MGMT 4513 FINAL EXAM STUDY GUIDE
Mission - Answer -statement explaining why a company exists
Vision - Answer -Crystallization of what leaders want firm to be
Strategic Plan - Answer -How to beat present and potential competitors
Stakeholders - Answer -individuals and groups who can affect, and are affected by, the
strategic outcomes achieved and who have enforceable claims on a firm's performance
Capital Market Stakeholders - Answer -Shareholders
Major suppliers of capital.
Expect the firm to preserve and enhance the wealth they have entrusted to it
Product Market Stakeholders - Answer -Primary Customers- demand reliable products
at low prices
Suppliers- seek loyal customers willing to pay highest sustainable prices for goods and
services
Host Communities- want companies willing to be long-term employers and providers of
tax revenues while minimized demands on public support services
Unions- want secure jobs and desirable work conditions
Organizational Stakeholders - Answer -Employees- expect a dynamic, stimulating and
rewarding work environment
Managers
Non-managers
General Environment - Answer -Focused on the future.
Little ability to predict them
Even less ability to control them
Can vary across industries
Industry environment - Answer -focused on factors and conditions influencing a firm's
profitability within an industry
Competitor environment - Answer -focused on predicting the dynamics of competitors'
actions, responses and intentions
General Environment Examples - Answer -Demographic
Sociocultural
Political/Legal
Technological
Economic
Global
,Industry Environment - Answer -Threat of new entrants
Power of suppliers
Power of buyers
Product Substitutes
Intensity of Rivalry
Porter's Five Forces Model of Industry Competition - Answer -Potential Entrants (threat
of new entrants)
Buyers (bargaining power of buyers)
Suppliers (bargaining power of suppliers)
Substitutes (threat of substitute products and services)
Threat of New Entrants - Answer -profits of established firms in the industry may be
eroded by new competitors
Threat of new entrants: Barriers to entry - Answer -High barriers of entry in an industry
reduces threat of new entrants:
Economics of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of scale
Government policy
Expected retaliation
Barriers to Entry - Answer -Economics of scale: marginal improvements as it
incrementally increases its size
Product differentiation - Answer -unique products
customer loyalty
products at competitive prices
Capital requirements - Answer -physical facilities
inventories
marketing activities
availability of capital
Switching costs - Answer -one-time customers incur when they buy from a different
supplier
new equipment
retraining employees
psychic costs of ending a relationship
Access to distribution channels - Answer -stocking or shelf space
, price breaks
cooperative advertising allowances
cost disadvantages independent of scale - Answer -proprietary product technology
Favorable access to raw materials
Desirable locations
Government policy - Answer -licensing and permit requirements
deregulation of industries
Expected retaliation - Answer -responses by existing competitors may depend on a
firm's present stake in the industry
The Bargaining Power of Buyers - Answer -A buyer group is powerful when
it is concentrated or purchases large volumes relative to seller sales
The products it purchases from the industry are standard or undifferentiated
The buyer faces few switching costs
It earns low profits
The buyers pose a credible threat of backward integration
The industry's product is unimportant to the quality of the buyer's products or services
Buyers threaten an industry - Answer -force down prices
Bargain for higher quality or more services
Play competitors against each other
The bargaining power of suppliers - Answer -Suppliers can exert power by threatening
to raise prices or reduce the quality of purchased goods and services
A supplier group is powerful when - Answer -The supplier group is dominated by a few
companies and is more concentrated than the industry it sells to
The supplier group is not obliged to contend with substitute products for sale to the
industry
The industry is not an important customer of the supplier group
The supplier groups products are differentiated or it has built up switching costs for the
buyer
Threat of substitute products - Answer -this increases when:
Buyers face few switching costs
The substitute product's price is lower
Substitute product's quality and performance are equal to or greater than the existing
product
Threat of substitute products - Answer -is reduced when differentiated industry
products that are valued by customers
The intensity of rivalry among competitors in an industry - Answer -Price competition
Mission - Answer -statement explaining why a company exists
Vision - Answer -Crystallization of what leaders want firm to be
Strategic Plan - Answer -How to beat present and potential competitors
Stakeholders - Answer -individuals and groups who can affect, and are affected by, the
strategic outcomes achieved and who have enforceable claims on a firm's performance
Capital Market Stakeholders - Answer -Shareholders
Major suppliers of capital.
