term relationship for a critical component?

  • Revenue (and cost) breakdown to see their profitability.
  • Assets breakdown to see their liabilities and equity which imply the financial health.
  • Detailed assets breakdown to see their cash, properties / plants, inventory and receivable to gauge their risk of bankruptcy and operating efficiency.
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