Threat of Entry (Competitive Forces, Differentiation) - CORRECT ANSWER --
Protection due to intangible resources, innovation, and customer service
- Risk include Erosion of Margins and Replacement
Threat of Entry (Cost Leadership) - CORRECT ANSWER - - Protects against entry due to
Economies of Scale
,- Risk include Erosion of Margins and Replacement
Power of Suppliers (Differentiation) - CORRECT ANSWER - - protection against input
prices which can be passed to customers
Risks include Erosion of Margins
Power of Suppliers (Cost Leadership) - CORRECT ANSWER - - Protection against
increase in input prices which can be absorbed
- Risks include Erosion of Margins
Power of Buyers (Differentiation) - CORRECT ANSWER - - Protection against decreased
sales prices
- Are well differentiated products
- Risks, Erosion of Margins
Power of Buyers (Cost Leadership) - CORRECT ANSWER - - Protected against decrease
in sales prices
- Can be absorbed
- Risks, Erosion of Margins
Threat of Substitutes (Differentiation) - CORRECT ANSWER - - Protection against
substitute, differential appeal
- Risks, Replacement when face with Innovation*
, Threat of Substitutes (Cost Leadership) - CORRECT ANSWER - - Protection against
substitutes through further lower prices
- Risks, Replacement when faced with innovation
Rivalry Among Competitors (Differentiation) - CORRECT 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) - CORRECT 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 - CORRECT 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? - CORRECT ANSWER -
1. Product Features
2. Customer Service
3. Complements
Different value drivers contribute to Competitive Advantage if V > C
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