BP&S chapter 2 Questions With Complete Solutions
A Buyer is Powerful when…
Buy a large portion of an industry’s total output
Sales of product account for significant portion of seller’s
revenue
Switching costs are low
Industry’s products are undifferentiated or standardized
Buyer pose a threat to integrate backward
A Buyer is Weak when…
Sales span multiple industries
Sales of product are mostly inconsequential to seller’s revenue
Switching costs are high
High level of differentiation in industry’s products
Buyer cannot integrate backward
Porter's Five Forces
Industry Rivalry
Threat of Substitutes
Bargaining Power of Buyer
Threat of New Entrants
Bargaining Power of Suppliers
External Environment
, Can be classified into three categories:
•General environment
•Industry environment
•Competitor analysis
PESTLE analysis
The general environment is composed of dimensions in the
broader society that influence an industry and the firms within it.
These dimensions can be grouped into several environmental
segments like demographic, economic, political/legal,
sociocultural, technological, global, and sustainable physical.
External Environment Segments Physical
The Physical refers to the physical environment, and ecological,
social, and economic systems that influence the environment.
Relevant considerations are global warming, energy
consumption, and sustainability.
Sociocultural
how society’s attitudes and values are changing, and how those
changes affect businesses. These would include, for example, a
population’s attitudes toward labor force participation, diversity,
religion, child rearing, healthcare, and lifestyles.
Global
the evolution of a global marketplace, and new producers and
consumers across all parts of the world. This also includes an
understanding of the cultural and institutional attributes of these
new market participants.
A Buyer is Powerful when…
Buy a large portion of an industry’s total output
Sales of product account for significant portion of seller’s
revenue
Switching costs are low
Industry’s products are undifferentiated or standardized
Buyer pose a threat to integrate backward
A Buyer is Weak when…
Sales span multiple industries
Sales of product are mostly inconsequential to seller’s revenue
Switching costs are high
High level of differentiation in industry’s products
Buyer cannot integrate backward
Porter's Five Forces
Industry Rivalry
Threat of Substitutes
Bargaining Power of Buyer
Threat of New Entrants
Bargaining Power of Suppliers
External Environment
, Can be classified into three categories:
•General environment
•Industry environment
•Competitor analysis
PESTLE analysis
The general environment is composed of dimensions in the
broader society that influence an industry and the firms within it.
These dimensions can be grouped into several environmental
segments like demographic, economic, political/legal,
sociocultural, technological, global, and sustainable physical.
External Environment Segments Physical
The Physical refers to the physical environment, and ecological,
social, and economic systems that influence the environment.
Relevant considerations are global warming, energy
consumption, and sustainability.
Sociocultural
how society’s attitudes and values are changing, and how those
changes affect businesses. These would include, for example, a
population’s attitudes toward labor force participation, diversity,
religion, child rearing, healthcare, and lifestyles.
Global
the evolution of a global marketplace, and new producers and
consumers across all parts of the world. This also includes an
understanding of the cultural and institutional attributes of these
new market participants.
