Industry and competitor analysis is important for new ventures to determine if a niche market is favorable and to assess the attractiveness of an industry. The five forces model examines threat of new entrants, rivalry among existing firms, bargaining power of suppliers and buyers, and threat of substitutes. A competitor analysis identifies competitors and collects intelligence through ethical means like trade shows. This information is organized in a competitive analysis grid to evaluate competitive positions.
The marketing environment represents a mix between the internal and external forces which surround an organization and have an impact upon it, especially their ability to build and maintain successful relationships with target customers.
The marketing environment consists of the micro and macro environment.
Macro environmental factors include social, economic, political and legal influences, together with demography and technological forces. These are sometimes referred to as the PESTLE factors and are discussed in more detail in PESTLE analysis. The organization cannot control these forces, it can only prepare for changes taking place.
Micro environment refers to the forces closely influencing the company and directly affect the organization’s relationships. The factors include the company and its current employees, its suppliers, marketing intermediaries, competitors, customers and the general public. These forces can sometimes be controlled or influenced and are explained in more detail in Porter’s 5 Forces.
Porter’s 5 Forces model is an excellent tool to analyze the structure of the competitive environment. Two important forces are the bargaining power of customers and the bargaining power of suppliers.
Supplier power is represented by their ability to determine the terms and price of supply and will increase if there are fewer suppliers than buyers, if the organization is not a key customer for the supplier, or if their industry is not attractive for suppliers.
Buyer power refers to the pressure that customers exert on companies to obtain high quality products and services at lower prices. Buyer power increases when there are few buyers and many sellers in the field, or when products are not significantly differentiated and can be easily substituted. For the seller, buyers’ demands represent costs. This means that the stronger the buyer is, the less profit available for the seller, which is why many companies try to develop strategies that reduce the power of buyers.
The PESTLE Analysis is a framework used to scan the organization’s external macro environment. The letters stand for Political, Economic Socio-cultural, Technological, Legal and Environmental.
this slide is about types of industry and the competition, firms and industry level, types of opportunities and competitor analysis.
also includes porter`s five force model, competitor intelligence and analysis grid.
The marketing environment represents a mix between the internal and external forces which surround an organization and have an impact upon it, especially their ability to build and maintain successful relationships with target customers.
The marketing environment consists of the micro and macro environment.
Macro environmental factors include social, economic, political and legal influences, together with demography and technological forces. These are sometimes referred to as the PESTLE factors and are discussed in more detail in PESTLE analysis. The organization cannot control these forces, it can only prepare for changes taking place.
Micro environment refers to the forces closely influencing the company and directly affect the organization’s relationships. The factors include the company and its current employees, its suppliers, marketing intermediaries, competitors, customers and the general public. These forces can sometimes be controlled or influenced and are explained in more detail in Porter’s 5 Forces.
Porter’s 5 Forces model is an excellent tool to analyze the structure of the competitive environment. Two important forces are the bargaining power of customers and the bargaining power of suppliers.
Supplier power is represented by their ability to determine the terms and price of supply and will increase if there are fewer suppliers than buyers, if the organization is not a key customer for the supplier, or if their industry is not attractive for suppliers.
Buyer power refers to the pressure that customers exert on companies to obtain high quality products and services at lower prices. Buyer power increases when there are few buyers and many sellers in the field, or when products are not significantly differentiated and can be easily substituted. For the seller, buyers’ demands represent costs. This means that the stronger the buyer is, the less profit available for the seller, which is why many companies try to develop strategies that reduce the power of buyers.
The PESTLE Analysis is a framework used to scan the organization’s external macro environment. The letters stand for Political, Economic Socio-cultural, Technological, Legal and Environmental.
this slide is about types of industry and the competition, firms and industry level, types of opportunities and competitor analysis.
also includes porter`s five force model, competitor intelligence and analysis grid.
Porter's Generic Strategies with examplesdipalij07
This Presentation is containing brief description of generic strategies with examples of companies in detail....
Hope it will be helpful to everybody....
