Exam 2: Evaluating a Firms External Environment

BidBuy is the world's leading online auction company. When BidBuy was founded ten years ago it was the first online auction company, and it has been the leader since it was founded. Although there are other firms in the industry, BidBuy controls over 75% of the market in the United States, and three additional firms control another 20% of the U.S. market. One of the aspects of BidBuy that keeps users from changing to other online auction companies is the large user base BidBuy has built and a feedback rating system that allows buyers and sellers to rate their satisfaction with each other following each transaction. This allows users to build a reputation for honesty and trustworthiness. Sellers with a high feedback rating tend to receive more bids on their auctions and a higher price for their goods. To help facilitate payment transfers between buyers and sellers following successful online auctions, companies such as DollarDog have been founded, and these companies have facilitated growth for BidBuy. Having attained a 75% market share in the U.S., BidBuy has begun expanding internationally, opening its own sites in some countries and purchasing incumbents in others. In its international expansion, BidBuy has allowed its individual companies to customize their offerings according to the needs and desires of the countries in which they operate and when these companies are successful, BidBuy works to transfer these successful capabilities throughout the firm. -For BidBuy,services such as those offered by DollarDog that make BidBuy's services more valuable for customers who use the services of both companies are best described as

________ exist when a firm's costs rise as a function of its volume of production.

The threat of buyers is greater if the products or services that are being sold to buyers are standard and not differentiated than if the products sold to buyers are highly differentiated.

The S-C-P model assumes that any competitive advantages a firm has in an industry must benefit society.

Identify and clearly distinguish between the four strategic options available to firms in a declining industry.

The major opportunity facing firms in fragmented industries is the implementation of strategies that begin to consolidate the industry into a smaller number of firms.

In general,it is rarely the case that all five forces in the five forces framework will be equally threatening at the same time.

Firms that have either recently begun operations in an industry or that threaten to begin operations in an industry soon are considered to be ________ in the five forces framework.

________ is/are the distribution of individuals in a society in terms of age,sex,marital status,income,ethnicity,and other personal attributes that may determine buying patterns.

The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.

The products or services provided by a firm's direct competitors meet ________ customer needs in ________ ways as the product provided by the firm itself.

The values,beliefs and norms that guide behavior in a society are known as

The threat of existing competition tends to be high in an industry when firms are able to meaningfully differentiate their products.

Brand identification and customer loyalty serve as entry barriers because new entrants not only have to absorb the standard costs associated with starting production in a new industry,but also have to absorb the costs associated with overcoming an incumbent firm's differentiation advantages.

Monopolistically competitive industries consist of only a single firm.

According to Bradenburger and Nalebluff,a firm's competitors help increase the size of a firm's markets while complementors divide this market among a set of firms.

In the hardwood furniture industry,composite wood furniture would be an example of a(n)

The threat of suppliers in the legal industry can best be described as

Suppliers are a greater threat to firms in an industry when suppliers are threatened by substitutes.

Which of the following attributes makes suppliers a stronger threat?