In Porter's Strategic Analysis Model, the Purpose of Competitive Analysis

question 6

Multiple Choice

In Porter's strategic analysis model, the purpose of competitive analysis is:

• A)To identify the bases of competition in a particular industry.
• B)To identify key success factors (KSFs) in a nation or culture.
• C)To evaluate whether a company has the internal capabilities to make its strategy a success.
• D)To identify competitive opportunities where a company is stronger on KSFs than its competitors.

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Total Variable Cost

The sum of all variable costs associated with the production of a given level of output.

Total Fixed Cost

The sum of all costs required to produce any product or service that does not change with the level of output.

Average Fixed Costs

Average fixed costs are the total fixed costs of production divided by the quantity of output produced, which decreases as production increases.