Question 1

Porter's Five Forces framework is derived from principles from which academic field?
A) Economics
B) Game theory
C) Bounded rationality
D) Organizational behaviour

Accepted Answer

Porter's Five Forces framework is derived from principles of economics, specifically industrial organization economics. It is used to analyze the competitive structure of an industry and identify factors that impact the level of competition and profitability within that industry.

Question 2

Porter's Five Forces is used to analyse: Please select all that apply.
A) The industry environment
B) The competitive environment
C) The macro-environment
D) The general environment

Accepted Answer

Porter's Five Forces is a framework used to analyse the competitiveness of an industry and the factors that affect its profitability. Therefore, it is primarily used to analyse the industry and competitive environment. It does not directly consider factors in the macro-environment or general environment.

Question 3

When comparing SWOT analysis framework with Porter's Five Forces, one can say: Please select all that apply.
A) SWOT analysis is industry-specific while Porter's five forces is company-specific.
B) The five forces framework allows an organization to make informed decision about whether an industry is attractive to stay or invest in.
C) Accurately estimating future trends in the five forces should also provide an organization with an indication of future profits.
D) SWOT analysis is only undertaken from the perspective of an incumbent firm.

Accepted Answer

B) Porter's Five Forces helps to determine the attractiveness of an industry for investment or staying, while SWOT analysis mainly focuses on internal factors of a company.
C) Estimating future trends in the five forces can help organizations predict future profits.

Question 4

The more difficult it is for a new organization to enter an industry, the more intense the competition will be in the industry.

Accepted Answer

High barriers to entry typically reduce the number of competitors in an industry, leading to less intense competition.

Question 5

____ as an entry barrier is further strengthened because the major oil companies are vertically integrated. They compete in different stages of production and distribution; that is, both upstream (extraction of oil) and downstream (sale of products to the consumer).

Accepted Answer

The answer of ____ as an entry barrier is further...

Question 6

In Porter's Five Forces, supplier power is high if: Please select all that apply.
A) The supplier technology is difficult for the buying firm to understand
B) There are many suppliers to chose from
C) Switching costs are low
D) There are few suppliers to chose from

Accepted Answer

Supplier power is high when the supplier technology is difficult for the buying firm to understand (A), making it hard to switch suppliers, and when there are few suppliers to choose from (D), limiting the buyer's options.

Question 7

In Porter's Five Forces, buyer power is high if: Please select all that apply.
A) There are few substitutes
B) Switching costs are low
C) There is adequate access to information about the product
D) There are few suppliers to chose from

Accepted Answer

B) When switching costs are low, buyers can easily switch from one supplier to another, increasing their power. C) Adequate access to information about the product empowers buyers to make informed decisions, enhancing their bargaining power.

Question 8

In Porter's Five Forces, competitive rivalry will be high if: Please select all that apply.
A) There is little differentiation.
B) There are high exit barriers.
C) It is a mature market.
D) It is a fragmented industry.

Accepted Answer

Competitive rivalry is high if there is little differentiation among competitors, high exit barriers make it difficult for firms to leave the industry, and if it is a mature market with many established players competing for market share. The option D, a fragmented industry, may actually result in lower competitive rivalry as there may be fewer dominant players and more opportunities for niche players to find success.

Question 9

The supermarket industry in the UK has low competitive rivalry.

Accepted Answer

The supermarket industry in the UK has high competitive rivalry, with major players like Tesco, Sainsbury's, Asda, Morrisons, and Aldi constantly competing for market share through pricing, promotions, and product offerings.

Question 10

Which of the following statements is NOT a criticism of Porter's Five Forces? Select all that apply.
A) It is based in economic theory.
B) It is tautological.
C) Industries are difficult to define.
D) It is overly concerned with external factors.

Accepted Answer

Being based in economic theory is not a criticism of Porter's Five Forces.

Question 11

Porter suggests the use of a specific set of ________________ strategies which enable the organization to position itself in such as way as to mitigate the impact of the five forces in that particular industry.

