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NEW QUESTION 20
You work at XYZ manufacturers and a competitor has just released a rival washing machine to the product that you make. This model is proving popular with customers. What competitive force is at play?

• A. threat of substitution
• B. supplier power
• C. buyer power
• D. threat of new entrant

Answer: D

Explanation:
This is a threat of a new entrant. The competitor has now entered the washing machine market and is competing directly with you. This is not a threat of substitution as it is the same product. A substitution would be if they invented a new product that washed clothes and people started buying this instead of washing machines. There are many questions in the exam on Porter's 5 Forces - see p. 39

NEW QUESTION 21
The Public Sector in the UK is unable to enter into formal partnership relationships with any supplier. Is this statement TRUE?

• A. Yes- the Public Sector is unable to enter partnerships because they operate in a monopoly market
• B. No- the Public Sector can enter into partnership relationships with suppliers providing they have tendered the opportunity
• C. No- the Public Sector can enter into partnership relationships when contracts are over the threshold value.
• D. Yes- the Public Sector is regulated by EU procurement regulations which prohibits this

Answer: D

Explanation:
The correct answer is 'Yes- the Public Sector is regulated by EU procurement regulations which prohibits this'. This is stated on p.122. Please note that this study guide and exam were written before Brexit. Once Brexit happens, nobody knows what will happen with this.

NEW QUESTION 22
In the 1990s a company spent a lot of time and money developing a device that you could carry around that could play CDs. The product spent a long time in development but when it was released the sales figures were very disappointing. This was in part due to the fact another product was released at a similar time which had much more developed technology and could play music without the cumbersome size of a portable CD player. Which of the following did the company not consider when developing the product?

• A. power of buyers
• B. rivalry among existing competitors
• C. threat of substitution
• D. threat of new entrant

Answer: C

Explanation:
The portable CD player has been replaced with a substitute product. This threat wasn't considered by the company and this resulted in poor sales. There are many questions in the exam on Porter's 5 Forces - see p. 39

NEW QUESTION 23
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