barriers to entry correct answers obstacles a firm may face while trying to enter a market or an industry
supply-side economies of scale correct answers - Arise when a firm manufactures products in high volumes; the large volume results in a lower production cost
- Lower cost deters entry sin...
MGMT 310 Exam 2 (chapters 5-8) || with Errorless Solutions
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barriers to entry correct answers obstacles a firm may face while trying to enter a market or an
industry
supply-side economies of scale correct answers - Arise when a firm manufactures products in
high volumes; the large volume results in a lower production cost
- Lower cost deters entry since new firms won't be able to generate the same production scale at
the time of entry
demand-side economies of scale correct answers - Arise in situations where the buyers'
willingness to pay for a product increases as the number of other buyers for the industry's
product increase
- Discourages entry by reducing consumers' preference to purchase from newcomers to the
industry
switching costs correct answers fixed costs buyers encounter when they change suppliers
capital requirements correct answers Discourages entry by requiring new entrants to make large
capital expenditures for entry
incumbency advantages independent of size correct answers incumbent companies maintain cost
or quality advantages that aren't easily available to a potential rival
- advantages include: superior technology, preferential access to raw materials, government
subsidiaries
unequal access to distribution channels correct answers discourages entry because the industry is
marked by overcrowded distribution channels
restrictive government policy correct answers discourages entry due to government controls
first-mover advantages correct answers a competitive advantage that occurs when a firm is first
to offer desirable products/services that secure customer loyalty
bargaining power correct answers the pressure that a supplier or buyer can exert on a company
bargaining power of suppliers correct answers - fewer suppliers than buyers
- buyers face switching costs in changing suppliers
- no substitutes exist for what the supplier provides
- supplier can threaten to forward integrate into the buyer industry
- supplier doesn't consider the industry as one of its major customers
, bargaining power of customers correct answers - customers are concentrated or purchase in large
volumes relative to the supplier
- supplier industry's products are undifferentiated
- customers face few switching costs
- customer can potentially backwards integrate to produce supplier's product
Increase in Industry Profitability correct answers - high barriers to entry
- limited competitors
- lack of substitutes
- low buyer & supplier power
decrease in industry profitability correct answers - low barrier to entry
- many competitors
- several substitutes
- high buyer & supplier bargaining power
resource-based view of a firm correct answers theory that a firm can develop a competitive
advantage through the collection and harvesting of resources
tangible resources correct answers a firm's most recognizable resources; often includes a firm's
plant and equipment, or what it uses to manufacture products, real estate, raw materials, and
computing systems
intangible resources correct answers often include a firm's internal processes or systems, brand
names, technology, culture, and intellectual property
human resources correct answers include employees of all levels
SWOT Analysis correct answers a tool that allows managers to take a snapshot of their firm's
internal strengths and weakness as well as the opportunities and threats that are evident in the
external environment
strategic flexibility correct answers the capability to identify and react to changes in the external
environment and to mobilize internal resources to deal with those changes
competitive advantage correct answers the effect of the firm's ability to create value for its
customers that exceeds the cost of producing the product/service
value correct answers - the amount consumers are willing to pay for a product/service
- it comes from offering a lower price than that of competitors or providing a unique product
whose benefits outweigh a higher potential cost
cost leadership strategy correct answers - a strategy that aims to provide a product/service at as
low a price as possible to a broad audience
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