Exam 2 Topic 3 Review Flashcards
(124 cards)
1
Q
Why do firms conduct external environmental assessments? uncover _____and _________
A
threats and opportunities
2
Q
Why do firms conduct external environmental assessments? see if above normal _________ are likely
A
profits
3
Q
Why do firms conduct external environmental assessments? better understand _____________ in a landscape
A
the nature of competition
4
Q
Why do firms conduct external environmental assessments? Make more informed __________
A
strategic choices
5
Q
What are the three main landscapes to analyze?
A
- general/ macro factors
- industry factors (Porter’s 5 forces)
- competitive set forces
6
Q
Goal of strategy is to push down __________
A
5 forces
7
Q
What are opportunities?
A
external factors that can lead to growth or expansion
8
Q
the following are examples of what? emerging markets, changing customer needs, or a niche market that is not yet filled
A
opportunities
9
Q
the following are examples of what? new regulations, economic downturn, competitor innovations, bad public relations, or demand decreasing
A
threats
10
Q
What are threats
A
external factors that can negatively impact a business or its ability to create value
11
Q
which landscape provides the broadest analysis of an environment
A
general/ macro factors
12
Q
general/ macro factors _________ (are or are not) industry specific
A
are not
13
Q
what are 6 factors that transcend industry boundaries ( fall under general/ macro factors
A
- demographic
- economic
- political/ legal
- sociocultural
- technological
- global
14
Q
why are general/ macro factors the broadest external analysis formed?
A
transcends industry boundaries (relevant to multiple industries)
15
Q
Putting people into an identifiable group falls under what factor of the general/ macro landscape
A
demographic
16
Q
Interest rates, personal savings rate, inflation, wage rates, and household debt falls under what factor of the general/ macro landscape
A
economic
17
Q
regulations, tariffs, compliance, tax, and legal battles fall under what factor of the general/ macro landscape
A
political/ legal
18
Q
want, demand, need, and desire fall under what factor of the general/ macro landscape
A
socio cultural
19
Q
innovation and automation fall under what factor of general/ macro landscape
A
technological
20
Q
climate change, tourism, larger storms, rising sea levels fall under what factor of general/ macro landscape
A
global
21
Q
use of technology falls under what factor of general/ macro landscape
A
socio cultural
22
Q
global forces can be either __________ or ____________
A
man made; mother nature
23
Q
sociocultural forces involve _______ needs vs _______ needs
A
specific vs general
24
Q
what is an industry?
A
a group of firms producing products that are close substitutes
25
What does a P5F analysis do
asses an industry and determine how successful
26
The P5F Model expands the arena for competitive analysis beyond focusing on firms that are _________ competitors
DIRECT
27
what does P5F stand for
Porter's Five- Forces
28
what are the 5 forces directly responsible for profit destruction
- bargaining power of
- suppliers, bargaining - power of buyers
- threat of new entrants
- threat of substitute products or services
- middle: rivalry among existing competitors
29
How many industries is a firm in?
at least 1 but can have more than 1
30
Industry performance impacts __________ performance
firm
31
What analysis focuses on multiple companies
Industry Analysis
32
If you compete in 3 industries (like Walmart) how many P5Fs should you do
3
33
The 5 forces are directly responsible for __________
profit destruction
34
____________ are responsible for identifying the forces and developing viable, value- creating, long-term responses to this destruction
managers
35
Threat of New Entrants = __________________ + __________________
Barriers to Entry +Expected Return
36
Is P5F a firm analysis
no- industry analysis
37
what is the acronym to remember threat of new entrants
BEER
38
new entrants bring additional _________ and don't always bring new ___________-
supple; demand
39
what evaluates how easily new companies can enter the market
threat of new entrants
40
what can reduce the threat of of new entrants
high entry barriers (cost, regulations)
41
Economies of scales (EoS) is purely a _________ argument
cost
42
Economies of Scale resides on the _____________ (balance sheet or income statement)
income statement
43
what kind of cost implications does economies of scale deal with
direct and fixed costs
44
Is commoditization or differentiation price sensitive
commoditization
44
if an industry is 100% commoditized then price matter _______ and brand matters _________
100%; 0%
45
If an industry is 100% differentiated then price matter __________ and brand matters _________
0%; 100%
46
differentiation in the ____________ along with switching costs
the industry
47
What are the three ways to calculate switching costs
- time
- money
- uncertainty
48
what happens to prices when new entrants bring additional supply but not demand
prices go down
49
what are switching costs
1 time costs incurred by a buyer to switch to a new provider
50
Economies of Scale. Differentiation in industry + switching costs, switching costs, capital requirements, issues independent of scale and government regulation all fall under which of the five forces
threat of new entrants
51
Are switching costs due to loyalty?
