Porters 5 Forces U4T1

Obstacles which potential newcomers would encounter when entering a market are called:

• Economies of scale

• Mobility Barriers

• Buying switching costs

• Barriers to entry

Which of the following is NOT an element of Porter’s Five Forces Model?

• The firm’s macroeconomic environment

• The bargaining power of suppliers

• The firm’s existing competition

• The potential competition from new entrants.

Perfect competition occurs in a market where there are too many firms each selling:

• A capital intensive product

• An identical product

• A competitive product

• A similar product

• A unique product

Which of the following is NOT an example of barriers to entry?

• Buyer switching costs

• Economies of scale

• Expected retaliation

• Licensing requirements

The bargaining power of suppliers will be high when:

• Suppliers threaten to integrate forward into the industry

• The industry is a key customer group to the supplier

• There are few buyers and many dominant suppliers

• The industry is a key customer group to the suppliers

To achieve more market power, firms can

• Raise their profit margin on prices

• Differentiate their products from the products of their rival

• Lobby the government to eliminate barriers to entry

• Advertise that they charge low prices

True of False

A major threat to longer-term profits exists when barriers to entry into an industry are high.

• True

• False

True of False

Extensive advertising can be a powerful barrier to entry into an industry.

• True

• False

True of False

IF switching costs are high for customers there is a high level of buyer bargaining power.

• True

• False

Before ‘Netflix Original’s were created, Netflix highly relied on other parties (such as Tarz, Paramount and Lionsgate) to supply movies and TV series. This is an example of which force being high?

• Rivalry among existing competitors

• Bargaining power of buyers

• Bargaining power of suppliers

• Threat of new entrants (barriers to entry)

• Threat of substitute products/services