MGMT 449 Final || with Accurate Answers 100%.
Five forces correct answers Is to understand how to get a bigger slice of the profit potential by
positioning the company in part of the market where there is little competition. The unit analysis
of this framework is industry.
Rivalry Intensity correct answers Intensity of Rivalry is High if...
• Competitors are numerous
• Competitors have equal size
• Competitors have equal market share
• Industry growth is slow
• Fixed costs are high
• Products are undifferentiated
• Brand loyalty is insignificant
• Consumer switching costs are low
• Competitors are strategically diverse
• There is excess production capacity
• Exit barriers are high
Intensity of Rivalry is Low if...
• Competitors are few
• Unequal size among competitors
• Competitors have unequal market share
• Industry growth is fast
• Fixed costs are low
• Products are differentiated
• Brand loyalty is significant
• Consumer switching costs are high
• Competitors are not strategically diverse
• There is no excess production capacity
• Exit barriers are low
Threat of New Entrants correct answers High Threat of entry of new competitors when:
• Profitability does not require economies of scale
• Products are undifferentiated
• Brand names are not well-known
• Initial capital investment is low
• Consumer switching costs are low
• Accessing distribution channels is easy
• Location is not an issue
• Proprietary technology is not an issue
• Proprietary materials is not an issue
• Government policy is not an issue
• Expected retaliation of existing firms is not an issue
, Threat of New Entry is Low if:
• Profitability requires economies of scale
• Products are differentiated
• Brand names are well-known
• Initial capital investment is high
• Consumer switching costs are high
• Accessing distribution channels is difficult
• Location is an issue
• Proprietary technology is an issue
• Proprietary materials is an issue
• Government policy is an issue
• Expected retaliation of existing firms is an issue
Supplier Power correct answers The supplier power Porter has studied includes several
determining factors. If suppliers are concentrated compared to buyers - if there are few suppliers
and many buyers - supplier bargaining power is high. If buyer switching costs - the cost of
switching from one supplier's product to another supplier's product - are high, the bargaining
power of suppliers is high. If suppliers can easily forward integrate - or begin to produce the
buyer's product themselves - supplier power is high. If the buyer is not price sensitive and
uneducated regarding the product, supplier power is high. If the supplier's product is highly
differentiated, supplier bargaining power is high. If the buyer does not represent a large portion
of the supplier's sales, the bargaining power of suppliers is high. If substitute products are
unavailable in the marketplace, supplier power is high.
Buyer Power correct answers Buyer Power is High/Strong if:
• Buyers are more concentrated than sellers
• Buyer switching costs are low
• Threat of backward integration is high
• Buyer is price sensitive
• Buyer is well-educated regarding the product
• Buyer purchases product in high volume
• Buyer purchases comprise large portion of seller sales
• Product is undifferentiated
• Substitutes are available
Buyer Power is Low/Weak if:
• Buyers are less concentrated than sellers
• Buyer switching costs are high
• Threat of backward integration is low
• Buyer is not price sensitive
• Buyer is uneducated regarding the product
• Buyer purchases product in low volume
• Buyer purchases comprise small portion of seller sales
• Product is highly differentiated
• Substitutes are unavailable
Five forces correct answers Is to understand how to get a bigger slice of the profit potential by
positioning the company in part of the market where there is little competition. The unit analysis
of this framework is industry.
Rivalry Intensity correct answers Intensity of Rivalry is High if...
• Competitors are numerous
• Competitors have equal size
• Competitors have equal market share
• Industry growth is slow
• Fixed costs are high
• Products are undifferentiated
• Brand loyalty is insignificant
• Consumer switching costs are low
• Competitors are strategically diverse
• There is excess production capacity
• Exit barriers are high
Intensity of Rivalry is Low if...
• Competitors are few
• Unequal size among competitors
• Competitors have unequal market share
• Industry growth is fast
• Fixed costs are low
• Products are differentiated
• Brand loyalty is significant
• Consumer switching costs are high
• Competitors are not strategically diverse
• There is no excess production capacity
• Exit barriers are low
Threat of New Entrants correct answers High Threat of entry of new competitors when:
• Profitability does not require economies of scale
• Products are undifferentiated
• Brand names are not well-known
• Initial capital investment is low
• Consumer switching costs are low
• Accessing distribution channels is easy
• Location is not an issue
• Proprietary technology is not an issue
• Proprietary materials is not an issue
• Government policy is not an issue
• Expected retaliation of existing firms is not an issue
, Threat of New Entry is Low if:
• Profitability requires economies of scale
• Products are differentiated
• Brand names are well-known
• Initial capital investment is high
• Consumer switching costs are high
• Accessing distribution channels is difficult
• Location is an issue
• Proprietary technology is an issue
• Proprietary materials is an issue
• Government policy is an issue
• Expected retaliation of existing firms is an issue
Supplier Power correct answers The supplier power Porter has studied includes several
determining factors. If suppliers are concentrated compared to buyers - if there are few suppliers
and many buyers - supplier bargaining power is high. If buyer switching costs - the cost of
switching from one supplier's product to another supplier's product - are high, the bargaining
power of suppliers is high. If suppliers can easily forward integrate - or begin to produce the
buyer's product themselves - supplier power is high. If the buyer is not price sensitive and
uneducated regarding the product, supplier power is high. If the supplier's product is highly
differentiated, supplier bargaining power is high. If the buyer does not represent a large portion
of the supplier's sales, the bargaining power of suppliers is high. If substitute products are
unavailable in the marketplace, supplier power is high.
Buyer Power correct answers Buyer Power is High/Strong if:
• Buyers are more concentrated than sellers
• Buyer switching costs are low
• Threat of backward integration is high
• Buyer is price sensitive
• Buyer is well-educated regarding the product
• Buyer purchases product in high volume
• Buyer purchases comprise large portion of seller sales
• Product is undifferentiated
• Substitutes are available
Buyer Power is Low/Weak if:
• Buyers are less concentrated than sellers
• Buyer switching costs are high
• Threat of backward integration is low
• Buyer is not price sensitive
• Buyer is uneducated regarding the product
• Buyer purchases product in low volume
• Buyer purchases comprise small portion of seller sales
• Product is highly differentiated
• Substitutes are unavailable
