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Analyzing market attrativeness


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Analyzing market attrativeness

  1. 1. <ul><li>Analyzing Market attractiveness </li></ul>
  2. 2. Market attractiveness <ul><li>What makes a market attractive? </li></ul><ul><ul><li>Macro factors: competitive advantage of nations </li></ul></ul><ul><ul><li>Meso factors: Competitive forces </li></ul></ul>
  3. 3. Analysis of national competitiveness (Porter diamond) 4- Firm strategy, structure, and rivalry Chance Factor conditions Related and supporting industries Demand conditions Govern- ment
  4. 4. Demand conditions in Porter’s diamond <ul><li>Nature of home demand </li></ul><ul><li>Size of home demand </li></ul><ul><li>Economies of scale </li></ul><ul><li>Transportation costs </li></ul><ul><li>Buyer sophistication </li></ul>4-
  5. 5. Factor conditions in Porter’s diamond <ul><li>Climate </li></ul><ul><li>Physical infrastructure </li></ul><ul><li>Natural resources </li></ul><ul><li>Educational system </li></ul><ul><li>Human resources </li></ul><ul><li>Technological infrastructure </li></ul><ul><li>Capital </li></ul>4-
  6. 6. Porter ’s five forces model 4- Market Competitors Intensity of rivalry New entrants Suppliers Buyers Substitutes Market level Industry level
  7. 7. Determinants of market competitiveness <ul><li>Concentration of industry </li></ul><ul><li>Rate of market growth </li></ul><ul><li>Structure of costs </li></ul><ul><li>Degree of differentiation </li></ul><ul><li>Switching costs </li></ul><ul><li>Exit barriers </li></ul>4-
  8. 8. Bargaining power of suppliers <ul><li>Supply is dominated by a few companies </li></ul><ul><li>Products are unique </li></ul><ul><li>High switching costs </li></ul><ul><li>Forward integration is possible </li></ul><ul><li>Backward integration is unlikely </li></ul><ul><li>Market is not an important customer to supplier group </li></ul>4-
  9. 9. Bargaining power of buyers <ul><li>Buyers are concentrated and/or purchase in large volumes </li></ul><ul><li>Backward integration is likely </li></ul><ul><li>Products are standardized </li></ul><ul><li>Many suppliers exist </li></ul><ul><li>Buyers earn low profits </li></ul><ul><li>Industry product is unimportant to quality of buyer ’s products, but price is important </li></ul>4-
  10. 10. Threat of substitutes 4- Buyer ’s willingness to substitute Relative price and performance of substitutes Costs of switching
  11. 11. Factors affecting entry barriers <ul><li>Economies of scale </li></ul><ul><li>Product differentiation and brand identity </li></ul><ul><li>Capital requirements in production </li></ul><ul><li>Switching costs </li></ul><ul><li>Access to distribution channels </li></ul>4-