Impact of External Influences (1.3.4)

Question 1

What is Porter’s Five Forces?

Answer 1

-Framework to measure the impact of competition of a business
-The forces that will determine the profitability of a firm

Question 2

What are Porter’s Five Forces used for?

Answer 2

Porter’s Five Forces is a framework used to analyze an industry’s competitive forces. It helps businesses evaluate their competitive environment, identify opportunities, and fortify their positions against threats.

Question 3

What are Porter’s Five Forces?

Answer 3

-Barriers to entry
-Buyer power
-Supplier power
-Threat of substitutes
-Rivalry

Question 4

What are Barriers to entry?

Answer 4

How easy it is for new firms to enter a market

Question 5

What is Buyer power? (Customers)

Answer 5

Buyers of goods and services want the lowest price per unit

Question 6

What is supplier power?

Answer 6

Sellers of goods and services want the highest price per unit

Question 7

What is threat of substitutes?

Answer 7

The ease of which customers can move to an alternative

Question 8

What is rivalry?

Answer 8

The level of competition a business has

Question 9

What are external influences? +eg.

Answer 9

Stuff that is out of your control. e.g PESTLE, Competition, Opportunities and Threats

Question 10

What does the impact of External change depend on?

Answer 10

• Products firm sells
  -Flexibility of workforce
  -Liquidity/ resources firm has
  -Debt form has
  -Expertise of manager

Question 11

What will the severity of Opportunities and Threats depend on?

Answer 11

-Product portfolio
-Workforce flexibility
-Liquidity
-Managerial expertise