Question 1

According to Porter's five forces model, in which of the following examples would rivalry be considered as a weak force affecting the market?

Accepted Answer

Cancer drug manufacturers typically face weak rivalry because there are fewer competitors due to high barriers to entry, significant R&D investment, and patent protections, which limit the number of players in the market.

Question 2

According to Porter's five forces model, in which of the following situations would a supplier have the highest bargaining power?

Accepted Answer

In situation A, the supplier has the highest bargaining power because they are the only supplier of a patented material for many smartphone manufacturers, which gives them a competitive advantage and the ability to dictate terms and prices. In situation B, the niche market may limit the number of suppliers, but there may still be options for the brand. In situation C, the restaurant's limited customer base means there are few suppliers who can cater to their specific needs, but this does not necessarily mean that the suppliers have high bargaining power. In situation D, the large retailer has the advantage of buying from multiple suppliers, which reduces the bargaining power of any one supplier.

Question 3

Organizations can lock in customers by making it difficult or expensive for them to move to another product.

Accepted Answer

This strategy is known as "lock-in" and is often used in industries such as telecommunications or software where the cost of switching may be high, either financially or in terms of time and effort. By making it difficult or expensive for customers to switch to another product, organizations can retain customers and reduce the likelihood of losing them to a competitor.

Question 4

The competitive strategy of locking in customers by making it difficult for them to move to another product is called establishing high switching costs.

Accepted Answer

This is the definition of establishing high switching costs.

Question 5

Establishing alliances with other organizations increases purchasing costs, though they do provide competitive advantages.

Accepted Answer

Establishing alliances with other organizations can actually decrease purchasing costs through the leveraging of economies of scale and joint negotiations. Additionally, alliances can provide access to new markets, expertise, and resources, which can lead to competitive advantages.

Question 6

To determine if an information system delivers net savings in costs, the cost of developing and operating the information system will need to be offset against the gains in reduced errors and paper, ink, and printing costs.

Accepted Answer

To determine net savings, the cost of developing and operating the information system needs to be compared to the gains achieved through reduced errors, and savings in paper, ink, printing costs, etc.

Question 7

A new drug that has shown promise in curing skin cancer has been discovered by a famous chemical laboratory. This is the only known drug effective for treatment of this disease. The laboratory obtains a patent for the product and decides to sell it. This situation is characterized by ________.

Accepted Answer

Since the drug is the only known effective treatment for skin cancer, there are no substitutes available, leading to a low threat of substitutions.

Question 8

An information system that allows a cell phone user to limit the volume of data transferred through the Internet creates a competitive advantage as part of a product.

Accepted Answer

By providing a feature that allows users to limit their data usage, the product is more attractive to those who may have limited data plans or want to avoid exceeding their data limits. This can give the product a competitive advantage over others that do not offer this feature.

Question 9

According to Porter's five forces model, a group of grain farmers in a surplus year will have reduced ________.

Accepted Answer

In a surplus year, the supply of grain is high, which reduces the bargaining power of farmers as buyers have more options to choose from and can negotiate for lower prices. This is in line with Porter's five forces model, where bargaining power of suppliers is one of the forces affecting industry competition.

Question 10

Creating a new product to increase margin is an example of using product implementations to achieve competitive advantage.

Accepted Answer

Creating a new product with higher margins than existing products can give a company a competitive advantage by increasing profitability and market share. This is an example of using product implementations to achieve competitive advantage.

Question 11

According to Porter's five forces model, which of the following would be most affected by the threat of substitutes?

Accepted Answer

Southwest Airlines would be most affected by the threat of substitutes because the airline industry faces significant competition from alternative modes of transportation, such as trains, buses, and cars, which can serve as substitutes for air travel.

Question 12

Bargaining power of customers is likely to be the highest for markets involving ________.

Accepted Answer

The answer of Bargaining power of customers is likely to...

Question 13

According to Porter's five forces model, which of the following firms would be least affected by the threat of substitutes?

Accepted Answer

The firm that sells the only drug for a disease would be least affected by the threat of substitutes as there are no alternatives available for the customers.

Question 14

Which of the following factors determines the structure, features, and functions of an information system used in a company?

Accepted Answer

The competitive strategy of the company is the most important factor that determines the structure, features, and functions of an information system used in a company. The information system must align with the competitive strategy of the company to provide a competitive advantage over its competitors. The value of its brands, the size of the company, and the technology used by competitors are also important factors, but they are not as significant as the competitive strategy in determining the structure, features, and functions of an information system used in a company.

Question 15

Information systems create competitive advantage by providing support to a product rather than by becoming a part of the product.

Accepted Answer

Information systems can create competitive advantage both by supporting a product and by becoming an integral part of the product itself, enhancing its value and differentiation in the market.

Question 16

An organization reducing operational costs is using product implementation to achieve competitive advantage.

Accepted Answer

The answer of An organization reducing operational costs is using...

Question 17

The automobile industry is characterized by many manufacturers and intense competition among them. According to Porter's five forces model, this statement illustrates ________.

Accepted Answer

Porter's five forces model identifies five forces that shape an industry's competition: the threat of new entrants, bargaining power of suppliers, bargaining power of customers or buyers, threat of substitutes, and intensity of competitive rivalry. The statement about the automobile industry suggests that there are many manufacturers competing with each other, indicating high levels of rivalry.

Question 18

An organization that minimizes the costs associated with the delivery of its products uses a product implementation strategy to obtain competitive advantage.

Accepted Answer

A product implementation strategy focuses on developing and launching new products, while minimizing delivery costs is typically part of an operational or cost leadership strategy.

Question 19

Porter's five forces model is used to assess ________.

Accepted Answer

Porter's five forces model is primarily used to analyze the structure and competitiveness of an industry. It considers five key factors - the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, and the level of competitive rivalry - to determine the attractiveness of the industry and the potential for profitability. It is not directly focused on market share, internal competition, or product life cycles.

Question 20

Organizations cannot gain a competitive advantage by enhancing existing products or services.

Accepted Answer

Organizations can gain a competitive advantage by enhancing existing products or services through innovation, better quality, or adding new features. This can help them differentiate themselves from their competitors and meet the changing needs of their customers.

Quiz 3: Strategy and Information Systems