Expect the firm to preserve and enhance the wealth they have entrusted to it
Product Market Stakeholders - Answer -Primary Customers- demand reliable products
at low prices
Suppliers- seek loyal customers willing to pay highest sustainable prices for goods and
services
Host Communities- want companies willing to be long-term employers and providers of
tax revenues while minimized demands on public support services
Unions- want secure jobs and desirable work conditions
Organizational Stakeholders - Answer -Employees- expect a dynamic, stimulating and
rewarding work environment
Managers
Non-managers
General Environment - Answer -Focused on the future.
Little ability to predict them
Even less ability to control them
Can vary across industries
Industry environment - Answer -focused on factors and conditions influencing a firm's
profitability within an industry
Competitor environment - Answer -focused on predicting the dynamics of competitors'
actions, responses and intentions
General Environment Examples - Answer -Demographic
Sociocultural
Political/Legal
Technological
Economic
Global
,Industry Environment - Answer -Threat of new entrants
Power of suppliers
Power of buyers
Product Substitutes
Intensity of Rivalry
Porter's Five Forces Model of Industry Competition - Answer -Potential Entrants (threat
of new entrants)
Buyers (bargaining power of buyers)
Suppliers (bargaining power of suppliers)
Substitutes (threat of substitute products and services)
Threat of New Entrants - Answer -profits of established firms in the industry may be
eroded by new competitors
Threat of new entrants: Barriers to entry - Answer -High barriers of entry in an industry
reduces threat of new entrants:
Economics of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of scale
Government policy
Expected retaliation
Barriers to Entry - Answer -Economics of scale: marginal improvements as it
incrementally increases its size
Product differentiation - Answer -unique products
customer loyalty
products at competitive prices
Capital requirements - Answer -physical facilities
inventories
marketing activities
availability of capital
Switching costs - Answer -one-time customers incur when they buy from a different
supplier
new equipment
retraining employees
psychic costs of ending a relationship
Access to distribution channels - Answer -stocking or shelf space
, price breaks
cooperative advertising allowances
cost disadvantages independent of scale - Answer -proprietary product technology
Favorable access to raw materials
Desirable locations
Government policy - Answer -licensing and permit requirements
deregulation of industries
Expected retaliation - Answer -responses by existing competitors may depend on a
firm's present stake in the industry
The Bargaining Power of Buyers - Answer -A buyer group is powerful when
it is concentrated or purchases large volumes relative to seller sales
The products it purchases from the industry are standard or undifferentiated
The buyer faces few switching costs
It earns low profits
The buyers pose a credible threat of backward integration
The industry's product is unimportant to the quality of the buyer's products or services
Buyers threaten an industry - Answer -force down prices
Bargain for higher quality or more services
Play competitors against each other
The bargaining power of suppliers - Answer -Suppliers can exert power by threatening
to raise prices or reduce the quality of purchased goods and services
A supplier group is powerful when - Answer -The supplier group is dominated by a few
companies and is more concentrated than the industry it sells to
The supplier group is not obliged to contend with substitute products for sale to the
industry
The industry is not an important customer of the supplier group
The supplier groups products are differentiated or it has built up switching costs for the
buyer
Threat of substitute products - Answer -this increases when:
Buyers face few switching costs
The substitute product's price is lower
Substitute product's quality and performance are equal to or greater than the existing
product
Threat of substitute products - Answer -is reduced when differentiated industry
products that are valued by customers
The intensity of rivalry among competitors in an industry - Answer -Price competition
