1
AGEC 440 Final Questions with Answers (100% Correct
Answers)
Business Approach to SCP Answer: strategy perspective turns SCP
upside and seeks ways to make industry less competitive
What are Porter's 5 forces? Answer: based on SCP framework to assess
environmental threats or competitive market conditions
Purpose of the 5 forces Answer: develop strategies to neutralize threats
so as to seek competitive advantage
assist firm manager's a framework to analyze environmental threats
Porter's 5 Forces Answer: threat of new entrants
bargaining power of suppliers
bargaining power of buyers
threat of substitute products
rivalry among competing firms
© 2025 All rights reserved
,2
SOCIOCULTURAL TRENDS Answer: a set of beliefs shared by one
social group ex: free speech in US, ex: constitution week at tamu, ex:
letter from young about alt right group
freedom of speech Answer: first amendment rights come from virginia
declaration of independence - george mason basically reworded and
wrote it in the first amendment.
TECHNOLOGICAL TRENDS Answer: for tech companies freedom of
speech is good bc it means more posts, more $
GOVERNMENT/REGULATORY TRENDS Answer: if govt gets
involved in moral issues ex: climate change then according to
friedman, thats using force-you can't force someone to be a good
person the essence of morality is not forced
ECONOMIC TRENDS Answer: there would be a loss of social welfare
because less creativity, innovation, etc. = less business
remote environment Answer: ECONOMIC TRENDS,
GOVERNMENT/REGULATORY TRENDS, TECHNOLOGICAL
TRENDS, SOCIOCULTURAL
Task Environment Answer: focus of the 5 forces
© 2025 All rights reserved
,3
industry analysis based on industrial organization economic (SCP)
threat of entry Answer: New entrants motivated to enter and compete
due to above normal economic profits earned by existing firms
- Increases industry competition
- Reduced performance of incumbent firms
• With free entrance, performance tends to competitive levels
POTENTIAL RIVALS
Barriers to entry Answer: cost of entry by new firms relative to firms
already in the market
- high cost detours entry
- determines sustainability of above normal economic profits
-protects incumbent firm's profits
8 ENTRY BARRIERS: Answer: • economies of scale
• capital requirements
© 2025 All rights reserved
, 4
• access to distribution
• Product differentiation / brand identity
• natural cost advantages
• learning curve
• access to necessary inputs
• government policy
Barriers to
Entry: economies of scale Answer: - High cost of fixed investment
- Fixed demand and high market share of incumbents
forces entrance at sub-optimal scale → Higher cost to
new entrant
Barriers to
Entry: product differentiation Answer: - Incumbents have brand
identity and customer loyalty • New entrants face higher advertising
costs to
© 2025 All rights reserved
AGEC 440 Final Questions with Answers (100% Correct
Answers)
Business Approach to SCP Answer: strategy perspective turns SCP
upside and seeks ways to make industry less competitive
What are Porter's 5 forces? Answer: based on SCP framework to assess
environmental threats or competitive market conditions
Purpose of the 5 forces Answer: develop strategies to neutralize threats
so as to seek competitive advantage
assist firm manager's a framework to analyze environmental threats
Porter's 5 Forces Answer: threat of new entrants
bargaining power of suppliers
bargaining power of buyers
threat of substitute products
rivalry among competing firms
© 2025 All rights reserved
,2
SOCIOCULTURAL TRENDS Answer: a set of beliefs shared by one
social group ex: free speech in US, ex: constitution week at tamu, ex:
letter from young about alt right group
freedom of speech Answer: first amendment rights come from virginia
declaration of independence - george mason basically reworded and
wrote it in the first amendment.
TECHNOLOGICAL TRENDS Answer: for tech companies freedom of
speech is good bc it means more posts, more $
GOVERNMENT/REGULATORY TRENDS Answer: if govt gets
involved in moral issues ex: climate change then according to
friedman, thats using force-you can't force someone to be a good
person the essence of morality is not forced
ECONOMIC TRENDS Answer: there would be a loss of social welfare
because less creativity, innovation, etc. = less business
remote environment Answer: ECONOMIC TRENDS,
GOVERNMENT/REGULATORY TRENDS, TECHNOLOGICAL
TRENDS, SOCIOCULTURAL
Task Environment Answer: focus of the 5 forces
© 2025 All rights reserved
,3
industry analysis based on industrial organization economic (SCP)
threat of entry Answer: New entrants motivated to enter and compete
due to above normal economic profits earned by existing firms
- Increases industry competition
- Reduced performance of incumbent firms
• With free entrance, performance tends to competitive levels
POTENTIAL RIVALS
Barriers to entry Answer: cost of entry by new firms relative to firms
already in the market
- high cost detours entry
- determines sustainability of above normal economic profits
-protects incumbent firm's profits
8 ENTRY BARRIERS: Answer: • economies of scale
• capital requirements
© 2025 All rights reserved
, 4
• access to distribution
• Product differentiation / brand identity
• natural cost advantages
• learning curve
• access to necessary inputs
• government policy
Barriers to
Entry: economies of scale Answer: - High cost of fixed investment
- Fixed demand and high market share of incumbents
forces entrance at sub-optimal scale → Higher cost to
new entrant
Barriers to
Entry: product differentiation Answer: - Incumbents have brand
identity and customer loyalty • New entrants face higher advertising
costs to
© 2025 All rights reserved
