college 1 Flashcards
1
Q
accounting measures
A
profit, liquidity, leverage, activity
2
Q
economic measures
A
cost of debit, cost of equity, WACC
3
Q
4 levels of analysis
A
general environment, industry, strategic group, individual firm
4
Q
5 forces model
A
entry, rivalry, substitutes, suppliers, buyers
5
Q
too narrow industry
A
actual competitors are labelled substitute or new entrant
6
Q
Too broad
A
actual substitutes are labelled direct competitors
7
Q
threat existing competitors
A
- Large number of competitors
- Slow or declining industry growth
- Low product differentiation (leading to low customer loyalty and switching costs)
- Industry capacity added in large increments
8
Q
High threat from new entrants when:
A
- High industry growth rate
- Low barriers of entry
o Economies of scale
o Product differentiation
o Government regulation of entry
o Retaliation of incumbent
o Proprietary technology
o Managerial know-how
o Favorable access to raw materials
o Learning-curve cost advantages
9
Q
High threat substitutes
A
- High potential of fulfilling the same need
- Low switching costs for customers
10
Q
High threat of supplier leverage
A
- Small number of firms in supplier industry
- Highly differentiated product
- Lack of close substitutes for supplier products
- Focal firm is insignificant customer of supplier
- High switching costs for focal firm
11
Q
Threat of buyer power
A
- Small number of buyers
- Low level differentiation
- Low switching costs
