Porter's Five Forces Model Overview

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Which of the following is not a factor that can give newer companies an advantage?

Older equipment

Which of the following scenarios presents the greatest customer switching difficulty, and thus, decreases the competitive force of customers?

Customers face high switching costs and cannot easily switch to competitor's products

Which industry is most likely to have lower barriers to market entry, making it easier for new entrants?

Food service

What is the most likely effect of substitute products and services on a company's pricing strategy?

Forces the firm to adjust pricing to remain competitive

How does a firm's control over suppliers impact its competitive positioning?

Having more suppliers decreases control and competitiveness

Which of the following scenarios is most likely to result in a firm exercising the greatest control over its suppliers?

The firm operates in an industry with a small number of suppliers and few substitute products available to the firm.

Which of the following scenarios is most likely to result in customers forcing a firm and its competitors to compete on price alone?

Customers are highly price sensitive and are constantly searching for the lowest price.

Which of the following is most likely to give newer companies an advantage when entering a market with traditional competitors?

Access to new and innovative technologies.

Which of the following is most likely to result in a customer easily switching to a competitor's product?

The customer has no preference between the firm's product and the competitor's product and is easily swayed by price.

Which of the following industries is most likely to have low barriers to entry, making it easier for new entrants?

The software industry

Test your knowledge on Porter's Five Forces model which identifies five competitive forces that shape the fate of a firm: traditional competitors, new market entrants, substitute products and services, bargaining power of customers, and bargaining power of suppliers.

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