ExpertMedium2 marksMultiple Choice
ACCA · Question 04 · The business organisation and its external environment
StreamForge is a new esports broadcasting platform. The industry is currently dominated by two massive tech giants who have exclusive, multi-year contracts with all major gaming tournaments and possess proprietary streaming compression algorithms. According to Porter's Five Forces, which force is primarily protecting the tech giants from StreamForge's entry?
StreamForge is a new esports broadcasting platform. The industry is currently dominated by two massive tech giants who have exclusive, multi-year contracts with all major gaming tournaments and possess proprietary streaming compression algorithms. According to Porter's Five Forces, which force is primarily protecting the tech giants from StreamForge's entry?
Answer options:
A.
Bargaining power of suppliers
B.
Threat of substitute products
C.
Threat of new entrants
D.
Competitive rivalry
How to approach this question
Look at what is stopping the new company (StreamForge) from succeeding. The existing companies have built 'moats' (contracts, tech) which are classic barriers to entry.
Full Answer
C.Threat of new entrants✓ Correct
Barriers to entry (such as patents, proprietary tech, and exclusive supplier contracts) directly reduce the Threat of New Entrants in Porter's Five Forces model.
Common mistakes
Selecting supplier power because contracts are mentioned. The contracts are a tool used to create a barrier to entry.
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