Exam 4: Further Topics in Industry and Competitive Analysis

A key limitation of Porter's five forces framework is that:

In the automobile industry barriers to firms' mobility between different segments tend to be low,hence profitability differences between segments are not sustained over long periods of time.

Unlike most strategic management concepts,there is little ambiguity over what a business model is.

Deterrence is a competitive action that is more attractive to firms that compete in multiple markets than in a single market because the resulting reputation can be transferred from one market to another.

The aim of competitive intelligence is to predict competitor behavior on the basis of verifiable facts.Attempts to "get inside the heads of your rivals" are inherently unreliable and should be avoided.

Competitive intelligence involves the systematic collection and analysis of public information about suppliers and customers to aid decision making.

A company whose primary goal is profitability is likely to be a much more aggressive competitor than one whose primary goal is market share.

Industry membership is the single most important source of profitability differences between firms.

The value of a product to its consumers tends to be reduced by availability of close substitutes.Similarly,the value if a product to its consumers is reduced by the availability of complements.

Business models can assist strategy formulation for firms that are located within complex business ecosystems.

The difference between substitute and complementary products may be summarized as follows:

A strategic group is a group of firms in an industry that serving the same market segment.

Video game consoles and video games are complementary products: the availability of one increases the value of the other.In the past the suppliers of consoles were able to appropriate most of the profits generated by video game systems because:

A "winner-take-all industry" is one in which the market leader earns the great majority of the industry's total profits.

When applied to real business situations,the usefulness of game theory is enhanced by its ability to predict very different outcomes on the basis of small changes in initial conditions.

Schumpeter's process of "creative destruction" challenges Porter's five forces of competition framework by:

The "prisoners' dilemma" can be resolved by changing the payoffs in a way that induces cooperative behavior.

The main purpose of competitive intelligence is to:

In the world of business,competition and cooperation seldom coexist.

Within a business ecosystem,the migrates of value between groups f firms is the result of external forces such as technology,regulation,and changing customer preferences.Individual firms have little power to influence value migration.