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BU 111 EXAM REVIEW.docx

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Department
Business
Course
BU111
Professor
Sofy Carayannopoulos
Semester
Fall

Description
BU 111 EXAM REVIEW Sample Exam Questions: What determines the power of substitutes in the Porter’s 5 forces model, what effect do substituteshave on profitability, and what can a firm do to address this force? The factors that determine the power of substitutes are: - The number of quality substitutes (higher number-= higher power) ½ mark o And the ease of switching to them (lower switching costs = higher power) ½ mark - Impact on profitability: o As the price of substitutes goes down compared to your product,a dn it becomes easier to switch/ switching costs decline, the greater the pressure you face to keep your price down/puts a ceiling on your price (1 mark) - To address the Porter’s five forces: o Convince customers that your product is unique and this can’t be substituted(1 mark) o Lock customers in so that it is harder / more costly for them to switch (1 mark) Explain how the elements that make the entrepreneurial process successful are similar to/related to the diamond E (3 marks) - The entrepreneur is similar to the management preferences and organization elements from diamond E because he/she represents both the biases and the capabilities of the organization(1 mark - The oppourtunity is similar to the Diamond E-s link to the environment. The entrepreneurial oppourtunity must make sense given the environment just as the strategy in Diamond E will only be successful if the environment is suppor
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