Chapter 6 Flashcards
What are Porter’s 5 Forces?
1- Buyers.
2- Suppliers.
3- Potential entrants.
4- Substitutes. (!)
5- Rivalry. (!)
What would happen when close substitute products exist in a market?
1- Customers might switch to alternatives due to pricing.
2- Supplier power and market attractiveness will decrease.
What are the scenarios under the condition of HIGH Substitute of New Products?
1- Other competitors have cheaper products.
2- Lower consumer switch costs.
What’s the definition of Rivalry?
Competition in the same field.
What are the main drivers of Rivalry?
The number and capability of competitors.
What are the scenarios under the condition of HIGH rivalry?
1- The number of competitors increases or they become equal in size.
2- Demand for the industry’s products declines.
What happens when rivalry is LOW?
Companies have greater power to charge higher prices and increase profits.
Discuss competitor analysis and its factors.
- Competitor Analysis is important to know where you are in the market.
The analysis helps to understand:
- Who are your competitors?
- What products do your competitors offer?
- Know your competitors’ sales tactics and strategies.
What does VRIO mean and what’s its objective?
VRIO stands for Value, rareness, imitability, and organization.
The Main Objective of VRIO analysis is to help the organization know what the most important resource a company has.
What are the organizations’ resources according to the VRIO Analysis?
1) Financial Resources.
2) Human Resources.
3) Material resources.
4) Nonmaterial resources.
What’s the difference between tangible and intangible resources?
Tangible resources are rarely a source of competitive advantage.
E.g.: Land, buildings, and machinery.
Intangible resources are usually valuable, rare, and costly to imitate.
