The industry and market environment

Question 1

What is the industry life cycle?

Answer 1

Introduction - new
Growth - rapid
Stakeout - begins to slow
Maturity - stable low growth
Decline

Question 2

What is Porter’s five forces used for?

Answer 2

To assess the attractiveness of an industry to determine the level of competition

Question 3

What are Porter’s five forces?

Answer 3

Threat of new entrants
Threat of substitutes
Bargaining power of suppliers
Bargaining power of customers
Competitive rivalry

Question 4

List some barriers to entry

Answer 4

Economies of scale
Brand loyalty
Patents
Government subsidies

Question 5

What makes competitive rivalry high?

Answer 5

Large no. of existing competitors
High fixed costs
Low industry growth
High exit barriers

Question 6

What makes the power of customers high?

Answer 6

Small no. large customers
Large no. competitors
Low product differentiation
High degree of price transparency

Question 7

What will cause the bargaining power of suppliers to increase?

Answer 7

Few large suppliers
Suppliers products are differentiated
Supplier has other buyers to sell to