MGT 499- Exam 1- Chapter 1, 2, 3 KANG CMU CMICH Study Guide Test.

MGT 499- Exam 1- Chapter 1, 2, 3 KANG CMU CMICH Study Guide Test. Opportunities - CORRECT ANSWER Elements and conditions in a company's environment that allow it to formulate and implement strategies that enable it to become more profitable Threats - CORRECT ANSWER elements in the external environment that could endanger the integrity and profitability of the company's business Industry - CORRECT ANSWER A group of companies offering products or services that are close to substitutes for each other Competitors - CORRECT ANSWER Those who serve the same basic customer needs as other businesses External Analysis - CORRECT ANSWER Identifying the industry within which a company competes Industry boundary - CORRECT ANSWER Basic customer needs that are served by a market Industry sector - CORRECT ANSWER A group of closely related industries Market segments - CORRECT ANSWER Distinct groups of customers within a market that can be differentiated from each other on the basis of their individual attributes and specific demands Industry competitive analysis - CORRECT ANSWER Begins by focusing upon the overall industry in which a firm competes before market segments or sector-level issues are considered Porter's 5 Forces Model - CORRECT ANSWER 1. Threat of new entrants 2. Bargaining power of buyers 3. Bargaining power of suppliers 4. Risk of substitutes 5. Rivalry among competitors Potential competitors - CORRECT ANSWER Companies that are not currently in an industry, but have the capability to do so if they choose Threat of new entrants - CORRECT ANSWER 1. Economies of scale 2. Brand loyalty 3. Absolute cost advantages 4. customer switching costs 5. Government regulations Economies of scale - CORRECT ANSWER Reductions in unit costs attributed to a larger output Brand Loyalty - CORRECT ANSWER Preference of consumers for the products of established companies Absolute cost advantage - CORRECT ANSWER enjoyed by incumbents in an industry and that new entrants cannot expect to match switching costs - CORRECT ANSWER costs that consumers must bear to switch from the products offered by one established company to the products offered by a new entrant Government regulations - CORRECT ANSWER Height of barriers to entry is one of the most important determinants of profit rates within an industry Rivalry among competitors - CORRECT ANSWER 1. Industry competitive structure 2. Industry demand 3. cost conditions 4. Exit Barriers Industry Competitive Structure - CORRECT ANSWER number and size distribution of companies in it, something that strategic managers determine at the beginning of the industry analysis Industry Demand - CORRECT ANSWER growing demand tends to reduce rivalry, declining demand leads to increase in rivalry Cost Conditions - CORRECT ANSWER where fixed costs are high, profitability tends to be highly leveraged to sales volume Fixed Costs - CORRECT ANSWER Must be paid before the firm makes a single sale Exit Barriers - CORRECT ANSWER economic, strategic, and emotional factors that prevent companies from leaving an industry. If exit barriers are high, companies become locked into an unprofitable industry Bargaining power of buyers - CORRECT ANSWER ability of buyers to bargain down prices charged by companies in the industry, or to raise the costs of companies in the industry by demanding better product quality and service Bargaining power of suppliers - CORRECT ANSWER the ability of suppliers to raise input prices, or to raise the costs of the industry in other ways Substitute Products - CORRECT ANSWER the products of different businesses or industries that can satisfy similar customer needs Complementors - CORRECT ANSWER Companies that sell products that add value to (complement) the products of companies in an industry, because, when used together, the use of the combined products better satisfies customer demands