BEC 5 M5: Impact of Market Influences 2

Question 1

What is the most significant force in Porter’s Five Forces.

Answer 1

Market Competitiveness (intensity of Competition)

Question 2

Cost Leadership Advantage competitive strategy

Answer 2

firms can produce and sell its products for less than its rivals.

Question 3

overall competitive advantage of a firm is determined by

Answer 3

value the firms offers minus the cost of creating that value

Question 4

differentiation advantage competitive strategy

Answer 4

firms products are perceived to be superior to those of its rival

Question 5

Five kinds of competitive strategies

Answer 5

1. cost leadership focused on broad range of buyers
2. cost leadership focused on a narrow range (niche) of buyers
3. differentiation focused on a broad range of buyers
4. differentiation focused on a narrow range (niche) of buyers
5. Best cost provider

Question 6

Best cost provider

Answer 6

has both cost leadership and differentiation leadership. Is best competitive strategy

Question 7

Value Chain Analysis

Answer 7

When managers perceive the flow of activities in their firm to produce a good/service and critique the value added to the customer by each link.

Question 8

Three forms of value chain analysis

Answer 8

1. Internal Cost Analysis: sources of profits and costs of internal costs
2. Internal Differentiation: ability to create value through product differentiation
3. Vertical Linkage: external value created by understanding the activities of suppliers and buyers.

Question 9

Four steps in the value chain analysis

Answer 9

1. Identify value activities: processes involved with designing, preparing, manufacturing and delivering the good
2. Identify cost drivers for each activity
3. develop competitive advantage by reducing cost of adding value
4. Exploit linkages among activities in value chain: synergies or connections that can create greater efficiency or value

Question 10

Porter’s four major factors that impact global competitive advantage

Answer 10

1. conditions of the factors of production: better factors=better competition
2. Conditions of domestic demand: higher the better
3. Related and supported industries: if suppliers of material input’s exist within a nation, that’s better. If more rival domestic firms are in international environment, that’s better.
4. Firm strategy, structure and rivalry: national practices and regulations on how firms are managed and organized, and intensity of competition for competing firms