Threat of Entry (Competitive Forces, Differentiation) - Answer-- Protection due to
intangible resources, innovation, and customer service
- Risk include Erosion of Margins and Replacement
Threat of Entry (Cost Leadership) - Answer-- Protects against entry due to Economies
of Scale
- Risk include Erosion of Margins and Replacement
Power of Suppliers (Differentiation) - Answer-- protection against input prices which can
be passed to customers
Risks include Erosion of Margins
Power of Suppliers (Cost Leadership) - Answer-- Protection against increase in input
prices which can be absorbed
- Risks include Erosion of Margins
Power of Buyers (Differentiation) - Answer-- Protection against decreased sales prices
, - Are well differentiated products
- Risks, Erosion of Margins
Power of Buyers (Cost Leadership) - Answer-- Protected against decrease in sales
prices
- Can be absorbed
- Risks, Erosion of Margins
Threat of Substitutes (Differentiation) - Answer-- Protection against substitute,
differential appeal
- Risks, Replacement when face with Innovation*
Threat of Substitutes (Cost Leadership) - Answer-- Protection against substitutes
through further lower prices
- Risks, Replacement when faced with innovation
Rivalry Among Competitors (Differentiation) - Answer-- Protection ONLY if product has
enough differential appeal
- Competition focus = Price Shifts
- Risks, Increasing product features and no recovery profit
Rivalry Among Competitors (Cost Leadership) - Answer-- Protection against price wars
because lowest cost firm WINS
- Risks, lowering costs to drive value below acceptable threshold
- Focus of competition to switch to non-price attributes (enhancing a product without
cost inputs)
Economies of Scope - Answer-- Savings that come from producing 2 or more outputs
(cheaper than it would be to produce them individually)
How do Managers Increase Perceived Value or Decrease Costs? - Answer-1. Product
Features
2. Customer Service
3. Complements
Different value drivers contribute to Competitive Advantage if V > C
Red Ocean - Answer-- market space that already exists with existing industries
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