IES STRATEGIC MANAGEMENT MIDTERM
EXAM QUESTIONS AND ANSWERS
The "Better off" test - Answers -Part of Porter's 3 Part Test focusing on how a new unit
can gain a competitive advantage from its link with the company or vice versa
Buyer power (Porter's 5 Forces) - Answers -The ability of buyers to affect the price of
an item
PEST analysis - Answers -Scanning external influences on an organization (Political,
Economic, Social, and Technological)
Resources and capabilities - Answers -All of the financial, physical, human, and
organizational assets used by a firm to develop, manufacture, and deliver products or
services to its customers (Internal Analysis)
Competitive advantage - Answers -An advantage over competitors gained by offering
greater customer value, either by having lower prices or providing more benefits that
justify higher prices
Threat of substitutes (Porter's 5 Forces) - Answers -A competitor who performs the
same or a similar function as a company at a lower cost, or via easy access for the
consumer
Vertical integration - Answers -A single entity controls the entire process of a product,
from the raw materials to distribution
Differentiation - Answers -Staying in or entering a particular business but producing a
product or delivering a service which is better and different from your rivals.
Incumbent rivalry (Porter's 5 Forces) - Answers -This is considered "high" if:
- Many competitors in the industry
- Firms are of equal size
- Industry growth = slow
- Exit barriers are high
* Contractual obligations
* Geographic or historical attachments
- Products and services are direct substitutes
Example: Entrance of BYD from China (& Tesla) increases rivalry
EXAM QUESTIONS AND ANSWERS
The "Better off" test - Answers -Part of Porter's 3 Part Test focusing on how a new unit
can gain a competitive advantage from its link with the company or vice versa
Buyer power (Porter's 5 Forces) - Answers -The ability of buyers to affect the price of
an item
PEST analysis - Answers -Scanning external influences on an organization (Political,
Economic, Social, and Technological)
Resources and capabilities - Answers -All of the financial, physical, human, and
organizational assets used by a firm to develop, manufacture, and deliver products or
services to its customers (Internal Analysis)
Competitive advantage - Answers -An advantage over competitors gained by offering
greater customer value, either by having lower prices or providing more benefits that
justify higher prices
Threat of substitutes (Porter's 5 Forces) - Answers -A competitor who performs the
same or a similar function as a company at a lower cost, or via easy access for the
consumer
Vertical integration - Answers -A single entity controls the entire process of a product,
from the raw materials to distribution
Differentiation - Answers -Staying in or entering a particular business but producing a
product or delivering a service which is better and different from your rivals.
Incumbent rivalry (Porter's 5 Forces) - Answers -This is considered "high" if:
- Many competitors in the industry
- Firms are of equal size
- Industry growth = slow
- Exit barriers are high
* Contractual obligations
* Geographic or historical attachments
- Products and services are direct substitutes
Example: Entrance of BYD from China (& Tesla) increases rivalry
