Question 1

The force from the five forces model that considers economies of scale, initial capital requirements, cost advantages relevant to company size, and lack of brand loyalty is the ________.

Accepted Answer

The force described in the question is the threat of new entrants. Economies of scale, initial capital requirements, and cost advantages are all factors that create barriers to entry and make it difficult for new companies to successfully enter the market. Additionally, the lack of brand loyalty among customers means that new entrants may not face the same obstacles in terms of customer loyalty as established companies. Therefore, the threat of new entrants is high when these factors are present.

Question 2

Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ________.

Accepted Answer

Switching costs and the number of buyers are key considerations for the bargaining power of buyers. If the items represent a relatively small portion of the cost of finished products, this may weaken their bargaining power as it may be less impactful for them to switch suppliers or negotiate lower prices.

Question 3

What are sociocultural changes and why are they important?

Accepted Answer

The answer of What are sociocultural changes and why are...

Question 4

When bargaining power of buyers is ________, the industry is ________ attractive.

Accepted Answer

The answer of When bargaining power of buyers is ________,...

Question 5

Low capital requirements, cost advantages that are not related to company size, and the lack of brand loyalty are considerations regarding the ________.

Accepted Answer

Low capital requirements make it easier for new entrants to join the industry, posing a threat to existing companies. Cost advantages that are not related to company size, such as technology or expertise, can also lower barriers to entry. Moreover, the lack of brand loyalty makes it easier for customers to switch to new entrants. These factors all contribute to the threat of new entrants.

Question 6

Changing demographics create opportunities for entrepreneurs.

Accepted Answer

Changing demographics, such as an aging population or an increase in diversity, can present new needs and demands among certain groups of people. Entrepreneurs who can identify and address these needs have the potential to create successful businesses.

Question 7

Generally, an industry is more attractive when companies in the industry have ________ switching costs to go from one supplier to another.

Accepted Answer

When the switching costs to go from one supplier to another are low, companies have the flexibility to easily change suppliers, which puts pressure on suppliers to offer competitive prices and better quality products/services. This makes the industry more attractive as buyers have more bargaining power and can negotiate better deals. Alternatively, when the switching costs are high, it becomes harder for buyers to change suppliers and they may end up sticking with their existing suppliers even if they are not offering the best products or services.

Question 8

Generally, an industry is more attractive when ________.

Accepted Answer

The answer of Generally, an industry is more attractive when...

Question 9

Products or services that may be sought as alternative solutions (e.g., purchasing tax planning software rather than paying a CPA to assist with preparing your taxes)are referred to as ________.

Accepted Answer

Substitute products are products or services that can be used in place of the original product or service, and can often be a cheaper or more convenient alternative. This means that consumers may opt to use substitute products instead of the original product or service, resulting in a loss of revenue for the original product or service provider.

Question 10

In a survey of members of Generation Z, ________ percent said they would rather save money than spend it.

Accepted Answer

According to a survey by TD Ameritrade, 57% of Generation Z members said they prefer saving money instead of spending it.

Question 11

For Under Armour, its top 10 suppliers manufacture less than half of its products. To Under Armour, supplier power is likely to be ________.

Accepted Answer

Since Under Armour's top 10 suppliers manufacture less than half of its products, it has a diverse supplier base, reducing the power that any single supplier may hold. Therefore, supplier power is likely to be low.

Question 12

The first step in assessing industry attractiveness is to paint a picture of the industry in broad strokes, assessing it from a "macro" level.

Accepted Answer

Assessing the industry from a macro level involves examining the big picture and broader trends, rather than specific details about individual companies or products. This is an important first step in determining whether an industry is attractive or not.

Question 13

Which of the following is not a question to ask to evaluate an industry?

Accepted Answer

This question is not relevant to evaluating an industry as it does not provide any significant information about the industry's potential or financial viability.

Question 14

Capital required to compete in an industry determines ________.

Accepted Answer

The capital required to compete in an industry is one of the factors determining the barriers to entry, which, in turn, affect the threat of new entrants. The higher the capital requirement, the more difficult it is for new competitors to enter the market, thus reducing the threat of new entrants. The capital requirement does not directly affect the bargaining power of buyers or suppliers or the threat of substitutes.

Question 15

The strongest of the five forces in most industries is ________.

Accepted Answer

Rivalry among existing competitors is often the strongest force because it directly affects the competitive environment and profitability within an industry. High rivalry can lead to price wars, increased marketing costs, and the need for continuous innovation.

Question 16

The growth in the number of women entering the workforce is an example of a sociocultural change.

Accepted Answer

The increase in the number of women entering the workforce represents a change in the societal and cultural norms that once dictated that women should not work outside the home. This change has been driven by factors such as increased access to education, changing attitudes towards gender roles, and greater economic opportunities for women.

Question 17

The enactment of the Affordable Health Care Act in 2010 is an example of a(n)________ change.

Accepted Answer

The Affordable Health Care Act, also known as Obamacare, was a political and legal change as it was a piece of legislation passed by Congress and signed into law by the President.

Question 18

The primary purpose of the five forces matrix is to ________.

Accepted Answer

The answer of The primary purpose of the five forces...

Question 19

The ________ the leverage suppliers of key raw materials or components have, the ________ attractive is the industry.

Accepted Answer

The greater the leverage suppliers of key raw materials or components have, the less attractive is the industry. This is because if suppliers have more leverage, they can increase prices or reduce the quality of their supplies, which can decrease profit margins for companies in the industry. Therefore, industries where suppliers have less leverage are more attractive as they have more control over their costs and profit margins.

Question 20

Porter's five forces model assesses industry attractiveness by surveying these five factors ________.

Accepted Answer

Porter's five forces model assesses industry attractiveness by examining the potential threat from new entrants, bargaining power of suppliers, bargaining power of buyers, the threat of substitutes, and the intensity of rivalry among existing firms. Option A correctly identifies these five factors. Option B is incorrect because "similar products" is not one of the forces, and Option C is incorrect because "raw materials" is not a force. Option D replaces "suppliers" with "competitors," which is not accurate according to Porter's model.

Quiz 4: Conducting a Feasibility Analysis and Designing a Business Model