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Forces of Competition Model

The document outlines the forces of competition in a market, including buyers, potential new entrants, rivalry among existing firms, substitute products, and suppliers. Each force is characterized by specific factors that influence their impact on the industry. Additionally, the document includes multiple-choice questions related to opportunity-seeking and the competitive environment.

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Reden Genova
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5 views

Forces of Competition Model

The document outlines the forces of competition in a market, including buyers, potential new entrants, rivalry among existing firms, substitute products, and suppliers. Each force is characterized by specific factors that influence their impact on the industry. Additionally, the document includes multiple-choice questions related to opportunity-seeking and the competitive environment.

Uploaded by

Reden Genova
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FORCES OF

COMPETITION
MODEL
1. BUYERS
The buyers are the ones that pay cash in exchange for your goods
and services. One example is the influence of the price or in the bargaining
strategy. The buyer has a strong and magnified bargaining power. The
threat of its bargaining power will be less if the following factors are noticed:
A. There are several suppliers available in the market.
B. The buyer has the potential for backward integration.
C. The cost of switching the supplier cost is minimal.
D. The product represents a high percentage of the buyer’s cost.
E. The buyer purchases large portions of the seller’s product or services.
2. POTENTIAL NEW ENTRANTS
A new entrant is defined as companies or businesses that have
the ability to penetrate or enter into a particular industry. For example,
in the level of capital requirements, if the business requires huge
capital, new entrants should decline to join the business. This gives a
threat to the business. This can be noticed if there is the presence of
the following factors:
A. Substantial capital requirement
B. Strict government policy
C. Difficulty in accessing distribution channels
D. Economies of scale
E. High cost of product differentiation
3. RIVALRY AMONG EXISTING FIRMS
Rivalry is a state or situation wherein business organizations are
competing with each other in a particular market. For example, it depends on
the marketing strategy of your competitor, like giving freebies and special offers.
The intensity of rivalry among existing firms is characterized to the following
factors:
A. Diversity of rivals
B. Number of competing firms
C. Characteristics of the products or services
D. Increased capacity
E. Amount of fixed costs
F. Rate of industry growth
4. SUBSTITUTE PRODUCTS
Substitute is one that serves the same purpose as another product in the
market. For example, the consumers decide to use margarine as a substitute
for butter. In case the price of butter increases, preferably the consumer will
gradually switch to margarine.
A substitute product can give a big threat in the industry environment if the
following factors are noticed:
A. Switching cost is low
B. Preferences and tastes of the customers easily change
C. Product differentiation is highly noticeable
D. The quality of substitute products dramatically improves
E. The price of substitute product is substantially lower
5. SUPPLIERS
The suppliers are the one that provide something that is
needed in business operations such as office supplies and
equipment. In an example where supplies and services being
offered is unstable the intensity of the threat is strong in this kind of
the competitive force in the industry. This can be noticed if there is
the presence of the following factors:
A. The supplier has the ability for forward integration
B. Suppliers in the industry are few, but the sales volume is high
C. Substitute products are not readily available in the market
D. The switching cost is very high
E. The product or service is uniq
MULTIPLE CHOICE
1. It is the process of considering, evaluating, and pursuing
market-based activities that are believed to be advantageous for
the firm.
A. Opportunity – seeking C. Opportunity – screening
B. Opportunity – seizing D. Sources of opportunity
2. This is essential to opportunity – seeking which allows the
entrepreneur to see things in a positive and optimistic light in the
midst of crisis or difficult situations.
A. Entrepreneurial mind frame C. Entrepreneurial heart flame
B. Entrepreneurial gut game D. Entrepreneurial heart frame
3. It is the ability of entrepreneur that can sense without
using the five senses, also known as intuition.
A. Entrepreneurial mind frame C. Entrepreneurial heart flame
B. Entrepreneurial gut game D. Entrepreneurial heart frame

4. One of the essentials of entrepreneur’s opportunity –


seeking that refers to the driven passion of an individual.
A. Entrepreneurial mind frame C. Entrepreneurial heart flame
B. Entrepreneurial gut game D. Entrepreneurial heart frame
5. What variable of societal environment includes
income level and employment rate?
A. Economic forces C. Political forces
B. Sociocultural forces D. Technological forces
For questions 6 and 7 refer to the following statements:
A. Preferences and tastes of the customers easily change.
B. The buyer has the potential for backward integration.
C. The cost of switching the supplier cost is minimal.
D. Product differentiation is highly noticeable.
6. Which are the factors of the substitute product that pose a great
threat in the industry environment?
A. A, b, c, d c. A and D
B. A and C D. B and C
7. Which are the factors that influence the buyer to have a less threats
because of the bargaining power?
A. A only C. A and D
B. A and C D. B and C
8. They are the ones who pay cash in exchange for your goods
and services.
A. Buyers C. Sellers
B. Competitors D. Suppliers
9. The intensity of rivalry among existing firms is characterized
to the following factors except one:
A. Diversity of rivals
B. Number of competing firms
C. Characteristics of the products or services
D. The product represents a high percentage of the buyer’s cost
10. The following are the forces competing within the
industry except one:
A. Potential new entrants and substitute products
B. Buyers and suppliers
C. Rivalry among existing firms
D. Needs and wants

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