Favorite Ice cream:____________
Test #3, Winter 08
Lundquist College of Business
University of Oregon
This is a take home exam due on Tuesday March 4 in class at 2:00 p.m. (no electronic submission).
Please answer all questions and make sure to type your answers in spaces provided below each
Please do not talk, or collaborate with any living person for answers.
Remember, you are
competing for grades higher than your classmates’ grades.
So, helping others may reduce your grade.
Any unethical behavior (plagiarisms, “similar” answers, communications with others, etc.) can result in a
zero and a failing grade in the class.
Lecture notes for T-S chapters 3, 4, 5, and 6 are posted under
Course Documents, Lecture Materials, T-S Lecture Notes.
T-S Chapter 3:
As the owner of a new fast-food enterprise seeking a loan from a bank to finance the
construction and operation of three new store locations, you have been asked to provide the
loan officer with a brief analysis of the competitive environment in fast-food. Draw a five-
forces diagram for the fast-food industry and briefly discuss the nature and strength of each
of the five competitive forces in fast food. Do whatever Internet research is required to
expand your understanding of competition in the fast-food industry and do a competent five-
You should draw a five-forces diagram similar to figure 3.3 in the text. The drawn
diagram should show that the five forces are:
(1) firms in other industries offering
substitute products, (2) buyers, (3) potential new entrants, (4) suppliers of raw
materials, parts, components, or other resource inputs, and (5) rivalry among
competing sellers in the industry.
Suggested responses for discussing the nature and strength of the five competitive forces
in fast food may include (numbers correspond to the numbered items above): (1)
competitive pressures stemming from the attempts of companies outside the industry to
win buyers over to their products - other food providers such as Sheetz and Denny’s –
strength is strong, (2) competitive pressures stemming from buyer bargaining power
and seller-buyer collaboration – different consumers and varying preferences – strength
is high, (3) competitive pressures coming from the threat of entry of new rivals – any
new restaurant or food service business – strength is moderate, (4) competitive
pressures coming from supplier bargaining and supplier-seller collaboration – provider
of food items – strength is moderate, and (5) competitive pressures created by jockeying
for better market position, increased sales and market share, and competitive
advantage – established competitors such as McDonald’s – strength is high.