MBA 705 1-3 Exam #1 Questions with Correct Answers
What is strategy? - Plan to achieve competitive advantage
What is competitive advantage? - Creating more value than competitors
Name the two main types of competitive advantage. - Cost leadership,
differentiation
What is a business model? - How a firm makes money
What is strategic management? - Analyzing, formulating, implementing strategy
What is an industry? - Firms producing similar products/services
Why is defining an industry difficult for companies like Amazon? - Operates in
multiple industries
What is environmental scanning? - Monitoring external environment
What are the four main external forces? - Economic, technological, political/legal,
sociocultural
What is a stakeholder? - Any group affected by firm
, List Porter's Five Forces - Rivalry, threat of new entry, substitutes, buyer power,
supplier power
When is rivalry among competitors high? - Many firms, slow growth, low
differentiation
What increases the threat of new entrants? - Low barrier to entry
Give two examples of barriers to entry - High cost, strong brand loyalty
What is a substitute product? - Alternative products
When is the threat of substitutes high? - Many options and low switching cost
When do buyers have high bargaining power? - Many choices, price transparency
When do suppliers have high bargaining power? - Few suppliers, unique inputs
A market has many competitors, low growth, and similar products. Which force is
strong? - Rivalry
Customers can easily compare prices online and switch brands. Which force is
strong? - Buyer power
A company requires billions in startup cost to enter. Which force is weak? - Threat
of new entrants (low)
What is strategy? - Plan to achieve competitive advantage
What is competitive advantage? - Creating more value than competitors
Name the two main types of competitive advantage. - Cost leadership,
differentiation
What is a business model? - How a firm makes money
What is strategic management? - Analyzing, formulating, implementing strategy
What is an industry? - Firms producing similar products/services
Why is defining an industry difficult for companies like Amazon? - Operates in
multiple industries
What is environmental scanning? - Monitoring external environment
What are the four main external forces? - Economic, technological, political/legal,
sociocultural
What is a stakeholder? - Any group affected by firm
, List Porter's Five Forces - Rivalry, threat of new entry, substitutes, buyer power,
supplier power
When is rivalry among competitors high? - Many firms, slow growth, low
differentiation
What increases the threat of new entrants? - Low barrier to entry
Give two examples of barriers to entry - High cost, strong brand loyalty
What is a substitute product? - Alternative products
When is the threat of substitutes high? - Many options and low switching cost
When do buyers have high bargaining power? - Many choices, price transparency
When do suppliers have high bargaining power? - Few suppliers, unique inputs
A market has many competitors, low growth, and similar products. Which force is
strong? - Rivalry
Customers can easily compare prices online and switch brands. Which force is
strong? - Buyer power
A company requires billions in startup cost to enter. Which force is weak? - Threat
of new entrants (low)
