Exam 3: Evaluating the External Environment

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

New entrants are more likely to join an industry if:

As buyers, large companies like Walmart have the power to insist on price concessions because their sales volumes are so high.

The likelihood of new entrants joining an industry is low if switching costs are high because:

During an economic crisis credit markets typically loosen their requirements.

Rivalry between competitors of an industry tends to be fierce when:

Why is understanding the nature of strategic groups within an industry important?

Suppliers tend to be powerful if the supplier's industry is concentrated.

Concentrated industries differ from fragmented industries in that in concentrated industries:

Bitter rivalry between an industry's competitors can lead to increase in prices of their products or services, thereby harming consumers.

_____ is one of the five forces of Michael Porter's five forces analysis.

How is the strategic groups analysis different from Porter's five forces analysis?

Which of the following is an example of backward vertical integration?

Forward vertical integration involves a buyer entering the industry that it purchases goods or services from.

Suppliers tend to be less powerful if there are no effective substitutes for what the supplier group provides.

Factors in the general environment can have different effects depending on the industry type.Give two examples.