AP®︎ Business with Personal Finance: Topic 4.4 Flashcards

Framework for evaluating a market’s competitive intensity, attractiveness, and potential profitability through rivalry, new entrants, substitutes, customer power, and supplier power

A market’s potential for businesses to earn profits; strong competitive forces reduce attractiveness, while weak forces increase it

Intensity of competition among current direct competitors, shaped by their number, product differentiation, and pricing power

Ability to set or raise prices without losing enough customers to make the change unprofitable

Risk that new businesses can easily enter a market and compete for market share; the threat is strong when barriers to entry are low

Conditions that make market entry difficult or costly, such as capital requirements, patents, regulations, economies of scale, or established brand loyalty

Risk from different types of goods or services that meet the same customer need; the threat is strong when many attractive alternatives are available

Buyers’ ability to pressure a business to lower prices or improve terms, strengthened by few significant customers, high acquisition costs, and low customer switching costs

The cost of gaining a customer; high acquisition costs increase the incentive to retain existing customers and strengthen customer power

Monetary and psychological costs a customer incurs when changing the product or brand purchased

Resource providers’ ability to raise input costs or impose unfavorable terms, strengthened by few qualified providers and high costs of switching suppliers

Framework for evaluating the internal strengths and weaknesses and external opportunities and threats affecting a business’s goals, competitiveness, and viability

Internal advantages that help a business achieve its goals or compete successfully, such as valuable competencies, resources, reputation, or intellectual property

Internal disadvantages, missing capabilities, or poorly performing resources that impede performance or make a business more vulnerable

Favorable external factors beyond the business’s direct control that it may capitalize on to improve its success

Unfavorable external factors beyond the business’s direct control that may harm it or interfere with its goals