BCOR 2304 Final Exam QUESTIONS AND CORRECT
ANSWERS (VERIFIED AND WELL DETAILED
ANSWERS) LATEST UPDATE 2024/2025
industry - ✔✔group of incumbent firms facing the same set of suppliers and buyers
products in the industry - ✔✔compete directly by influencing demand (changes in
value or price of a firm's product affect demand for competing firms' products) and are
functionally similar (ex - air conditioners cool the air differently from fans, which are a
substitute)
Porter's Five Forces - ✔✔threat of entry, threat of substitute, supplier power, buyer
power, and competitive rivalry
How the five forces reduce the profitability of an industry: - ✔✔the stronger that
each of these forces is, the more limited the ability of established companies to raise
prices and earn greater profits within their industry (weak force may be an opportunity,
strong force may be a threat, strength of forces may change)
Key Assumptions of Porters five forces: - ✔✔1) viewed from POV of existing firms in
the industry
2) industry is being analyzed, not an individual firm
3) snapshot in time
Risk of New Entrants - ✔✔1) economies of scale
2) brand loyalty
3)absolute cost advantages
4) customer switching costs for buyers
, 5) government regulation
Rivalry among established companies: - ✔✔1) industry competitive structure (# and
size distribution of companies)
2) demand conditions
3) cost conditions
4) height of exit barriers (economic dependence on industry, write-off investment in
assets, bankruptcy regulations)
Bargaining Power of Buyers - ✔✔1) buyers are dominant
2) buyers purchase in large quantities
3) industry dependent on buyers
4) low switching costs for buyers
5) buyers can purchase from several supplying companies at once
6) buyers can threaten to enter industry themselves
Bargaining power of suppliers: - ✔✔1) product supplies are vital to industry and has
few close substitutes
2) industry is not an important customer to suppliers
3) high switching costs for companies in industry
4) suppliers can threaten to enter industry
5) companies in industry cannot threaten to enter supplier's industry by making their
own inputs
Threat of substitutes: - ✔✔1) existence of close substitutes are a strong competitive
threat
ANSWERS (VERIFIED AND WELL DETAILED
ANSWERS) LATEST UPDATE 2024/2025
industry - ✔✔group of incumbent firms facing the same set of suppliers and buyers
products in the industry - ✔✔compete directly by influencing demand (changes in
value or price of a firm's product affect demand for competing firms' products) and are
functionally similar (ex - air conditioners cool the air differently from fans, which are a
substitute)
Porter's Five Forces - ✔✔threat of entry, threat of substitute, supplier power, buyer
power, and competitive rivalry
How the five forces reduce the profitability of an industry: - ✔✔the stronger that
each of these forces is, the more limited the ability of established companies to raise
prices and earn greater profits within their industry (weak force may be an opportunity,
strong force may be a threat, strength of forces may change)
Key Assumptions of Porters five forces: - ✔✔1) viewed from POV of existing firms in
the industry
2) industry is being analyzed, not an individual firm
3) snapshot in time
Risk of New Entrants - ✔✔1) economies of scale
2) brand loyalty
3)absolute cost advantages
4) customer switching costs for buyers
, 5) government regulation
Rivalry among established companies: - ✔✔1) industry competitive structure (# and
size distribution of companies)
2) demand conditions
3) cost conditions
4) height of exit barriers (economic dependence on industry, write-off investment in
assets, bankruptcy regulations)
Bargaining Power of Buyers - ✔✔1) buyers are dominant
2) buyers purchase in large quantities
3) industry dependent on buyers
4) low switching costs for buyers
5) buyers can purchase from several supplying companies at once
6) buyers can threaten to enter industry themselves
Bargaining power of suppliers: - ✔✔1) product supplies are vital to industry and has
few close substitutes
2) industry is not an important customer to suppliers
3) high switching costs for companies in industry
4) suppliers can threaten to enter industry
5) companies in industry cannot threaten to enter supplier's industry by making their
own inputs
Threat of substitutes: - ✔✔1) existence of close substitutes are a strong competitive
threat
