Strategic Management - Midterm Exam - 1st Trimester - SY25-26

The threat of new entrants is high when:

• Economies of scale are strong

• Capital requirements are low

• Brand loyalty is high

• Distribution channels are limited

Which of the following decreases the threat of new entrants?

• Strong patents

• Weak government regulation

• Low switching costs

• Abundant resources

When barriers to entry are low, firms in the industry:

• Enjoy greater long-term profits

• Face more competition

• Experience monopoly conditions

• Increase market power

Which factor is not a common barrier to entry?

• Government policy

• Economies of scale

• Strong brand identity

• Low customer demand

High switching costs for customers usually mean:

• New entrants will find it harder to attract buyers

• New entrants can easily capture market share

• Industry profits will decline immediately

• Customers are highly price-sensitive

A new coffee shop entering a city dominated by one large brand illustrates:

• Bargaining power of buyers

• Threat of substitutes

• Threat of new entrants

• Rivalry among competitors

Supplier power increases when:

• There are many alternative suppliers

• The supplied input is critical and unique

• Customers can easily switch suppliers

• Inputs are standardized

When a supplier can integrate forward, this means:

• The supplier can start producing the buyer’s product

• The buyer can manufacture the supplier’s product

• Both buyer and supplier merge

• Substitutes are eliminated

If suppliers are few but buyers are many, suppliers tend to:

• Lose power

• Maintain equal bargaining power

• Gain power

• Have no influence

A strong supplier industry often leads to:

• Reduced profitability for buyer firms

• Lower costs for buyer firms

• Weak competitive forces

• Reduced entry barriers