Using the Five Forces Model of Competition to Determine the Character

question 67

Multiple Choice

Using the five forces model of competition to determine the character and strength of the competitive forces within a given industry involves

• A) building the picture of competition in three steps: (1) identify the different parties involved, along with specific factors that bring about competitive pressures; (2) evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or weak); and (3) determining whether the collective impact of the five competitive forces is conducive to earning attractive profits in the industry.
• B) building the picture of competition in two steps: (1) determining which rival has the biggest competitive advantage and (2) assessing whether the competitive advantages possessed by various industry members allow most industry members to earn above-average profits.
• C) evaluating whether competition is being intensified or weakened by the industry's driving forces and key success factors.
• D) assessing whether the collective impact of all five forces is weak enough to allow industry members to go on the offensive or use a defensive strategy to insulate against fierce competitive pressures.
• E) gauging the overall strength of competition based on how many industry rivals are operating with a competitive advantage and how many are operating at a competitive disadvantage.

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Definitions:

Product Trial

An opportunity for customers to use a product on a limited basis before making a purchase decision, often used as a marketing strategy.

Sales Promotion

Marketing activities that aim to temporarily increase interest, demand, or sales of a product or service through incentives or discounts.

Product Brochure

A marketing document designed to introduce a product or service to potential customers, highlighting features, benefits, and specifications.

Sampling

The process of selecting a subset of individuals or items from a larger population or collection to estimate characteristics of the whole group.