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QLDBusiness StudiesQuick questions
Unit 3: Business diversification
Quick questions on Competitive markets and Porter's five forces (QCE Business Unit 3)
12short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is market structures?Show answer
Most Australian consumer markets sit in monopolistic competition or oligopoly. True perfect competition is rare; true monopolies usually exist only by regulation or natural-monopoly infrastructure.
What is porter's five forces?Show answer
Michael Porter's (1979) five forces framework identifies the structural determinants of profitability in an industry.
What is implications for the diversification decision?Show answer
High overall competitive intensity (rivalry, supplier power, buyer power, entry threat, substitute threat all high) means low average industry profitability. A business in such a market faces a structural decision.
What is worked Australian examples?Show answer
Big Four banks (oligopoly). CBA, Westpac, NAB and ANZ each hold around 20-25 percent share of Australian mortgages. Industry rivalry is moderate (interdependent pricing, sticky customers). Supplier power (depositors, wholesale funders) is moderate. Buyer power (customers) is moderate.
What is big Four banks?Show answer
CBA, Westpac, NAB and ANZ each hold around 20-25 percent share of Australian mortgages. Industry rivalry is moderate (interdependent pricing, sticky customers). Supplier power (depositors, wholesale funders) is moderate.
What is australian mining?Show answer
BHP, Rio Tinto and Glencore dominate iron-ore and coal exports. Industry rivalry is moderate (cost-curve competition globally). Supplier power is low (commodity inputs).
What is sydney cafes?Show answer
Thousands of cafes in Sydney, each differentiated by location, coffee quality, food and atmosphere. Industry rivalry is intense. Supplier power varies (some coffee roasters dominate).
What is plan?Show answer
Assess each force, then make a recommendation.
What is treating Porter's framework as static?Show answer
Forces change over time. Threats of substitution have risen in many markets over the past decade.
What is confusing structure and conduct?Show answer
Market structure (concentration, entry barriers) is distinct from firm conduct (pricing strategy, marketing).
What is generic "supermarkets are competitive" answers?Show answer
Specific evidence - market shares, ACCC inquiry findings, named players - earn higher marks.
What is forgetting the diversification implication?Show answer
The dot point is specifically about why competitive intensity drives diversification. The five forces are the diagnostic, not the destination. :::