Accepted Answer

The answer of Porter suggests the use of a specific...

Question 12

A zero-sum game is where no player can win in a particular situation.

Accepted Answer

A zero-sum game is a situation in which one player's gain results in another player's loss, so it is possible for one player to win and the other to lose.

Question 13

Porter's Five Forces has been accused of assuming a zero-sum gain.

Accepted Answer

Porter's Five Forces model assumes that industries are characterized by a zero-sum gain, meaning when one company gains a competitive advantage, another company must lose. This assumption has been criticized by some scholars who argue that industries can experience positive-sum gains, in which multiple companies can benefit and grow together.

Question 14

It has been suggested that Porter's Five Forces needs to include additional aspects to make it more meaningful. These include: Please select all that apply.
A) Complementors
B) Collaborators
C) Power of government
D) Power of Uncertainty

Accepted Answer

Including complementors (companies providing complementary goods or services) and the power of government (in terms of regulations and policies) into Porter's Five Forces model can help provide a more comprehensive analysis of the competitive landscape. Collaborators may be included as a part of the existing force of bargaining power of suppliers or buyers. Power of uncertainty is not a factor that needs to be included in Porter's Five Forces.

Question 15

What main criticism do Mintzberg and Waters (1985) have of Porter's Five Forces framework?
A) There are not enough forces.
B) The model needs to be more dynamic.
C) Emergent strategies are not considered.
D) There is little consideration of internal resources.

Accepted Answer

Mintzberg and Waters criticize Porter's Five Forces framework for not considering emergent strategies, which are unplanned actions that arise as a result of unpredictable changes in the external and internal environment. They argue that businesses do not always have a clear strategy in place, and that emergent strategies can be just as important as deliberate strategies in achieving success. Therefore, the Five Forces framework is limited in its usefulness for understanding real-world business situations.

Question 16

Porter's Five Forces is of limited use in a young industry.

Accepted Answer

Porter's Five Forces is designed to analyze competitive forces in established industries with well-defined market boundaries and established competitors. In a young industry, market boundaries are still developing and competitors are not yet well-established, making Porter's Five Forces less effective in analyzing the competitive landscape.

Question 17

Porter's Five Forces framework has been accused of being a ________________ analysis assuming relatively stable markets.

Accepted Answer

The answer of Porter's Five Forces framework has been accused...

Question 18

Brandenburger and Nalebuff (1996) developed the concept of the ___________ to represent a map of the whole game, the players in the game and their relationships with each other.

Accepted Answer

The answer of Brandenburger and Nalebuff (1996) developed the concept...

Question 19

A Lexus car and a van are in the same market.

Accepted Answer

Lexus cars are typically positioned in the luxury vehicle market, while vans are generally in the utility or family vehicle market, catering to different consumer needs and preferences.

Question 20

Strategic group analysis is useful because: Please select all that apply.
A) It helps to identify mobility barriers of moving to a different group.
B) It aids identification of strategic space.
C) It predicts a competitor's next move.
D) It aids understanding of the historical development of a particular industry.

Accepted Answer

The answer of Strategic group analysis is useful because: Please...

Quiz 3: Industry Analysis

Porter's Five Forces framework is derived from principles from which academic field?

Porter's Five Forces is used to analyse: Please select all that apply.

When comparing SWOT analysis framework with Porter's Five Forces, one can say: Please select all that apply.

The more difficult it is for a new organization to enter an industry, the more intense the competition will be in the industry.

____ as an entry barrier is further strengthened because the major oil companies are vertically integrated. They compete in different stages of production and distribution; that is, both upstream (extraction of oil) and downstream (sale of products to the consumer).

In Porter's Five Forces, supplier power is high if: Please select all that apply.

In Porter's Five Forces, buyer power is high if: Please select all that apply.

In Porter's Five Forces, competitive rivalry will be high if: Please select all that apply.

The supermarket industry in the UK has low competitive rivalry.

Which of the following statements is NOT a criticism of Porter's Five Forces? Select all that apply.