Relate Your Understanding of the Porter's Five Forces Model to Describe

question 61

Essay

Relate your understanding of the Porter's Five Forces model to describe how the Internet affects the bargaining power of buyers and sellers according to whether offers commodity or differentiated products.

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.

Unlevered Firm

A company that operates without any debt financing, relying solely on equity for its financing needs.

Levered

Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.

Break-Even EBIT

The level of Earnings Before Interest and Taxes that a company needs to achieve in order to cover all of its operating expenses without making a profit or loss.