business models

Question 1

what is the porters five forces model?

Answer 1

• used to analyse competition within an industry to determine the potential for future profits
• the more powerful the forces, the lower the profit potential

the model helps businesses to:

• better understand competitive forces in industry
• assess attractiveness of entering a new industry
• opportunities it presents for business growth

Question 2

what are the elements of the porters five forces model?

Answer 2

• intensity of rivalry
• threat of new entrants
• threat of substitutes
• power of customers
• power of suppliers

Question 3

what is meant by intensity of rivalry?

Answer 3

intensity of rivalry among competitors in an industry refers to:

• the extent to which firms within an industry put pressure on one another and limit each other’s profit potential.
• if rivalry is fierce, then competitors are trying to steal profit and market share from one another.

Question 4

what is meant by threat of new entrants?

Answer 4

• refers to the threat of new competitors pose to existing competitors in an industry
• if it is easy for new entrants to enter the market (if entry barriers are low) then this poses a threat to the firms already competing in that market

Question 5

what is meant by threat of substitutes?

Answer 5

• the availability of other products that a customer could purchase from outside an industry
• buying another similar product, meaning the original product is no longer required

Question 6

what is meant by power of customers?

Answer 6

• refers to the pressure customers can put on businesses to get them to provide higher quality, lower prices, better customer service

Question 7

what is meant by power of suppliers?

Answer 7

• suppliers have the power to influence prices & availability of resources
• most powerful when companies are dependent on them and cannot switch to other suppliers because of higher costs or lack of alternative sources

Question 8

what are the elements of the 5Cs model?

Answer 8

• customers
• company
• competition
• collaborators
• climate

Question 9

what is the ansoff matrix?

Answer 9

• used to analyse and plan strategies for growth

- helps a business to assess the risks associated with business growth

Question 10

what are the elements of the ansoff matrix?

Answer 10

• market penetration= existing product & existing market
• market development= existing products & new market
• product development= new products & existing market
• diversification= new products & new market
  »> increasing risks&raquo_space;>

Question 11

what is the Boston matrix?

Answer 11

• many businesses produce more than one product which together makes up the product portfolio or the product range
• evaluates each product in relation to its market share and its potential for market growth
• helps a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products
• designed to help with long term strategic planning

Question 12

what are the elements of the Boston matrix?

Answer 12

.
relative market share

                                                  high                low

market growth rate high stars question marks

                                  low         cash cow            dogs