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UARK MGMT 3013 Final Review UPDATED Exam Questions and CORRECT Answers $11.99
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UARK MGMT 3013 Final Review UPDATED Exam Questions and CORRECT Answers

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UARK MGMT 3013 Final Review UPDATED Exam Questions and CORRECT Answers PESTEL Model - CORRECT ANSWER - framework that categorizes and analyzes an important set of external factors that can affect a firms potential to gain and sustain a competitive advantage -*P*olitical - government, laws ...

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  • January 18, 2025
  • 24
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • MGMT 3013
  • MGMT 3013
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UARK MGMT 3013 Final Review
UPDATED Exam Questions and CORRECT
Answers
PESTEL Model - CORRECT ANSWER - framework that categorizes and analyzes an
important set of external factors that can affect a firms potential to gain and sustain a competitive
advantage
-*P*olitical - government, laws and regulation
-*E*conomic - interest rates, currency exchange, price stability
-*S*ociocultural - societies, culture, norms, values
-*T*echnological - innovations in product/service
-*E*cological - environment issues, pollution, global warming
-*L*egal - regulation changes, anti-trust laws, class action lawsuits


5 Forces Model - CORRECT ANSWER - framework that identifies 5 forces that
"determine the profit potential" of an industry and shape a firms competitive strategy; stronger
forces = lower profit
1. Threat of Entry
2. Power of Suppliers
3. Power of Buyers
4. Threat of Substitutes
5. Rivalry Among Competitors


Threat of Entry - CORRECT ANSWER - risk of potential competitors entering the
industry which lowers the industry's profit potential (Amazon)


Threat of Entry: Barriers - CORRECT ANSWER - obstacles that determine how easily
firms can enter the industry (economies of scale, network effects, customer switching costs,
capital requirement, government policy, credible threat of retail)

,Power of Suppliers - CORRECT ANSWER - pressures that industry suppliers can exert on
an industry's profit potential
-reduces a firm's ability to obtain superior performance of that by powerful suppliers can raise
the cost of production by demanding higher prices for their inputs OR reducing the quality of the
input factor or service level delivered


Factors that influence the power of suppliers? (is high when....) - CORRECT ANSWER --
suppliers' industry is more concentrated then the industry it sells to
-suppliers do not depend heavily on the industry for a large portion of their revenues
-incumbent firms face significant switching costs when changing suppliers
-suppliers offer products that are differentiated
-no readily available substitutes that the supplier offers
-suppliers can credibly threaten to forward-integrate into the industry


Power of Buyers - CORRECT ANSWER - concerns the pressure an industry's customers
can put on the producers margins in the industry by demanding a lower price or higher product
quality
-when buyers obtain price discount, it reduces the firm's top line (revenue)
-when the buyers demand higher quality and more service, it raises production costs


Factors that influence the power of buyers? (is high when....) - CORRECT ANSWER --
there are few buyers and each buyer purchases large quantities relative to the size of a single
seller
-products are standardized and undifferentiated commodities
-buyers are facing low or no switching costs
-buyers can credibly threaten to backwardly integrate into the industry


Threat of Substitutes - CORRECT ANSWER - product or services available from outside
the industry can come close to meeting the needs of current customers
-threat is high when... substitute offers an attractive price performance trade off, buyers cost pf
switching to the substitute is low

, Rivalry Among Competitors - CORRECT ANSWER - describes the intensity with which
companies within the same industry jockey for market share and profitability
exit barriers


Factors that determine the intensity of rivalry among competitors? - CORRECT
ANSWER - -*competitive industry structure*
-*industry growth rate (when high - consumer demand rises and price competition decreases and
when low or negative industry growth - competition becomes fierce)
-*strategic commitments* (if firms make commitments, rivalry among competitors are more
intense)
-*exit barriers* (when high- reduces profit potential because excess capacity still remains but
when low- its more attractive because it allows underperforming firms to exit more easily)


6th Force - Strategic Role of Complements - CORRECT ANSWER - Porter enhanced his
5 forces model by highlighting positive sum competition via firm cooperation that yields
complements


Example: 5 Forces Model - If you have two auto parts suppliers, one in Taiwan and one in Japan,
and a typhoon destroys the supplier factory in Taiwan. What happens to the bargaining power of
the supplier in Japan? How does this impact the profit potential of the automakers who rely on
this part? - CORRECT ANSWER -



Switching Costs - CORRECT ANSWER - a customer can go to different companies in the
same industry, gives companies a low profit potential


What are the elements of competitive industry structures? - CORRECT ANSWER - -the
number and size of it competitors
-firm's degree of pricing power
-type of product or service (commodity or differentiated product)
-height of entry barriers

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