Does anyone know of an easy way to remember how to tackle these problems? I just took the Book 6 Exam 1 AM and got killed in that section. 1/6 They seem pretty intuitive, but I got many of them wrong. I hear that the Five Forces are an extremely important topic and are all over the L2 exam. Help please
same problem here… porter and corporate governance are my weakest areas and even though i read it twice, i cannot assure you that i have it down. 
i suspect that question from schweser is just badly phrased …look at cfai text question - must clearer
thanks, I’ll look at the CFA I text for this. Hopefully, that clears some of this up.
If an analyst was assessing a pharmaceutical companys competitive strategy, the length of the drug patent would be related to which of Porter’s Five Forces? A) Entry barriers. B) Bargaining power of buyers. C) Bargaining power of suppliers. D) Rivalry among existing competitors.
I would go A. Thanks for posting these questions lately. I haven’t been posting questions as much lately, more so just answering. I will start posting some up.
Well it’s definitely a barrier of sorts, so A
anytime nib. we’re here to help each other and we all are getting better by writing/posting/answering/discussing/etc… the ans is A. Long drug patents make entry into the industry difficult; therefore this relates to barriers to entry.
A
I agree, I choose A, but it could easily be Supplier Bargaining Power (you’re the sole supplier)
A is the answer, that question was discussed a few weeks ago.
I suck at these questions. Why couldn’t it be D? This is the kind of stuff I mess up all the time. There maybe many other companies in the pharma industry and even though this particular co. has a patent on one drug that doesn’t translate to barriers for the entire industry (which is what Porter is about). It could reduce competition for that particular drug. I am just messed up? Everybody else seemed to jump on A right away. I don’t think I will ever get a framework for understanding these questions.
Why NOT B? If I would like to purchase a particular drug but there is only ONE company selling it because they have the patent then they pretty much dictate the price to me.
What the heck would be the industry here?
Patents prevent others from getting into the industry. It’s a big barrier to entry. Think the drug industry, if you made a new drug you would have a patent for example like 10 years. For 10 years, no one can make that drug. It’s a big barrier.
According to Porter, there are two fundamental questions that determine competitive strategy. Of these two questions, the one that the firm has the most control over is whether the: A) industry is attractive. B) firm’s competitors will enter the market. C) industry is profitable. D) firm can position itself to have a competitive advantage. ------------------- ---------------------
Dapper425 Wrote: ------------------------------------------------------- > Why NOT B? > > If I would like to purchase a particular drug but > there is only ONE company selling it because they > have the patent then they pretty much dictate the > price to me. the perspective of the question is important. If you are a distributor of drugs - then the patent holder may be a supplier and it would then be a bargaining power of suppliers issue. If you are the manufacturing pharmaceutical company and you hold the patent then it acts as a barrier to entrants. The CFAI questions will be clear as to who the subject is.
According to Porter, there are two fundamental questions that determine competitive strategy. Of these two questions, the one that the firm has the most control over is whether the: A) industry is attractive. B) firm’s competitors will enter the market. C) industry is profitable. D) firm can position itself to have a competitive advantage. ans is D. The firm typically has little control over the industrys long-term attractiveness, but it has a great deal of control over its choice of competitive position.
mwvt9 Wrote: ------------------------------------------------------- > I suck at these questions. Why couldn’t it be D? > > > This is the kind of stuff I mess up all the time. > There maybe many other companies in the pharma > industry and even though this particular co. has a > patent on one drug that doesn’t translate to > barriers for the entire industry (which is what > Porter is about). It could reduce competition for > that particular drug. > > I am just messed up? Everybody else seemed to jump > on A right away. > > I don’t think I will ever get a framework for > understanding these questions. i agree with mw, why cant it be D?
Black Swan Wrote: ------------------------------------------------------- > I agree, I choose A, but it could easily be > Supplier Bargaining Power (you’re the sole > supplier) Supplier bargaining power refers to the suppliers to the company in question. In other words the suppliers for the pharm company would be the companies that supplies them the chemicals, test tubes and whatnot to make the final product. What you are trying to describe is more like rivalry among competitors.