Which of the Following Statements Is True About Porter's Five-Forces

question 18

Multiple Choice

Which of the following statements is true about Porter's five-forces model?

• A) The level of threat of entry from competition is generally the same across all industries.
• B) Every industry is different in terms of who maintains the power in the firm-supplier relationship.
• C) The buyer or customer has no power to force down prices in an industry.
• D) Not all companies face the threat of substitutes.

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Definitions:

Indirect Bankruptcy Costs

Costs associated with bankruptcy that do not involve direct cash payments, such as damage to a company's reputation or loss of customers.

Optimal Capital Structure

The most favorable mix of debt and equity financing that minimizes the cost of capital and maximizes the value of the firm.