2.5.3 The Competitive Environment

    Cards (52)

    • What does the competitive environment refer to?
      External market conditions
    • The competitive environment is defined by the number and size of competitors
    • The competitive environment is influenced by how easy it is for new companies to enter the market.
    • What does the degree of differentiation measure in the competitive environment?
      Product uniqueness
    • Barriers to exit refer to the difficulty for companies to leave the market
    • Match the competitive structure with its definition:
      Perfect Competition ↔️ Many firms with identical products
      Monopolistic Competition ↔️ Many firms with differentiated products
      Oligopoly ↔️ Few firms dominate the market
      Monopoly ↔️ One firm controls the market
    • Perfect competition includes free entry and exit for firms.
    • What characterizes an oligopoly in terms of market dominance?
      Few large firms
    • A monopoly is characterized by a single seller and very high barriers to entry
    • What is the purpose of Porter's Five Forces framework?
      Analyze competitive forces
    • Order the five forces in Porter's framework:
      1️⃣ Threat of New Entrants
      2️⃣ Bargaining Power of Suppliers
      3️⃣ Bargaining Power of Buyers
      4️⃣ Threat of Substitute Products
      5️⃣ Intensity of Competitive Rivalry
    • Which industry has a low threat of new entrants due to high capital investment requirements?
      Aviation
    • Rare earth metal suppliers have high bargaining power due to their concentration.
    • Large supermarket chains have high bargaining power when purchasing from small suppliers
    • What is an example of a substitute product that threatens traditional cable TV?
      Streaming services
    • In which industry is competitive rivalry most intense between Apple and Samsung?
      Smartphone
    • Understanding Porter's Five Forces helps businesses improve their market position and profitability.
    • Monopolistic competition involves many firms competing with differentiated products.
    • Oligopolies have low barriers to entry.
      False
    • What type of competitive structure involves a single seller with very high barriers to entry?
      Monopoly
    • The factors defining competitive structures include the number and size of competitors, ease of entry, and degree of differentiation.
    • Arrange Porter's Five Forces in the order they appear in the study material.
      1️⃣ Threat of New Entrants
      2️⃣ Bargaining Power of Suppliers
      3️⃣ Bargaining Power of Buyers
      4️⃣ Threat of Substitute Products
      5️⃣ Intensity of Competitive Rivalry
    • What does the "Threat of New Entrants" in Porter's Five Forces refer to?
      Ease or difficulty of entry
    • An example of high bargaining power of suppliers is rare earth metal suppliers in technology manufacturing.
    • Large supermarket chains have high bargaining power over small suppliers.
    • What is the "Threat of Substitute Products or Services" in Porter's Five Forces?
      Likelihood customers switch alternatives
    • Match the type of competitive advantage with its definition.
      Cost Advantage ↔️ Lower cost than competitors
      Product Differentiation ↔️ Unique products valued by customers
      Service Excellence ↔️ Exceptional customer satisfaction
    • A cost leadership strategy aims to become the lowest-cost producer.
    • What is the first stage of market evolution?
      Introduction
    • Arrange the stages of market evolution in the correct order.
      1️⃣ Introduction
      2️⃣ Growth
      3️⃣ Maturity
      4️⃣ Decline
    • The smartphone industry is currently in the decline stage of market evolution.
      False
    • The competitive environment is defined by factors such as the number and size of competitors, ease of entry, degree of differentiation, and barriers to exit.
    • How many main types of competitive structures are there?
      Four
    • In perfect competition, firms produce identical products.
    • Monopolistic competition has low barriers to entry.
    • What is a key feature of an oligopoly?
      Few large firms
    • A monopoly is characterized by a single seller.
    • Match the competitive structure with its key feature:
      Perfect Competition ↔️ Many buyers and sellers
      Monopolistic Competition ↔️ Differentiated products
      Oligopoly ↔️ Few large firms
      Monopoly ↔️ Very high barriers to entry
    • Porter's Five Forces is used to analyze the competitive environment in an industry.
    • What is the threat of new entrants in Porter's Five Forces?
      Ease of market entry