Strategic Groups in Industry Analysis

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Questions and Answers

What is one benefit of identifying barriers to mobility?

It protects a group from attacks by other groups. (correct)

It eliminates the bargaining power of suppliers.

It decreases the number of new entrants in the market.

It helps to increase competition among industry players.

How does the Internet affect the bargaining power of buyers?

It raises switching costs for buyers, making them loyal to suppliers.

It increases buyers' access to information, reducing their bargaining power. (correct)

It empowers end users through intermediaries in distribution channels.

It decreases information availability, empowering suppliers.

What is a disadvantage of online procurement methods for suppliers?

They limit suppliers' access to customers.

They create more opportunities for differentiation.

They increase competition among suppliers. (correct)

They reduce the bargaining power of suppliers.

In the context of competitive forces, what can online capabilities do to industry sales?

Expand industry sales through increased efficiency. Signup and view all the answers

Which of the following reflects a threat posed by new entrants due to the Internet?

Lower barriers to entry. Signup and view all the answers

What strategic insights can be derived from analyzing industry trends?

It helps in charting the future direction of firms' strategies. Signup and view all the answers

What is one way online capabilities affect the threat of substitutes?

They create more opportunities for substitution. Signup and view all the answers

How does the Internet influence the bargaining power of suppliers?

It gives suppliers easier access to more customers. Signup and view all the answers

What is one factor that increases the bargaining power of suppliers?

Suppliers sell to several industries Signup and view all the answers

What is a characteristic of substitute products?

They perform the same function as products in another industry. Signup and view all the answers

What drives intense rivalry in an industry?

Slow industry growth and many competitors Signup and view all the answers

How can buyers' product quality be affected by industry products?

When products are unique and differentiated. Signup and view all the answers

What tactic is commonly used in industry rivalry?

Price competition Signup and view all the answers

What factor can reduce the power of suppliers?

Availability of multiple suppliers Signup and view all the answers

What limits how high firms can profitably set their prices?

Attractiveness of substitute products Signup and view all the answers

What is a result of high exit barriers in an industry?

Increased market stability Signup and view all the answers

Which of the following factors is NOT considered a barrier to entry in an industry?

Brand loyalty Signup and view all the answers

What effect does product differentiation have on new entrants into an industry?

It decreases the threat of new entrants. Signup and view all the answers

Which of the following is an example of backward integration that increases buyer power?

A retailer starting to produce its own private label goods. Signup and view all the answers

What is the primary reason that buyers can exercise bargaining power?

They can purchase products in large volumes. Signup and view all the answers

In Porter’s Five Forces Model, what does the 'threat of new entrants' refer to?

The likelihood that new firms will join the industry and disrupt established companies. Signup and view all the answers

Which condition would likely make buyers' bargaining power weaker?

High switching costs for the buyers. Signup and view all the answers

How does the presence of proprietary products affect competitive forces in an industry?

It reduces buyer power by limiting alternatives. Signup and view all the answers

Which of the following characteristics signifies powerful buyer groups?

Few switching costs are involved. Signup and view all the answers

What is a primary consideration when conducting an industry analysis?

The appropriate time frame must be chosen. Signup and view all the answers

What does the five forces analysis implicitly assume?

It is a zero-sum game. Signup and view all the answers

What additional consideration extends beyond the five forces analysis?

Complementors and value net. Signup and view all the answers

Which factor is NOT typically analyzed when identifying strategic groups within industries?

Employee satisfaction ratings. Signup and view all the answers

Which assumption is true regarding firms within an industry?

No two firms are totally different. Signup and view all the answers

Why might low profit industries still be attractive to managers?

High returns can be achieved with strategic management. Signup and view all the answers

When considering quantitative factors in an industry analysis, which aspect is critical?

Actual switching costs and market share percentages. Signup and view all the answers

What is the main purpose of identifying strategic groups within industries?

To understand competitive dynamics among firms with similar strategies. Signup and view all the answers

Study Notes