Year 12 Business Studies: Five Forces Analysis

What effect does an increase in the number of competitors in an operating area have on a business?

• It decreases the threat to the business.

• It increases the threat to the business.

• It has no effect on the business.

• It guarantees higher profits for all businesses.

Why might competitors that are financially powerful and aggressive pose a greater threat?

• They are more likely to take aggressive marketing tactics such as lowering prices.

• They tend to ignore market trends.

• They avoid competition altogether.

• They focus only on customer service.

What happens to the bargaining power of customers when there are fewer buyers in the market?

• The bargaining power of customers becomes greater

• The bargaining power of customers becomes smaller

• The bargaining power of customers remains the same

• The bargaining power of customers disappears

How does the amount of information buyers have about an industry affect their bargaining power?

• More information increases their bargaining power

• More information decreases their bargaining power

• Information has no effect on bargaining power

• Less information increases their bargaining power

Why might mechanics be able to overcharge customers who do not know anything about cars?

• Because the customers have less information about the industry

• Because the customers are highly dependent on cars

• Because there are many buyers in the market

• Because the industry is very attractive

Why does a high cost of switching to another service provider reduce your bargaining power?

• Because it makes it expensive and difficult to leave your current provider.

• Because it increases your monthly plan fee.

• Because it allows you to negotiate better deals.

• Because it gives you more options for service providers.

Which of the following is a factor that affects the bargaining power of suppliers in a market?

• The number of suppliers in the market

• The number of customers in the market

• The price of finished goods

• The marketing strategy of competitors

If a company finds it easy to switch to another supplier, what does this indicate about the bargaining power of the current supplier?

• The supplier has low bargaining power

• The supplier has high bargaining power

• The supplier controls the market price

• The supplier is the only option available

Which of the following is a factor to consider when assessing the threat of new entrants in an industry?

• What are capital requirements of entering the industry?

• How many substitutes are there in the market?

• How sensitive are your customers to prices?

• How dependent are you to suppliers?

Which of the following best describes a way to measure the threat of substitutes?

• How relative performance of substitute?

• How many buyers are there in the market?

• How strong and capable is your business?

• Does your business have economies of scale?