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BS 4 Porter's Five Forces--Key - 201 Porters Five Forces BS...

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201 Porter’s Five Forces BS 4 Porter's Five Forces--Key Threat of new entrants is low when 1. large scale operations 2. product differentiation 3. capital requirements 4. switching cost 5. distribution channel Threat of substitutes is high when 1. differentiation of substitute is high Bargaining power of buyers is high when 1. purchase large volume 2. standard 3. few switching costs 4. companies in the industry can’t pass the cost of input prices to their customers in the form of higher product prices Bargaining power of suppliers is high when 1. companies in the industry can do little to decrease the cost of inputs 2. production equipment is customized and costly to replace. Rivalry/price competition is high when 1. many competitors 2. low industry growth rate
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201 Porter’s Five Forces 3. high fixed or storage costs 4. lack of differentiation or switching costs 5. high exit barriers 1. The cost of a key production factor is steadily rising. The product made in the industry is critical for the industry’s customers. Will the company raise the price of its product to compensate for the increased cost of making it? Why or why not? a. no, the bargaining power of buyers is high b. no, the bargaining power of buyers is low c. no, the bargaining power of suppliers is high d. no, the bargaining power of suppliers is low e. none of the above 2. Very few companies compete in a certain industry. Using Porter’s model an analyst is likely to conclude 3. The cost of a key production factor is steadily rising. The company competes in an industry for which customers are relatively plentiful . Will the company raise the price of its product to compensate for the increase cost of making it? Why or why not?
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