U5 - Ch.3 - Competitive Strategies and Business Processes

Question 1

Explain the Productivity Paradox

Answer 1

Productivity doesn’t increase although technological advancement would make it seem it should.

Question 2

What is a value chain?

Answer 2

Chain of activities that produce value in a business.

Question 3

What’s the difference between primary and support activities?

Answer 3

Primary activities add direct value to a business (marketing and sales), while secondary/support activities include stuff that doesn’t add direct value but are still necessary in a business (accounting).

Question 4

What is Porter’s Five Forces Model and how is it used?

Answer 4

Used to assess an industry structure. And it aims to state the five competitive forces determining the profitability of a business in a particular industry.

1. Bargaining power of customers
2. Threat of substitutions
3. Bargaining power of suppliers
4. Threat of new entrants
5. Rivalry among existing firms