Lesson 3.7.7

3.7.7 Analysing external environment: the competitive environment Quiz: AQA Business, Unit 7

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.7.7, Analysing external environment: the competitive environment: 20 multiple choice questions for the AQA Business (7132), Unit 7: Analysing the strategic position of a business, written with Revision Ninja.

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The 20 questions

  1. Which of Porter's five forces measures the ease with which new competitors can enter an industry?

    • Supplier power
    • Buyer power
    • Substitute threat
    • Entry threat

  2. Which factor acts as a barrier to entry for prospective competitors in an industry?

    • Low brand loyalty
    • Low switching costs
    • Standardised products
    • High capital requirements

  3. Buyer power within an industry is highest under which market condition?

    • Few large buyers
    • High switching costs
    • Differentiated products
    • Fragmented customer base

  4. Supplier power within an industry is highest under which condition?

    • Few available substitutes
    • Large purchase volumes
    • Low switching costs
    • Many competing suppliers

  5. Rivalry among existing competitors in an industry is most intense when market growth is:

    • Slow
    • Rapid
    • Exponential
    • Unpredictable

  6. In Porter's five forces model, what represents a substitute threat?

    • Alternative product categories
    • Direct brand rivals
    • Raw material suppliers
    • New market entrants

  7. Which of the following is NOT one of Porter's five forces?

    • Buyer power
    • Government regulation
    • Substitute threat
    • Rivalry

  8. How does lower setup cost affect the threat of new entrants to a market?

    • Eliminates it
    • Decreases it
    • Increases it
    • Has no effect

  9. How does product differentiation affect buyer power in Porter's five forces model?

    • Increases supplier power
    • Reduces buyer power
    • Increases buyer power
    • Eliminates rivalry

  10. Which strategic move reduces high supplier power for a manufacturer?

    • Backward vertical integration
    • Forward vertical integration
    • Market penetration
    • Horizontal integration

  11. Which of these represents a threat of substitute products or services?

    • Rival airline discounts
    • New airline entering
    • Higher fuel costs
    • Trains replacing flights

  12. In a market with a four-firm concentration ratio of 35%, 25%, 15% and 10%, what is the concentration ratio?

    • 85%
    • 100%
    • 60%
    • 35%

  13. Industry profitability is generally lowest when competitive forces are:

    • Unbalanced
    • Strong
    • Weak
    • Moderate

  14. Which main limitation applies to Porter's five forces model?

    • Ignores competition
    • Only covers finance
    • It is static
    • Applies to monopolies

  15. What is a major risk of a low-cost strategy in a highly competitive market?

    • Price wars
    • Increased brand loyalty
    • Greater product differentiation
    • Higher profit margins

  16. Which factor acts as a high barrier to entry in an industry?

    • High capital costs
    • Standardised technology
    • Deregulated markets
    • Low brand loyalty

  17. Why might an industry's attractiveness change rapidly after a five forces analysis?

    • Constant supplier numbers
    • Technological change
    • Stable buyer preferences
    • Fixed capital requirements

  18. How does strong brand loyalty protect incumbent firms from new entrants?

    • Lowers marketing expenses
    • Increases switching costs
    • Increases supplier power
    • Reduces production costs

  19. A rising four-firm concentration ratio indicates that a market is becoming:

    • Easier to enter
    • Perfectly competitive
    • Less competitive
    • More competitive

  20. Competitive rivalry among existing firms is usually lowest when market growth is:

    • Zero
    • High
    • Low
    • Negative

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