No
52
Capital requirements are what kind of argument? balance sheet or income statement
balance sheet
53
what accounts does capital requirements deal with
PPE and inventory
54
What is the difference between differentiation in the industry and differentiation of a business model
industry deals with industry-level effect and business model deals with firm-level effect
55
_______ switching costs discourage customers from switching from one product provider to another
high
56
High capital needs create a ___________ barrier
financial
57
knowledge, reputation, distribution, access to labor, and access to raw materials have to do with which barrier to entry
issues independent of scale
58
licensing and permits, compliance costs, trade restrictions and tariffs have to do with which barrier to entry
governmental regulation
59
what are incumbents
existing providers in industry
60
what is low alternative use
what could you even do with PPE on my BS? could I convert it to something else or what
61
what is retaliation
willful commitment of time, resources and talent for sole purpose of deterring entry (keeping entrants out)
62
who does retaliation (incumbents or entrants)
incumbents
63
bargaining power of suppliers is how _________ suppliers are
powerful
64
powerful suppliers can ________ costs
increase
65
is labor considered a supply in the bargaining power of suppliers
yes
66
If the industry growth rate is low should incumbents retaliate or no
retaliate
67
If the industry growth rate is high should incumbents retaliate
no
68
Bargaining power of suppliers assesses how much power suppliers have over the ________ and _______ of inputs
price; quality
69
when suppliers are few/ offer unique resources, they hold more ___________ which can drive up ____________ for businesses
power; costs
70
bargaining power of buyers looks at the influence _________ have on pricing and quality
customers
71
when customers have many options or are well-informed, their power _________ potentially pushing prices ___________ and reducing ______________
increases; down; profitability
72
threat of substitute products or services considers the risk of
customers switching to alternatives
73
substitutes lie _________ industry
outside
74
three things to consider in substitute viability
- quality
- ease of use
- cost/ price
75
when substitutes are readily available and affordable, they ______ pricing power and _________ market share for business
limit; reduce
76
if fixed costs are high, retaliation is what
high
77
what explains the relationship between: fixed costs, variable costs, average cost per unit, the common-size income statement and sales prices
Economies of scale
78
Can new entrants match low prices of incumbents?
Yes, but not at same profit
79
we would say say the industry is __________ divided if there are no large players/ providers
proportionately
80
when 90% of an industry is controlled by one or two companies we would say the industry is _____________ divided
disproportionately
81
When is there higher switching costs: when goods are highly commoditized or when goods are highly differentiated
differentiated
82
Which of the following are considered supplies in the buying power of suppliers: labor, working capital, raw materials
all
83
are capital requirements always a barrier to entry?
no it depends on the industry
84
what test is used to see when retaliation is needed
5 part test
85
Supplier has more or less power when:
- what is getting supplied is differentiated
-Few or one supplier
-Low ratio of suppliers to industry
-No ability to substitute supply
-Suppliers have ability to forward integrate
More
86
What are the 5 tests for BPS
1. is it differentiated or not
2. few suppliers
3. ratio of supplier to the industry
4. ability or not to substitute a supply
5. the ability of a supplier to forward integrate
87
Suppliers have more power when supply is differentiated or commoditized? /
differentiated
88
one/ few suppliers gives bargaining power to ___________
suppliers
89
high ratio of suppliers to the industry means what
high numbers of suppliers compared to buyers
90
a high ratio of suppliers means what for suppliers bargaining power
no bargaining power
91
No ability to substitute ________ the suppliers bargaining power
increases
92
what is forward integration
ability of a supplier to sell directly to customers themselves
93
the ability of a supplier to sell directly to customers themselves (forward integration) ___________ bargaining power of suppliers
increases
94
The buyer has _________ power when:
- High commoditization
- Few buyers
- Low ratio of buyers to industry
- Informed buyers
- BUY in volume - yes…can receive discounts
- Ability of buyer to backward integrate
more
95
if an industry is commoditized the buyer will have ________ power
more
96
what is backward integration
when buyer can take control of the production process (ex: retailer starting to produce its own brand of products)
97
ability to backward integrate _______ buyer power
increases
98
a low ratio of buyers to the number of supplier ________ buyer power
increases
99
a higher ratio of buyer to the number of supplier ____________ buyer power
reduces
100
If buyers buy in volume their bargaining power ________
increases
101
Do substitutes perform the same function as the industry?
yes they have to
102
Can substitutes kill an industry?
YES
103
intense rivalry typically leads to __________
price war
104
Does intensity/ threat of rivalry take into account your cost structure?
No
105
What does intense rivalry do to profit margins
erodes margins
106
why do price wars erode margins?
cost structure doesn't drop at same rate as prices
107
what is the question you ask about those in your competitive set
who will take away my revenue?
108
Are all providers in an industry are part of a competitive environment?
No
109
_________ threat/ intensity of rivalry when:
-Low differentiation(high commoditization) more rivalry
-High fixed costs…higher need to cover
-Supply exceeds demand (oversupply)
-high exit barriers
high
110
What is cyclical oversupply?
excess supply linked to the economic cycle
111
is cyclical oversupply temporary or long-term
temporary- resolves when economy improves
112
what is chronic oversupply
persistent excess supply that doesn't depend on the economy
113
is chronic oversupply temporary or long-term
long-term as it continues regardless of economic conditions
114
under competitive forces one of the questions is as follows: how will the major competitors ______________ to current forces and competitive industry trends
most likely to respond
115
under competitive forces one of the questions is as follows: how _________- are the major competitors to our strategies and vice versa?
vulnerable
116
under competitive forces one of the questions is as follows: how are the _____________ relative to major competitors?
products or services positioned
117
under competitive forces one of the questions is as follows: what ________ have resulted in our present competitive position in this industry?
key factors
118
under competitive forces one of the questions is as follows: how have the ____________ of major competitors in the industry changed over recent years? Why have these rankings changed that way?
sales and profit rankings
119
In competitive forces we want to _________ competitors
identify
120
what do we want to know about major competitors
strengths and weaknesses, objectives and strategies
121
_____________ argument is fixed attributes that do not change regardless of the market or competitive landscape
absolute
122
_____________ argument emphasizes competitive positioning and market dynamics, highlighting how a firms performance is affected by competitors' actions
relative
123
