solution

Instructions: Below there are a number of short statements. Identify which of the five competitive forces is being described in each of the statements. Choose the BEST answer based on the statement provided. Take for example the following statement: “Most of Apple’s customers are loyal “fanatics”. They are willing to buy all of the latest Apple products regardless of how much the new products cost. When we’re talking about customers who are willing to buy anything at any price (i.e., they are loyal), that means the customers (aka buyer) has LITTLE to NO bargaining power. Hence, this statement refers to the HIGH “Bargaining Power of Buyers”.

Using:

A. Bargaining power of suppliers
B. Bargaining power of buyers
C. Rivalry among competitors
D. Threat of new entrants
E. Threat of substitute products/services

1. Chipotle only has a few suppliers from which they can source pork that meets their high quality standards. Recently, Chipotle suffered severe financial losses due to a nationwide shortage of pork needed for their “carnitas” meat. Not only did they lose sales, but their raw materials costs sky-rocketed. The fact that Chipotle had to pay a premium for whatever high-quality pork they could get their hands on reflects the HIGH:

2. Tesla is spending billions of dollars to develop self-driving cars. Tesla’s massive investment in self-driving car technology for the better part of the last decade means there is likely a LOW:

3. You can get almost anything on the Internet these days. This means that local businesses have to find a way to meet/beat the price on the internet or justify why they charge customers more (e.g., better customer service, longer warranty, higher quality product). The ability for buyers to instantly take their business elsewhere if they find a better price reflects the HIGH:

4. TD Ameritrade provides investors with access to direct stock trading. In the past, you had to go through a financial planner to make investments in the stock market. This means you don’t have to use a financial planner if you want to manage your own stock portfolio. For financial planners, the introduction of services that allow for direct stock trading reflects the HIGH:

5. Popeyes tweets @Chickfila that it “perfected” the chicken sandwich. This tweet was part of a “hot” (pun intended) marketing campaign promoting Popeye’s new sandwich. This bold action reflects which of Porter’s five competitive forces?

6. The cost of switching from a PC computer to an Apple computer is very high. Assume that Spectrum Electrical’s invoicing software and customer relationship management tools that they use are only compatible on a PC computer. If they switched to Apple products, they would have to buy the “Mac” versions of their software. Unfortunately, none of their existing “PC” files would be compatible. This means that Spectrum Electrical (and all PC computer customers) will have to think long and hard about whether it’s worth the time, money, and hassle of switching to Apple products. The high switching costs reflects the HIGH:

7. Whole Foods does not price match. If you shop at Whole Foods, you pay Whole Foods’ prices. There’s no haggling. This refusal to price match reflects the LOW:

8. Coca Cola has a strong brand image. In fact, they have dominated the carbonated beverage industry for decades. They have branched out into water and “hydration products” (e.g., Dasani, SmartWater), juices (e.g., MinuteMaid), dairy (e.g., Fairlife), plant-based offerings (e.g., innocent), coffee (e.g., Costa), and teas (e.g., Honest). Anyone trying to launch any sort of beverage needs to be aware of the juggernaut that is “Coca Cola.” Coca Cola has enough money and brand recognition that they can outspend and out-position any potential newcomers to the market. Coca Cola’s strong brand image and dominant market position reflect the LOW:

9. Apple gets all of its glass from one company (Corning). (Yes, that’s the same company who likely made your grandma’s white casserole dish with blue flowers!) This glass is highly specialized and Apple can’t get it from anyone else (at least in the short-term). Apple’s reliance on one company for a key component of their products means that the (Click to select) Bargaining power of suppliers Bargaining power of buyers Rivalry among competitors Threat of new entrants Threat of substitute products/services ______ is HIGH.

10. Jif is beginning to offer other more “allergen-friendly” buttery spreads. This is because “choosy Moms” and “choosy Dads” are not choosing Jif as much anymore, because traditional peanut butter is NOT allowed in most school lunches. Jif realizes that they need to offer more “peanut-free” and “nut-free” options or else they are going to go out of business. This increase in alternative “spreads” reflects the HIGH:

11. A few years ago, a (highly disturbing) video showing the conditions that Fairlife cows were subjected to started circulating on social media. Angry customers and animal rights activists protested this abusive treatment of the animals and called for a boycott of all Fairlife products (and of all companies that sold/used Fairlife products). As a result, Fairlife milk products were pulled from grocery store shelves after these animal rights violations were uncovered. This reflects the HIGH: