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BUS 475 EXAM 1 LATEST ACTUAL EXAM

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BUS 475 EXAM 1 LATEST ACTUAL EXAM

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  • September 25, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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By: leonardmuriithi061 • 1 week ago

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BUS 475 EXAM 1 LATEST ACTUAL EXAM
firm effects account for up to... - ANSWER: 55%

industry effects account for up to ... - ANSWER: about 20%

other effects account for up to... - ANSWER: about 25%

what are some examples of other effects? - ANSWER: business cycle effects,
unexplained variance

what is an industry? - ANSWER: 1. where company competes
2. group of companies competing against each other
3. around the same set of suppliers and buyers
4. tend to offer similar products and services

what is PESTEL framework? - ANSWER: 6 external factors that impact a firm

what are the 6 segments in the PESTEL framework? - ANSWER: - Political
- economic
- sociocultural
- technological
- ecological
- logical

the 6 of the PESTEL factors can create.... - ANSWER: opportunities and/or threats

competition - ANSWER: goes beyond the firm's direct competitors

industry analysis is a method to... (1) - ANSWER: identify an industry's profit
potential

industry analysis is a method to... (2) - ANSWER: derive implications for a firm's
strategic position

industry analysis is a method to... (3) - ANSWER: guide firms to decide how they can
position themselves to gain and sustain a competitive advantage

profit potential - ANSWER: level of profitability for the average firm

firm's strategic position - ANSWER: ability to create value while controlling the cost

Value = - ANSWER: total perceived consumer benefits =
consumer's maximum willingness to pay =
reservation price

, economic value created = - ANSWER: v-c

c = - ANSWER: firm's cost

Porter's 5 Forces - ANSWER: 1. threat of new entrants
2. threat of substitute products or services
3. bargaining power of suppliers
4. bargaining power of buyers
5. rivalry among existing competitors

if the 5 forces are weak --> - ANSWER: industry's profit potential increases

if the 5 forces are strong --> - ANSWER: industry's profit potential decreases

force 1 - threat of entry - ANSWER: risk that potential competitors will enter an
industry

threat of entry: the more profitable an industry... - ANSWER: the more attractive it is
for new competitors to enter

entry barrier - ANSWER: obstacle blocking others from entering

an entry barrier is... - ANSWER: a significant predictor of industry profit potential

types of entry barriers - ANSWER: 1. economies of scale
2. network effects
3. switching costs
4. capital requirements
5. government policy
6. threat of retaliation

entry barrier: economies of scale - ANSWER: cost advantages accrue to firms with
bigger output

economies of scale: as you increase output... - ANSWER: can spread fixed costs

economies of scale: increase in output... - ANSWER: helps with cost advantage

entry barrier: network effects - ANSWER: value of a product/service for an individual
user INCREASES with the # of total users

entry barrier: switching costs - ANSWER: costs incurred by moving from one product
to another

entry barrier: capital requirements - ANSWER: capital required to compete in this
industry

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