3.1.4 Porter's Five Forces

What is the primary factor that determines the threat of new entrants in an industry?

• The number of existing competitors

• The level of capital investment required

• The bargaining power of suppliers

• The availability of substitute products

Which of the following can increase the bargaining power of suppliers?

• A large number of suppliers

• High switching costs for buyers

• Low demand for the supplier's products

• A decrease in the number of buyers

How does the threat of substitute products affect an industry?

• It increases the industry's profitability

• It decreases the industry's profitability

• It has no effect on the industry

• It stabilises the industry's profitability

What is a common barrier to entry that can deter new entrants?

• Low customer loyalty

• High economies of scale

• Low product differentiation

• High industry growth rate

Which factor can lead to high industry rivalry intensity?

• High product differentiation

• Low fixed costs

• Slow industry growth

• Few competitors

What effect does a high threat of new entrants have on existing companies?

• It encourages them to lower prices

• It allows them to increase prices

• It has no effect on pricing strategies

• It stabilises their market share

Which of the following is a sign of strong bargaining power of buyers?

• Buyers purchase in small quantities

• Buyers have many alternative suppliers

• Buyers face high switching costs

• Buyers are not price sensitive

What is a potential consequence of high industry rivalry?

• Increased market share for all competitors

• Decreased innovation within the industry

• Lower prices and reduced profitability

• Higher barriers to entry

How can a company reduce the threat of substitute products?

• By increasing product prices

• By enhancing product features

• By reducing marketing efforts

• By limiting distribution channels

What is a characteristic of an industry with low bargaining power of suppliers?

• Suppliers offer unique products

• There are many suppliers

• Suppliers have strong brand identities

• Suppliers are concentrated