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LOS a: Distinguish among the five competitive forces that drive industry profitability in the medium and long run.
Q1. Which of the following is NOT one of Porter's five competitive forces that determines the attractiveness or profitability of any industry?
A) Industry average return on equity.
B) Bargaining power of buyers.
C) Entry of new competitors.
Q2. 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) rivalry among existing suppliers.
B) bargaining power of buyers.
C) threat of substitutes.
Q3. Which of the following statements about Porter's five factors is FALSE?
A) Rivalry increases when many firms of relatively equal size compete within an industry.
B) Profitability is enhanced by increases in the bargaining power of buyers or suppliers within an industry.
C) The presence of substitute products limits the profit potential of an industry.
Q4. Significant economies of scale in an industry will reduce industry competition by reducing the:
A) bargaining power of suppliers.
B) threat of new entrants.
C) threat of substitute products.
Q5. Which of the following is NOT one of Porter’s five factors used to determine industry competition?
A) Bargaining power of buyers.
B) Purchasing power of consumers.
C) Rivalry among existing competitors.
Q6. Which of the following factors associated with industry competition affect the performance of a firm within that industry?
A) Industry operating leverage.
B) Threat of new entrants.
C) The industry's stage in its life cycle.
Q7. Which of following is NOT one of Michael Porter’s factors used to determine competition in an industry?
A) Threat of substitute products.
B) Bargaining power of buyers.
C) Economies of scale.
Q8. Daniel Tipton and Jesse Torrez are first-year MBA students at the Haas School of Business. Torrez has an economics background, but Tipton’s background is in music. To help Tipton study one of the main tenets of competition theory, Torrez creates the following question and asks Tipton to identify the statement that is most inconsistent with Porter’s five forces. Which statement should Tipton select?
A) Supplier power is higher when there are only a few suppliers to an industry.
B) Porter's five forces are: rivalry among current competitors, economies of scale, threat of substitutes, bargaining power of suppliers, and bargaining power of buyers.
C) To sustain above average returns on invested capital, firms should strive for economies of scale.
Q9. Which of following is NOT one of Michael Porter’s factors used to determine competition in an industry?
A) Threat of new entrants into the market.
B) Capital structure and financial flexibility.
C) Bargaining power of the firm with its suppliers.
Q10. Porter’s five factors for determining the intensity of competition within an industry are least likely to include:
A) bargaining power of buyers.
B) threat of new entrants.
C) regulatory environment.
Q11. According to Porter's Five Forces, which of the following should least likely be considered when analyzing a firm's competitive strategy?
A) The bargaining power of employees.
B) The bargaining power of suppliers.
C) The bargaining power of buyers.
Q12. Short-term profitability is determined by:
A) bargaining power.
B) supply and demand.
C) industry structure.
Q13. According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:
A) exit barriers.
B) threat of substitutes.
C) bargaining power of suppliers.
Q14. According to Porter's Five Forces, all of the following should be considered when analyzing a firm's competitive strategy EXCEPT:
A) bargaining power of suppliers.
B) entry barriers.
C) rivalry among existing suppliers.
Q15. Long-term profitability is determined by:
A) cost leadership.
B) industry structure.
C) supply and demand.
Q16. Determinants of substitute threats include:
A) relative price performance of substitutes, presence of substitute inputs, and switching costs.
B) buyer propensity to substitute, presence of substitute inputs, and switching costs.
C) relative price performance of substitutes, buyer propensity to substitute, and switching costs.
Q17. Mary Smith, a Level II CFA candidate, was recently hired for an analyst position at The Bank of Ireland. Her first assignment is to examine the competitive strategies employed by various French wineries. Smith is eager to impress her boss, Ron VanDreisen, and has taken care to make sure she is following the CFA Institute Standards of Practice when writing her research report.
Smith’s report identifies four wineries that are the major players in the French wine industry. Key characteristics of each are cited below in Figure 1.
Figure 1: Characteristics of Four Major French Wineries
|
|
South
Winery |
North
Winery |
East
Winery |
West
Winery |
|
Founding Date |
1750 |
1903 |
1812 |
1947 |
|
Generic Competitive Strategy |
? |
Cost
Leadership |
Cost
Leadership |
Cost
Leadership |
|
Major Customer Market
(more than 80% concentration) |
France |
France |
England |
USA |
|
Production Site |
France |
France |
France |
France |
In the body of Smith’s report, she includes a discussion of the competitive structure of the French wine industry. She notes that over the past five years, the French wine industry has not responded to changing consumer tastes. Profit margins have declined steadily and the number of firms representing the industry has decreased from 10 to 4. It appears that participants in the French wine industry must consolidate in order to survive.
Smith’s report notes that French consumers have strong bargaining power over the industry. She supports this conclusion with five key points.
Bargaining Power of Buyers
- Many consumers are drinking more beer than wine with meals and at social occasions.
- Increasing sales over the internet have allowed consumers to better research the wines, read opinions from other customers, and identify which producers have the best prices.
- The French wine industry is consolidating and consists of only 4 wineries today compared to 10 wineries five years ago.
- Over 65% of the business for the French wine industry consists of purchases from restaurants. Restaurants typically make purchases in bulk, buying 4 to 5 cases of wine at a time.
- Land where the soil is fertile enough to grow grapes necessary for the wine production process is scarce in France.
After completing the first draft of her report, Smith takes it to VanDriesen to review. VanDriesen tells her that he is a wine connoisseur himself, and often makes purchases from the South Winery. Smith tells VanDriesen, “In my report I have classified the South Winery as a stuck-in-the-middle firm. It tries to be a cost leader by selling its wine at a price that is slightly below the other firms, but it also tries to differentiate itself from its competitors by producing wine in bottles with curved necks, which increases its cost structure. The end result is that the South Winery’s profit margin gets squeezed from both sides. VanDriesen replies, “I have met members of the management team from the South Winery at a couple of the wine conventions I have attended. I believe that the South Winery could succeed at being at both a cost leadership and a differentiation strategy if they separated its operations into distinct operating units, with each unit pursuing a different competitive strategy.” Smith makes a note to do more research on generic competitive strategies to verify VanDriesen’s assertions before publishing the final draft of her report.
If the French home currency were to greatly appreciate in value compared to the English currency, what is the likely impact on the East Winery?
A) No impact since the major market for East Winery is England, not France.
B) Make the firm less competitive in the English market.
C) Make the firm more competitive in the English market.
[此贴子已经被作者于2009-3-6 14:08:42编辑过] | 
发表于 2009-3-6 14:00
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