11) In Porter's five forces model, the two strength factors that relate to competitive forces are ________ and customer loyalty.
A) employee unions
B) nature of products
C) customer services
D) switching costs
12) In which of the following cases is the strength of competitive forces low?
A) when switching costs are high
B) when the prices of rival products are relatively high
C) when customers are not loyal to the existing company or brand
D) when finding rival products is difficult
13) If the price of an alternative is lower than the price of the existing product, and customers perceive similar benefits from both the products, then the ________.
A) switching cost is high
B) price of the product should be increased to retain market share
C) threat from the substitute is strong
D) customers' bargaining power decreases
14) Which of the following is true if the threat from a substitute is strong?
A) Customers are likely to switch to competitors' products.
B) Competitors' products are of a lower quality.
C) Competitors are yet to overcome the entry barriers.
D) Prices of competitors' products are higher.
15) Which of the following is true about new entrants?
A) They have strong customer loyalty.
B) They will have records on customers' purchase habits.
C) They are yet to develop relationships with suppliers.
D) They can lock in suppliers to gain a competitive advantage.
16) The strength of bargaining power forces depends on the availability of substitutes and ________ compared to the size of suppliers or customers.
A) the amount of profit made annually
B) the relative size of the firm
C) the production capacity
D) the relative size of the employee union
17) Which of the following statements describes a scenario in which the bargaining power of a supplier is strong?
A) Competitors have decreased demand for raw materials.
B) The availability of raw materials is limited.
C) The supplier has excess inventory.
D) There are many suppliers providing the same raw materials for comparable prices.
18) The bargaining power of a customer is weak if ________.
A) the availability of a rival product is limited
B) the cost of switching to a substitute is low
C) competitors offer products with same benefits at lower prices
D) new entrants are offering a product that uses more recent technology
19) Porter originally developed the five forces model in order to understand organizations' workforce.
20) According to Porter's five forces model, a company is profitable if all the five competitive forces are strong.