BUS 475 EXAM 1 LATEST ACTUAL EXAM
firm effects account for up to... - ANSWER: 55%
industry effects account for up to ... - ANSWER: about 20%
other effects account for up to... - ANSWER: about 25%
what are some examples of other effects? - ANSWER: business cycle effects,
unexplained variance
what is an industry? - ANSWER: 1. where company competes
2. group of companies competing against each other
3. around the same set of suppliers and buyers
4. tend to offer similar products and services
what is PESTEL framework? - ANSWER: 6 external factors that impact a firm
what are the 6 segments in the PESTEL framework? - ANSWER: - Political
- economic
- sociocultural
- technological
- ecological
- logical
the 6 of the PESTEL factors can create.... - ANSWER: opportunities and/or threats
competition - ANSWER: goes beyond the firm's direct competitors
industry analysis is a method to... (1) - ANSWER: identify an industry's profit
potential
industry analysis is a method to... (2) - ANSWER: derive implications for a firm's
strategic position
industry analysis is a method to... (3) - ANSWER: guide firms to decide how they can
position themselves to gain and sustain a competitive advantage
profit potential - ANSWER: level of profitability for the average firm
firm's strategic position - ANSWER: ability to create value while controlling the cost
Value = - ANSWER: total perceived consumer benefits =
consumer's maximum willingness to pay =
reservation price
, economic value created = - ANSWER: v-c
c = - ANSWER: firm's cost
Porter's 5 Forces - ANSWER: 1. threat of new entrants
2. threat of substitute products or services
3. bargaining power of suppliers
4. bargaining power of buyers
5. rivalry among existing competitors
if the 5 forces are weak --> - ANSWER: industry's profit potential increases
if the 5 forces are strong --> - ANSWER: industry's profit potential decreases
force 1 - threat of entry - ANSWER: risk that potential competitors will enter an
industry
threat of entry: the more profitable an industry... - ANSWER: the more attractive it is
for new competitors to enter
entry barrier - ANSWER: obstacle blocking others from entering
an entry barrier is... - ANSWER: a significant predictor of industry profit potential
types of entry barriers - ANSWER: 1. economies of scale
2. network effects
3. switching costs
4. capital requirements
5. government policy
6. threat of retaliation
entry barrier: economies of scale - ANSWER: cost advantages accrue to firms with
bigger output
economies of scale: as you increase output... - ANSWER: can spread fixed costs
economies of scale: increase in output... - ANSWER: helps with cost advantage
entry barrier: network effects - ANSWER: value of a product/service for an individual
user INCREASES with the # of total users
entry barrier: switching costs - ANSWER: costs incurred by moving from one product
to another
entry barrier: capital requirements - ANSWER: capital required to compete in this
industry
firm effects account for up to... - ANSWER: 55%
industry effects account for up to ... - ANSWER: about 20%
other effects account for up to... - ANSWER: about 25%
what are some examples of other effects? - ANSWER: business cycle effects,
unexplained variance
what is an industry? - ANSWER: 1. where company competes
2. group of companies competing against each other
3. around the same set of suppliers and buyers
4. tend to offer similar products and services
what is PESTEL framework? - ANSWER: 6 external factors that impact a firm
what are the 6 segments in the PESTEL framework? - ANSWER: - Political
- economic
- sociocultural
- technological
- ecological
- logical
the 6 of the PESTEL factors can create.... - ANSWER: opportunities and/or threats
competition - ANSWER: goes beyond the firm's direct competitors
industry analysis is a method to... (1) - ANSWER: identify an industry's profit
potential
industry analysis is a method to... (2) - ANSWER: derive implications for a firm's
strategic position
industry analysis is a method to... (3) - ANSWER: guide firms to decide how they can
position themselves to gain and sustain a competitive advantage
profit potential - ANSWER: level of profitability for the average firm
firm's strategic position - ANSWER: ability to create value while controlling the cost
Value = - ANSWER: total perceived consumer benefits =
consumer's maximum willingness to pay =
reservation price
, economic value created = - ANSWER: v-c
c = - ANSWER: firm's cost
Porter's 5 Forces - ANSWER: 1. threat of new entrants
2. threat of substitute products or services
3. bargaining power of suppliers
4. bargaining power of buyers
5. rivalry among existing competitors
if the 5 forces are weak --> - ANSWER: industry's profit potential increases
if the 5 forces are strong --> - ANSWER: industry's profit potential decreases
force 1 - threat of entry - ANSWER: risk that potential competitors will enter an
industry
threat of entry: the more profitable an industry... - ANSWER: the more attractive it is
for new competitors to enter
entry barrier - ANSWER: obstacle blocking others from entering
an entry barrier is... - ANSWER: a significant predictor of industry profit potential
types of entry barriers - ANSWER: 1. economies of scale
2. network effects
3. switching costs
4. capital requirements
5. government policy
6. threat of retaliation
entry barrier: economies of scale - ANSWER: cost advantages accrue to firms with
bigger output
economies of scale: as you increase output... - ANSWER: can spread fixed costs
economies of scale: increase in output... - ANSWER: helps with cost advantage
entry barrier: network effects - ANSWER: value of a product/service for an individual
user INCREASES with the # of total users
entry barrier: switching costs - ANSWER: costs incurred by moving from one product
to another
entry barrier: capital requirements - ANSWER: capital required to compete in this
industry
