6 Theories that are useful to know for the Exam

Question 1

Porter’s 5 Forces..

Answer 1

looks at how profitable an industry can be which will depend on how strong each one of the forces are.

Question 2

Economies of scale is..

Answer 2

cost advantages that can occur when a company increases their scale of production

and becomes more efficient, resulting in a decreased cost-per-unit

Question 3

Product Life Cycle is the…

Answer 3

length of time from a product first being introduced to

consumers until it is removed from the market

Question 4

Boston Matrix helps you…

Answer 4

classify your organisation’s business units, product lines or products,

based on their market growth and market share

Question 5

PED/YED

Answer 5

PED is a measure of responsiveness in quantity demanded when there is a change in price.

Elastic - lower prices
Inelastic - raise prices

YED is a measure of responsiveness in quantity demanded when there is a change in income.

YED > 1 Elastic - Luxurious good

YED < 1 - Inelastic Normal good/inferior good

Question 6

Ansoff’s matrix is a…

Answer 6

strategic planning tool that provides a framework to help the owners devise strategies for future business growth