Porter's 5 Forces

Question 1

forms part of Credit Risk Rating System (CRRS) whose prime objective is to assess creditworthiness of corporate borrowers.

Answer 1

Industry and Competitive Analysis

Question 2

A borrower’s quality is assed based on its:

Answer 2

1. Financial Condition & Strategies
2. Industry Profitability, Threats, & Opportunities

Question 3

What are the porter’s 5 foces?

Answer 3

1. Rivalry among existing competitors
2. Threats of New Entrants
3. Bargaining Power of Buyers
4. Bargaining Power of Suppliers
5. Threats of Substitutes

Question 4

True or False: If rivalry among existing competitors are high, profitability high.

Answer 4

False. High Threat Low Profit; Low Threat Higher Profit

Question 5

Refers to the size of the buyer. The smaller the number, the higher the bargaining power

Answer 5

Buyer Concentration

Question 6

Refers to the price of the product versus the actual expense of buyers

Answer 6

Product cost vs Buyer’s cost

Question 7

It is the perceived uniqueness in a product

Answer 7

Differentiation

Question 8

The cost associated with switching from one company to another.

Answer 8

Switching costs

Question 9

Threat of buyer owning the producing firm or threat of supplier owning the producing firm

Answer 9

Possibility of forward integration

Question 10

Refers to how essential the product of the industry to the buyers

Answer 10

Importance of Product to Buyer

Question 11

It refers to the size of the supplier. The smaller the number, the higher the bargaining power.

Answer 11

Supplier Concentration

Question 12

It is the availability of alternative inputs for producing the industry’s products

Answer 12

Presence of Substitute

Question 13

It is whether the industry is a major buyer of the supplier’s products

Answer 13

Importance of Volume to the Supplier

Question 14

Whether supplier’s products represents an essential raw material for the industry

Answer 14

Importance of Inputs to the industry

Question 15

Refers to the cost associated with switching from one supplier to another

Answer 15

Switching costs

Question 16

Whether or not companies in the supplying industry offers differentiated products

Answer 16

Differentiation

Question 17

It is the number of players in the industry.

Answer 17

Number of competitors

Question 18

Growth demand for the product per period

Answer 18

Industry Growth

Question 19

Growth of demand for the product per period

Answer 19

Industry Growth

Question 20

Whether fixed costs account for a large fraction of the firms’ total cost

Answer 20

Fixed/Storage Cost

Question 21

Whether competing players offer differentiated products and how high is the cost to the buyers if they switch from one provider to another.

Answer 21

Differentiation/ Switching Cost

Question 22

If players differ so widely in goals and strategies

Answer 22

Diverse Competitors

Question 23

How far can a firm go to achieve success in the industry

Answer 23

High Strategic Stakes

Question 24

Factors that cause a firm to remain in the industry even when the venture is not profitable

Answer 24

Exit Barriers

Question 25

Decline in unit cost as volume per period increases

Answer 25

Economies of Scale

Question 26

Amount a potential player must raise in joining the industry

Answer 26

Capital Requirement

Question 27

The cost associated with switching from an incumbent to a new player

Answer 27

Switching Cost

Question 28

How difficult or easy for the new entrant to get its products through existing distribution channels

Answer 28

Access to Distribution

Question 29

Government agencies can limit or bar entry by requiring licenses and permits

Answer 29

Government Policy

Question 30

Transferring from the industry’s product to the product produced by substitute industry

Answer 30

Switching cost

Question 31

Whether the substitute product is better than the industry's product in terms of features and attributes

Answer 31

Performance of Substitute

Question 32

Whether the substitute product is cheaper than the industry’s product.

Answer 32

Price of Substitute

Question 33

True or False: If O>R, the outlook is positive and overall assessment is moderate growth?

Answer 33

False. Overall assessment is high growth.

Question 34

True or False: If the O=R, the outlook is moderate and the overall assessment is moderate.

Answer 34

True

Question 35

True or False: If O

Answer 35

True

Question 36

True or False: Complete information particularly regarding the operations of the account is needed to be able to come up with proper INDUSTRY CLASSIFICATION that is necessary in the preparation of Industry situationers.

Answer 36

True

Question 37

It is a type of economic taxonomy that organizes companies into industrial groupings based on similar production processes, similar products, or similar behaviour in financial markets

Answer 37

Industry Classification or Industry Taxonomy

Question 38

It is a United Nations System for classifying economic data

Answer 38

International Standard Industrial Classification of All Economic Activities (ISIC)

Question 39

It is patterned after the ISIC. It is published by the Philippine Statistics Authority (PSA).

Answer 39

Philippine Standard Industrial Classification (PSIC)

Question 40

What are the different industry classifications?

Answer 40

1. North American Industry Classification System (NAICS), 2. Standard Industrial Classification (SIC) 3. Global Industry Classification Standard (GICS)

Question 41

True or False: PSIC serves as a guide in the classification of establishments according to their economic activity.

Answer 41

True.

Question 42

As per _________ it is required to provide the PSIC of an account for its respective Credit Recommendation Memo (CRM)

Answer 42

Credit Policy

Question 43

Generate data for reports such as the Exposure Reports useful for the Management, Industry Analysis Report, Portfolio Analysis, etc.

Answer 43

PSIC

Question 44

Information necessary for industry classification

Answer 44

1. FS 2. Clients & Suppliers List 3. Identified Competitors 4. For start-ups (with no reflected revenues)

Question 45

It defines environmental and social risk as potential, financial, legal, and/ or reputational negative effect of environmental and social issues on the bank.

Answer 45

BSP Circular No. 1085

Question 46

True or False: Reports are released to the AQRMD-CRE and a copy of the report is also sent to the Lending Units via Outlook.

Answer 46

True

Question 47

Industry Analysis is under what department?

Answer 47

CMG- Credit and Market Research Department

Question 48

CMRD also provides:

Answer 48

1. Industry Report 2. Sovereign Risk Report 3. Economic Reports 4. CMG i-Watch 5. idus360

Question 49

Copies of the report is also uploaded in our

Answer 49

CMRD SharePoint Side