Reading 41: Competitive Strategy: The Core Concepts - LOS style, black, include, substitute, class

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1.Determinants of substitute threats include:

A)   relative price performance of substitutes, presence of substitute inputs, and switching costs.

B)   relative price performance of substitutes, buyer propensity to substitute, and switching costs.

C)   buyer propensity to substitute, presence of substitute inputs, and switching costs.

D)   buyer propensity to substitute, presence of substitute inputs, and product differences.

2.Long-term profitability is determined by:

A)   supply and demand.

B)   bargaining power.

C)   industry structure.

D)   cost leadership.

3.For pharmaceutical companies, the time it takes to get a drug through the clinical trials, regulatory approval and finally to the market is approximately 12 years. In a competitive strategy analysis, this lengthy pre-product period would raise concerns about the:

A)   threat of substitutes.

B)   bargaining power of buyers.

C)   bargaining power of suppliers.

D)   rivalry among existing suppliers.

4.According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:

A)   entry barriers.

B)   threat of substitutes.

C)   bargaining power of suppliers.

D)   rivalry among existing suppliers.

5．According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:

A)   threat of substitutes.

B)   bargaining power of buyers.

C)   bargaining power of suppliers.

D)   exit barriers.

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答案和详解如下：

1.Determinants of substitute threats include:

A)   relative price performance of substitutes, presence of substitute inputs, and switching costs.

B)   relative price performance of substitutes, buyer propensity to substitute, and switching costs.

C)   buyer propensity to substitute, presence of substitute inputs, and switching costs.

D)   buyer propensity to substitute, presence of substitute inputs, and product differences.

The correct answer was B)

The threat of product substitution is driven by availability, prices, and cost of switching to other products in addition to the inclination of the buyer to switch.

2.Long-term profitability is determined by:

A)   supply and demand.

B)   bargaining power.

C)   industry structure.

D)   cost leadership.

The correct answer was C)

Industry structure determines long-term profitability.

3.For pharmaceutical companies, the time it takes to get a drug through the clinical trials, regulatory approval and finally to the market is approximately 12 years. In a competitive strategy analysis, this lengthy pre-product period would raise concerns about the:

A)   threat of substitutes.

B)   bargaining power of buyers.

C)   bargaining power of suppliers.

D)   rivalry among existing suppliers.

The correct answer was A)

It would raise concerns about the threat of substitutes. There is usually a race among pharmaceutical companies to get similar drugs through the process first, because the first drug to the market generally captures a larger market share and creates brand loyalty.

4.According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:

A)   entry barriers.

B)   threat of substitutes.

C)   bargaining power of suppliers.

D)   rivalry among existing suppliers.

The correct answer was D)

The rivalry among competitors should be considered, not the rivalry among suppliers.

5．According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:

A)   threat of substitutes.

B)   bargaining power of buyers.

C)   bargaining power of suppliers.

D)   exit barriers.

The correct answer was D)

Entry barriers should be considered, not exit barriers.