Exam 3: Industry Analysis: the Fundamentals

If an industry earns a return on capital in excess of its cost of capital:

Industries exhibit strong differences, such as the chewing tobacco industry and the Chicago grain market:

Value is defined as the difference between the cost of supplying a product or service and the actual price paid by the customer for it, but not all value translates into profit.

Which characteristics differentiate industries such as, on the one hand, aircraft manufacturers and commercial satellites, and, on the other hand, e-service and fast food industries?

An industry "direct modeling of profitability" is defined in the text as:

In an industry, the profits earned by firms are determined by:

Changing the industry structure is:

Retaliation against a new entrant may take the form of aggressive price-cutting, increased advertising, sales promotion, or vexatious litigation.

In a contestable market there does not always need to be actual competition to keep prices relatively low - just the threat of competitors entering the market.

The core of a firm's business environment is determined by:

Regarding industry concentration;

What is the relationship between macro level factors (such as economic trends or political trends) and strategy?

Understanding the competitive forces in an industry is:

Perfect competition defines an industry structure where two or three dominant firms efficiently supply the market.

"Consumer surplus" is:

Understanding the structure of the industry helps managers to work out how to make a profit in future and to possibly identify ways to change the industry structure to their advantage.

Formally scanning and analysing the external environment continuously is the best approach.

A Even pure monopolies have substitutes

Value is created when:

What should be the level of detail of key success factors?