MGT 445 Final Study Guide short answer questions
1. According to Porter, the intensity of industry competition and an industry's profit potential are functions of FIVE forces of competition. Name the five forces and describe how to use Porter's FIVE forces of industry competition. THREE of these forces pertain to identifying competitor types. Name and explain the three competitor types and the industry analysis part each competitor type represents.
Five Forces: Buyers, Entrants, Suppliers, Substitutes, and Interfirm Rivalry.
The model is used to enable managers to understand their industry environment and shape their firm’s strategy. Generally, the stronger the five forces, the lower the industry’s profit potential (a.k.a. less attractive industry). The reverse is true as well, the weaker the five forces, the greater the profit potential (a.k.a. more attractive industry). The goal is to position the firm in an industry in a way that reduces the constraints of strong forces and leverages weak forces.
The three competitor types are direct competitors, Interfirm Rivalry indirect competitors Threat of Substitutes future competitors. Threat of New Entrants
2. According to Rothaermel (2013), there are five ways to examine a firm's competitive advantage. Name and explain the five ways we measure a firm's competitive advantage.
i) Economic Value Creation: The consumer’s maximum willingness-to-pay less the firm’s cost ii) Accounting Profitability: Different financial ratios that measure a firm’s performance relative to other firms in the industry iii) Shareholder Value Creation: The total return to shareholders, or how much an investor gets for investing in the firm iv) Balanced Scorecard: Examines how customers and shareholders view the firm, how the firm creates value, and what core competencies a firm needs to achieve a competitive advantage.
v) Triple Bottom Line: Examines financial, social, and ecological considerations
3. According to Rothaermel (2013), one way we measure and examine a firm's
Five Forces: Buyers, Entrants, Suppliers, Substitutes, and Interfirm Rivalry.
The model is used to enable managers to understand their industry environment and shape their firm’s strategy. Generally, the stronger the five forces, the lower the industry’s profit potential (a.k.a. less attractive industry). The reverse is true as well, the weaker the five forces, the greater the profit potential (a.k.a. more attractive industry). The goal is to position the firm in an industry in a way that reduces the constraints of strong forces and leverages weak forces.
The three competitor types are direct competitors, Interfirm Rivalry indirect competitors Threat of Substitutes future competitors. Threat of New Entrants
2. According to Rothaermel (2013), there are five ways to examine a firm's competitive advantage. Name and explain the five ways we measure a firm's competitive advantage.
i) Economic Value Creation: The consumer’s maximum willingness-to-pay less the firm’s cost ii) Accounting Profitability: Different financial ratios that measure a firm’s performance relative to other firms in the industry iii) Shareholder Value Creation: The total return to shareholders, or how much an investor gets for investing in the firm iv) Balanced Scorecard: Examines how customers and shareholders view the firm, how the firm creates value, and what core competencies a firm needs to achieve a competitive advantage.
v) Triple Bottom Line: Examines financial, social, and ecological considerations
3. According to Rothaermel (2013), one way we measure and examine a firm's