Specification Topic: Porter’s five forces and PESTLE

Q1 Fill in the gaps…number 1!

Every market or industry that businesses operate within is ____________________. These differences
include the number of ___________________ found within it, whether the market is growing or
______________________, the needs and wants of consumers and the level of ____________ loyalty.
Most businesses today operate in ________________ competitive markets. This has been fuelled by
factors such as ____________________, changes in technology and the growth of ________________.
In 1980, ______________ _________________developed a model which provided a framework to
determine the nature of competition in a particular _________________. This aimed to help businesses
establish how best to achieve and keep a __________________ ___________________. This model is
referred to as “Porter’s __________ ____________________” and is represented in an easily
understandable ______________.

Choose from: Michael Porter; globalisation; declining; highly; different; e-commerce; market;
diagram; Five Forces; brand; competitors; competitive advantage

Q2 Porter’s five forces diagram… Complete the diagram and give a brief explanation of each
element in the table below.

Force Explanation

2.1

2.2

2.3

2.4

2.5

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Specification Topic: Porter’s five forces and PESTLE

Q3 Match the scenario to the likely effect

(i) A business accesses 85% of its (a) The threat of new entrants is
supplies from one supplier and there significantly reduced protecting
are no substitutes. business profitability and market
share.

(ii) A market is dominated by a few (b) The price of products will be kept
major players, each benefiting from low, therefore reducing the
economies of scale. potential for high profits.

(iii) A leading supermarket chain is (c) The profit margins of the business
thinking about changing suppliers for will be squeezed if the supplier
one of its best-selling lines. There are chooses to raise prices.
currently a large number of suppliers
in the market which could potentially
supply them.

(iv) A market where there is limited (d) Choice is restricted and therefore
brand loyalty and a huge number of prices tend to rise, increasing the
substitutes available for customers to profitability of the firm, although
buy. the business may be inefficient.

(v) One business dominates the market, (e) The business may be able to
holding an 85% market share. negotiate cheaper prices, reducing
the supplier’s profit margins.

(i) (ii) (iii) (iv) (v)

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 Specification Topic: Porter’s five forces and PESTLE

Q4 Fill in the Gaps…number 2!

The ______________ __________________ can have a significant impact on the operations of a

business, both in a positive and a negative way. It is something that cannot be ________________, yet
______________ ______________ must be adapted to ensure business success. For example, if the
government decides to raise __________ __________ ______ to 25%, then this could have an impact
on a business and the revenue it makes, as it will make the products and services it offers potentially
more expensive and thus discourage customers from purchasing and force them to purchase from
other firms. If ____________ _________ rise, this will have an effect on the cost of borrowing and may
mean that businesses are unable to push ahead with planned investment. However, the external
environment, providing it is monitored, can be helpful to a business. One such tool that businesses can
use to support the monitoring process is a ____________ analysis.
Choose from: PESTLE, external environment, interest rates, controlled, value added tax, business
strategy

Q5 Identify the different elements that make up the PESTLE analysis

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Specification Topic: Porter’s five forces and PESTLE

Q6 Link the following factors to the correct section of PESTLE analysis

(i) Interest Rates

(ii) Changes in Government

(iii) Renewable Sources

(iv) European Union

(v) Unemployment

(vi) Age of Population

(vii) Developments in Social Media

(viii) Reduction of ‘Red Tape’

(ix) Increasing Migration

(x) Exchange Rate

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