Les 2 international

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Questions and Answers

What can lead to higher costs for firms in the industry?

Intense price or promotional wars between firms

Which factor can increase the threat of substitute products in the market?

Availability of cheaper substitutes

How does supplier bargaining power affect firms?

It can lead to higher costs for firms

What is involved in value innovation according to the text?

Creating new markets by delivering a unique value proposition Signup and view all the answers

What strategy involves identifying unserved markets and delivering a new value proposition to them?

Blue ocean strategy Signup and view all the answers

What did Formule 1 do to create a new marketspace according to the text?

Provided a new value proposition to customers Signup and view all the answers

How does buyer bargaining power affect costs for firms?

It can lead to higher costs for firms Signup and view all the answers

What is the main purpose of competition analysis in an industry according to the text?

To find a position in an industry where the firm can best defend itself against 5 basic competitive forces Signup and view all the answers

What does the term 'market' refer to according to the text?

A set of actual and potential buyers of a product and sellers Signup and view all the answers

What determines the intensity of rivalry existing between competitors in the market?

The number of competitors of equal size in the market Signup and view all the answers

What is the goal of competition analysis in an industry as per the text?

To find a position in an industry where the firm can best defend itself against 5 basic competitive forces, or influence these forces to its favor Signup and view all the answers

What is the significance of adjusting to customers, competitors, and public authorities according to the text?

It helps establish a competitive basis of resources, competences, and relations when compared to other international players Signup and view all the answers

What is the focus of Porter's 5 forces model as per the text?

Analysis of the state of competition and profit potential in an industry Signup and view all the answers

What does the term 'industry' refer to according to the text?

A group of firms that offer a product or class of products that are close substitutes for each other Signup and view all the answers

What does the intensity of rivalry among competitors in the market depend on?

Market growth and high fixed costs Signup and view all the answers

"Which functions will we keep" and "Which functions will be outsourced" are decisions related to what according to the text?

"Value chain analysis" Signup and view all the answers

Study Notes

Long-term industry profitability may be negatively impacted by intense price or promotional wars between firms.
Supplier bargaining power can lead to higher costs for firms.
Factors that increase supplier power include: dominance of the supply market, unique or differentiated products, high switching costs, and low profit margins for buyers.
Buyer bargaining power can also lead to higher costs for firms.
Factors that increase buyer power include: concentration of buyers, standard or undifferentiated products, many sellers, low profit margins, and a focus on price over quality.
Substitute products can decrease profits in the market.
Factors that increase the threat of substitute products include: availability of cheaper substitutes, low switching costs, and overall willingness of buyers to substitute.
Competition from new entrants can also decrease profits in the market.
Barriers to entry are lower when there are economies of scale, little product differentiation, low production costs, and low switching costs.
Customers perceive value based on the benefits they receive from a product and the costs of acquiring and using it.
Customer perceived value is influenced by both the customer and the firm.
Blue ocean strategy involves identifying unserved markets and delivering a new value proposition to them.
Value innovation is a strategic approach to business growth that involves creating new markets by delivering a unique value proposition.
Formule 1, a line of French budget hotels, used value innovation to create a new marketspace by providing a new value proposition to customers.
Value innovation involves answering four questions: which factors should be reduced below industry standard, which should be eliminated, which should be raised above industry standard, and which should be created.
Formule 1 answered these questions by eliminating costly restaurants and appealing lounges, eliminating receptionists during peak hours and providing basic rooms, raising the quality of beds, hygiene, and room quietness, and creating an automated teller for room keys and modular blocks manufactured in a factory.

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