The Five Forces of Competition Analysis (Fill in the blanks – 10 points for each)

Time allowed: 30 minutes

1. Threat of New Entrants: Barriers to _______. These barriers are high when:

a. Economies of scale are ________.

b. Product differentiation is ________.

c. ________ Capital requirements

d. ________Switching costs

e. ________ Access to distribution channels

f. Government policy ________.

2. Bargaining Power of Suppliers increases when:

a. Suppliers are ______ and ______ in number

b. Suitable substitute products are not ________

c. Individual buyers are not _______ customers of suppliers and there are ______ of them

d. Suppliers’ goods are _______ to buyers’ marketplace success

e. Suppliers’ products create ______ switching costs.

f. Suppliers pose a threat to integrate ______ into buyers’ industry

3. Bargaining Power of Buyers increases when:

a. Buyers are _______ and ______ in number

b. Buyers purchase a ______ portion of an industry’s total _______

c. Buyers’ purchases are a _______ portion of a supplier’s annual revenues

d. Buyers can switch to another product without incurring ______ switching costs

e. Buyers pose threat to integrate _______ into the sellers’ industry

4. Threat of Substitute Products increases when:

a. Buyers face _______ switching costs

b. The substitute product’s price is _______ than the firm’s.

c. Substitute product’s quality and performance are ______ to or ______ than the existing product

5. Intensity of Rivalry Among Competitors increases when:

a. There are ________ or ________ balanced competitors

b. Industry growth ________ or _______

c. There are _______ fixed costs or ______ storage costs

d. There is a _______ of differentiation opportunities or _______ switching costs

e. When _______ exit barriers prevent competitors from leaving the industry

Interpreting Industry Analyses

|Attractive Industry |Unattractive Industry |
|________ entry barriers |________ entry barriers |
|Suppliers and buyers have ________ positions |Suppliers and buyers have ________ positions |
|________ threats from substitute products |________threats from substitute products |
|________ rivalry among competitors |________ rivalry among competitors |