TUTORIAL CHAPTER 2

Answer True/False:

1) True.

2) True.

3) True.

4) True.

5) False.

6) False.

7) True.

8) True.

9) True.

Answer Long Essay:

1) Describe three (3) Porter Generic Strategies.

• Cost leadership is a low cost producer in the industry allows the company to lower prices to customers. The competitors with higher costs cannot afford to compete with the low cost leader on price. 

• Differentiation is create by competitive advantage by distinguishing their product on one or more features important to their customers. The unique features or benefits may justify price differences and stimulate demand. For example, i care by Proton.

• Focused Strategy is target to a niche market in which to sell their goods and concentrates on either cost leadership or differentiation.

2) List and describe each of the five (5) forces in Porter`s Five Forces.

• Buyer Power: High when the buyers have many choices of whom to buy. Low when their choices are few.

• Supplier Power: High when the buyers have few choices of whom to buy from. Low is when their choices are many.

• Threat of Substitute Products & Services: High when there many alternatives to a product or service. Low when there are few alternatives from which to choose.

• Treat for New Entrants: High when it is easy for new competitors to enter a market. Low when there are significant entry barriers to entering a market.

• Rivalry among Existence Competitors: High when competition is fierce in a market. Low when competition is more complacent.

3) The information technology can develop a competitive advantage for each force in Five Forces Model. 

• Competitive rivalry. This force examines how intense the competition currently is in the marketplace, which is determined by the number of existing competitors and what each is capable of doing.

• Bargaining power of suppliers. This force analyzes how much power a business's supplier has and how much control it has over the potential to raise its prices, which, in turn, would lower a business's profitability.

• Bargaining power of customers. This force looks at the power of the consumer to affect pricing and quality.

• Threat of new entrants. This force examines how easy or difficult it is for competitors to join the marketplace in the industry being examined.

• Threat of substitute products or services. This force studies how easy it is for consumers to switch from a business's product or service to that of a competitor.