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Porter's Five Forces

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Match the following factors with their respective Porter's Five Forces category:

Economies of scale = Threat of new entrants Number of suppliers = Bargaining power of suppliers Buyer volume (number of customers) = Bargaining power of buyers Number of substitute products available = Threat of substitute products or services

Match the following factors with their respective Porter's Five Forces category:

Brand identity/loyalty = Threat of new entrants Supplier concentration = Bargaining power of suppliers Buyer's ability to substitute = Bargaining power of buyers Number of competitors = Rivalry among existing competitors

Match the following concepts with their definitions related to Porter's Five Forces:

Competitive Rivalry Among Existing Competitors = Examines how intense the current competition is in the marketplace Threat Of New Entrants = Refers to the ease with which new firms can enter the market Bargaining Power Of Suppliers = Refers to the ability of suppliers to negotiate better prices or terms Bargaining Power Of Buyers = Refers to the ability of buyers to negotiate better prices or terms

Match the following factors with their respective Porter's Five Forces category:

Access to distribution channels = Threat of new entrants Supplier's threat of forward integration = Bargaining power of suppliers Buyer's information availability = Bargaining power of buyers Industry growth = Rivalry among existing competitors

Match the following characteristics with the competitive force they relate to:

High fixed costs and high barriers to exit = Competitive Rivalry Among Existing Competitors Low switching costs for customers = Bargaining Power Of Buyers High concentration ratio = Threat Of New Entrants High demand for a product = Bargaining Power Of Suppliers

Match the following factors with their respective Porter's Five Forces category:

Absolute cost advantages = Threat of new entrants Uniqueness of supplier's products or services = Bargaining power of suppliers Buyer's switching costs = Bargaining power of buyers Quality differences = Rivalry among existing competitors

Match the following factors with their impact on competitive rivalry:

Many competitors that are roughly equal in size and power = Increases competitive rivalry Industry is growing rapidly = Decreases competitive rivalry Barriers to exit are high = Increases competitive rivalry Concentration ratio is high = Decreases competitive rivalry

Match the following factors with their respective Porter's Five Forces category:

Expected retaliation from existing players = Threat of new entrants Industry threat of backward integration = Bargaining power of suppliers Price sensitivity = Bargaining power of buyers Product differentiation = Rivalry among existing competitors

Match the following factors with their respective Porter's Five Forces category:

Access to latest technology = Threat of new entrants Supplier's contribution to quality or service = Bargaining power of suppliers Buyer's threat of backward integration = Bargaining power of buyers Diversity of competitors = Rivalry among existing competitors

Match the following industries with their characteristics related to Porter's Five Forces:

Airline industry = High barriers to exit and high fixed costs Retail industry = High bargaining power of buyers Agricultural industry = High bargaining power of suppliers Technology industry = High threat of substitute products

Match the following factors with their respective Porter's Five Forces category:

Switching costs = Threat of new entrants Total industry cost contributed by suppliers = Bargaining power of suppliers Industry threat of forward integration = Bargaining power of buyers Barriers to exit = Rivalry among existing competitors

Match the following concepts with their effects on business:

High competitive rivalry = Leads to advertising and price wars, hurting profit margins High bargaining power of suppliers = Increases costs for businesses High threat of substitute products = Decreases demand for a product High bargaining power of buyers = Forces businesses to lower prices

Match the following factors with their respective Porter's Five Forces category:

Experience and learning effects = Threat of new entrants Importance of volume to supplier = Bargaining power of suppliers Buyer's propensity to substitute = Bargaining power of buyers Intermittent overcapacity = Rivalry among existing competitors

Match the following characteristics with the competitive force they relate to:

Easy access to distribution channels = Threat Of New Entrants High demand for a product = Bargaining Power Of Buyers Many substitutes available = Threat Of Substitute Products High concentration ratio = Competitive Rivalry Among Existing Competitors

Match the following factors with their impact on the attractiveness of an industry:

High competitive rivalry = Decreases attractiveness of an industry High bargaining power of suppliers = Decreases attractiveness of an industry Low threat of new entrants = Increases attractiveness of an industry High bargaining power of buyers = Decreases attractiveness of an industry

