5 Forces

The question business strategy wants to answer is:

• Why some products sell more than others?

• Why some companies are more profitable than others?

• Why some managers are more effective than others?

• All options are correct.

Michael Porter´s 5 Forces can be compared to:

• What some business strategists label as operational environment.

• To the conservation of forests in the 21^st century.

• To the 4Ps in Marketing.

• All options are wrong.

In order to sustain long-term profitability, you must:

• Respond tactically to competition.

• Look to what your direct competitors are doing and nothing else.

• Look beyond competitors, trying to understand how competitive forces can hurt your prospective profits.

• All options are correct.

Porter´s 5 forces framework arguments that powerful suppliers may:

• Constrain your profits if they charge lower prices

• Boost your profits if they charge higher prices

• Help your business to become profitable.

• All options are wrong.

Porter´s proposal is that by analyzing all 5 competitive forces, you:

• Gain a complete picture of what’s influencing profitability in your industry.

• Will be able to identify game-changing trends early and be in a better position to exploit them.

• Will be able to spot ways to work around constraints on profitability— or even reshape the forces in your favor.

• All options are correct.

According to Porter´s 5 forces framework, a smart business strategist:

• Wait for competitor´s moves to position his-her business.

• Position his-her business where competitive forces are the strongest.

• Position his-her business where competitive forces are the weakest.

• All options are correct.

In the 5 forces framework, Porter advocates that:

• Good industry analysis looks rigorously at the structural underpinnings of profitability.

• When doing industry analysis, appropriate time horizon is the same to all industries.

• Profitability of different industries doesn’t change over time.

• All options are correct.

In the 5 forces framework, the point of industry analysis:

• Is to declare a particular industry attractive or unattractive.

• Is to understand the underpinnings of competition.

• Is to understand root causes of profitability.

• Both options that start with “Is to understand” are correct.

In the 5 forces framework, the strength of the competitive forces affects:

• Prices and costs, but not the investment required to compete.

• Prices, costs, and the investment required to compete.

• Income statements but not balance sheets of industry participants.

• All options are wrong.

In the 5 forces framework, defining the industry in which competition actually takes place is an important:

• Initial step, being key to define as narrow as possible.

• Initial step and defining the industry broadly clarifies many differences that exist.

• Initial step not only for good industry analysis, but also for developing strategy and setting business unit boundaries.

• All options are wrong.