Sample Questions for Midterm

Use porters five forces model to explain your answer

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widespread changes? Use Porter’s Five Forces Model to explain your answer. (25 marks) the Five Forces Model deals mainly with industry and corporations. The 5 Forces are: o The threat of entry of new competitors o The threat of substitute products or services o The bargaining power of customers o The bargaining power of suppliers o The intensity of competition The threat of entry of new competitors o Target is a new competitor in the market o Major retailers normally can’t make this jump into a marketplace to this level o Backed with Target’s capital and the purchase of Zellers, Target is able to do what many other retailers could not do o Market share does not grow with the addition of new players; can only steal market share away from existing companies The threat of substitute products or services o Target is a perfect substitute to WalMart. o It offers similar products and services to existing retailers. The bargaining power of customers o Increased competition increases the bargaining power of customers o They have more choice on where to spend their money.
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o Retailers have to work harder to keep customers. o Prices are forced lower with more choice. Two ways to argue this: o When you have a large retailer like WalMart or Target, they can force concessions out of suppliers who want to sell in this retail chain. o Target can bring its own suppliers that are currently not in the Canadian market into it, hurting Canadian suppliers. o With the introduction of Target though, you could argue that suppliers do not have to give up as much to be in a WalMart as they now have another option. The intensity of competition o More competition it forces everyone to be more responsive to consumers. o Some businesses will accept loses in the short term to cause damage to their competition, hoping that they are in a better position to weather the short term loses than their competition is. 2. WalMart was the first major retailer to dramatically shake up the retail landscape of Canada. From the lecture slides, what did WalMart do that was considered innovative in Canada? (3 marks) Walmart’s introduction of “Everyday low prices” caused Canadian retailers to change their tactics. Canadian retailers would rely on weekly fliers, lost-leaders and specials to draw people into their stores. As Canadian stores switched to this model, consumers benefited from lower pricing. 3. Why has foreign investment been so attractive to Canada? Give a brief overview of its history in Canada. (10 marks) Foreign investment is larger in Canada than anywhere else in the world.
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Why is this? o Proximity to the much larger US o Holdover from our days as a British colony The British supplied capital to help establish Canada, looking to reap the benefits of the natural resources here.
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