Match the following concepts with their definitions related to Porter's Five Forces:

Threat Of Substitute Products = Refers to the availability of alternative products Bargaining Power Of Suppliers = Refers to the ability of suppliers to negotiate better prices or terms Competitive Rivalry Among Existing Competitors = Refers to the intensity of competition among firms Threat Of New Entrants = Refers to the ease with which new firms can enter the market

Match the following Porter's Five Forces components with their descriptions:

Threat of New Entrants = New capacity and the desire to gain market share Bargaining Power of Suppliers = Ability of suppliers to influence prices Threat of Substitute Products = Substitutes that attract customers away Competitive Rivalry Among Existing Competitors = Competition among existing companies

Match the following barriers to entry with their descriptions:

Economies of scale = Minimum size required to operate efficiently Customer loyalty = Difficulty in converting customers to a new brand Large capital requirements = High investments required to start a business Government policies = Regulations that restrict new entrants

Match the following Porter's Five Forces components with their examples from the airline industry:

Threat of New Entrants = High upfront investments to start an airline company Bargaining Power of Suppliers = fuel suppliers negotiating prices Threat of Substitute Products = train travel as an alternative to flying Competitive Rivalry Among Existing Competitors = price wars among airline companies

Match the following components of Porter's Five Forces with their effects on the industry:

Threat of New Entrants = Decreased profitability due to increased competition Bargaining Power of Suppliers = Higher production costs due to supplier dominance Threat of Substitute Products = Reduced demand due to alternative products Competitive Rivalry Among Existing Competitors = Lower prices and higher advertising expenses

Match the following components of Porter's Five Forces with their impact on profit potential:

Threat of New Entrants = Reduced profit potential due to increased competition Bargaining Power of Buyers = Lower prices due to buyer negotiations Threat of Substitute Products = Reduced profit potential due to substitutes Competitive Rivalry Among Existing Competitors = Reduced profit potential due to intense competition

Match the following components of Porter's Five Forces with their industry attractiveness:

Threat of New Entrants = Lower attractiveness due to increased competition Bargaining Power of Suppliers = Lower attractiveness due to supplier dominance Threat of Substitute Products = Lower attractiveness due to substitute products Competitive Rivalry Among Existing Competitors = Lower attractiveness due to intense competition

Match the following components of Porter's Five Forces with their impact on market share:

Threat of New Entrants = Loss of market share due to new competitors Bargaining Power of Suppliers = Reduced market share due to high production costs Threat of Substitute Products = Loss of market share due to substitutes Competitive Rivalry Among Existing Competitors = Market share fluctuations due to competition

Match the following components of Porter's Five Forces with their influence on industry dynamics:

Threat of New Entrants = Increased competition and price pressure Bargaining Power of Suppliers = Influence on production costs and pricing Threat of Substitute Products = Influence on product development and innovation Competitive Rivalry Among Existing Competitors = Influence on marketing and advertising strategies

Study Notes

Rivalry among Existing Competitors

  • Rivalry is high when there are many competitors of similar size and power, slow industry growth, and low switching costs for consumers.
  • A low concentration ratio indicates high rivalry, leading to intense competition, advertising, and price wars.
  • Barriers to exit, such as long-term loan agreements and high fixed costs, can also increase rivalry.

Example: Airline Industry

  • The airline industry in the US is extremely competitive due to low-cost carriers, tight regulation, high fixed costs, and low switching costs.
  • Many players in the industry are similar in size, leading to fierce competition.

Porter's Five Forces

  • The framework consists of five forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and rivalry among existing competitors.
  • The collective strength of these forces determines the profit potential of an industry and its attractiveness.

Threat of New Entrants

  • The threat of new entrants depends on the barriers to entry, such as economies of scale, product differentiation, brand identity, access to distribution channels, capital requirements, and government policies.
  • The threat is lower when these barriers are high.

Example: Airline Industry

  • The threat of new entrants in the airline industry is low to medium due to the high upfront investments required to start an airline company.

Assess your knowledge of Porter's Five Forces framework.

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