LSUS MBA 705 questions and answers
A Supplier Group if Powerful If ✔✔Their products are differentiated
If the Five Forces are Weak ✔✔Greater the industry's profit potential
One of the Five Forces ✔✔Threat of New Entrants
PESTEL Framework ✔✔Ecological or EnvironmentalMacro-environmental Factors
✔✔Consists of the set of external conditions and forces that can influence
organizations
Focus of macro-environmental factors ✔✔At this analysis stage, focus is on the
industry, not individual firms.
PESTEL Framework ✔✔Political
Limitations of the Five Forces Model ✔✔Relationships among the rivals in an
industry are always described as adversarial.
One of the Five Forces ✔✔Threat of Substitute Products or Services
, Power of Buyers is High When ✔✔There are a few buyers and each buyer
purchases large quantities
Bargaining Power of Buyers ✔✔If buyers have greater leverage over the firms in
an industry, the firm may be forced to reduce the prices of their goods & services,
thereby reducing their profits.
Threat of New Entrants ✔✔Describes the risk of potential competitors entering
the industry
Limitations of the Five Forces Model ✔✔Assumes that competition is a zero-sum
game (amount of profit potential in an industry is fixed)
Backward Integration ✔✔Occurs when a buyer moves upstream in the industry
value chain into the seller's business.
A Supplier Group if Powerful If ✔✔It is dominated by a few companies or is more
concentrated than the industry that it supplies.
Power of Buyers is High When ✔✔Industry's products are standardized or
undifferentiated commodities.
PESTEL Framework ✔✔Legal
A Supplier Group if Powerful If ✔✔Their products are differentiated
If the Five Forces are Weak ✔✔Greater the industry's profit potential
One of the Five Forces ✔✔Threat of New Entrants
PESTEL Framework ✔✔Ecological or EnvironmentalMacro-environmental Factors
✔✔Consists of the set of external conditions and forces that can influence
organizations
Focus of macro-environmental factors ✔✔At this analysis stage, focus is on the
industry, not individual firms.
PESTEL Framework ✔✔Political
Limitations of the Five Forces Model ✔✔Relationships among the rivals in an
industry are always described as adversarial.
One of the Five Forces ✔✔Threat of Substitute Products or Services
, Power of Buyers is High When ✔✔There are a few buyers and each buyer
purchases large quantities
Bargaining Power of Buyers ✔✔If buyers have greater leverage over the firms in
an industry, the firm may be forced to reduce the prices of their goods & services,
thereby reducing their profits.
Threat of New Entrants ✔✔Describes the risk of potential competitors entering
the industry
Limitations of the Five Forces Model ✔✔Assumes that competition is a zero-sum
game (amount of profit potential in an industry is fixed)
Backward Integration ✔✔Occurs when a buyer moves upstream in the industry
value chain into the seller's business.
A Supplier Group if Powerful If ✔✔It is dominated by a few companies or is more
concentrated than the industry that it supplies.
Power of Buyers is High When ✔✔Industry's products are standardized or
undifferentiated commodities.
PESTEL Framework ✔✔Legal