Enjoy...!! :)
What is Pricing Strategy and what are the objectives and factors affecting the Pricing Strategy.
There are Certain types of Pricing Strategies as well. Each and every strategy has its own affect on the product and services offered by an organization.
Professor Michael Porter suggested three general positioning strategies to achieve competitive advantage :
Low Cost Leadership Strategy
Differentiation Strategy
Focus Strategy
The Generic Competitive Strategy (GCS) is a methodology designed to provide companies with a strategic plan to compete .The GCS is useful when a company is looking to gain an advantage over a competitor
Business Portfolio Analysis is an organisational strategy formulation technique that is based on the philosophy that Organisations should develop strategy..... much as they handle investment portfolios..
Marketing research, Role of Marketing Research and Marketing Research ProcessShashiPrabhat2
Hello, friends
This PPT includes the explanation of Marketing Research, Role of Marketing Research and Marketing Research Process or Steps of Marketing Research.
Here you will get the definition of Marketing Research according to American Marketing Association.
If you are getting any doubt, you email me at: shashiprabhat566@gmail.com
Introduction to Consumer Behaviour; Consumer Behaviour
and Marketing Strategy; Consumer Involvement – Levels
of involvement, and Decision Making
Consumer Decision Process – Stages in Decision Process,
Information Search Process; Evaluative Criteria and
Decision Rules, Consumer Motivation – Types of Consumer
Needs, Ways of Motivating Consumers. Information
Processing and Consumer Perception.
Consumer Attitudes and Attitude Change; Influence of
Personality and Self Concept on Buying Behaviour,
Psychographics and Lifestyles, Impuse Buying.
Diffusion of Innovation and Opinion Leadership, Family
Decision Making, Influence of Reference Group
Industrial Buying Behaviour– Process and factors, Models
of Consumer Behaviour – Harward Seth, Nicosia, E& D,
Economic Model; Introduction to Consumer Behaviour
Audit; Consumer Behaviour Studies in India
To download the editable version of this document, go to www.slidebooks.com
Market & competitor analysis template in PPT created by former Deloitte & McKinsey management consultants and talented designers.
Porter's Generic Strategies with examplesdipalij07
This Presentation is containing brief description of generic strategies with examples of companies in detail....
Hope it will be helpful to everybody....
Enjoy...!! :)
What is Pricing Strategy and what are the objectives and factors affecting the Pricing Strategy.
There are Certain types of Pricing Strategies as well. Each and every strategy has its own affect on the product and services offered by an organization.
Professor Michael Porter suggested three general positioning strategies to achieve competitive advantage :
Low Cost Leadership Strategy
Differentiation Strategy
Focus Strategy
The Generic Competitive Strategy (GCS) is a methodology designed to provide companies with a strategic plan to compete .The GCS is useful when a company is looking to gain an advantage over a competitor
Business Portfolio Analysis is an organisational strategy formulation technique that is based on the philosophy that Organisations should develop strategy..... much as they handle investment portfolios..
Marketing research, Role of Marketing Research and Marketing Research ProcessShashiPrabhat2
Hello, friends
This PPT includes the explanation of Marketing Research, Role of Marketing Research and Marketing Research Process or Steps of Marketing Research.
Here you will get the definition of Marketing Research according to American Marketing Association.
If you are getting any doubt, you email me at: shashiprabhat566@gmail.com
Introduction to Consumer Behaviour; Consumer Behaviour
and Marketing Strategy; Consumer Involvement – Levels
of involvement, and Decision Making
Consumer Decision Process – Stages in Decision Process,
Information Search Process; Evaluative Criteria and
Decision Rules, Consumer Motivation – Types of Consumer
Needs, Ways of Motivating Consumers. Information
Processing and Consumer Perception.
Consumer Attitudes and Attitude Change; Influence of
Personality and Self Concept on Buying Behaviour,
Psychographics and Lifestyles, Impuse Buying.
Diffusion of Innovation and Opinion Leadership, Family
Decision Making, Influence of Reference Group
Industrial Buying Behaviour– Process and factors, Models
of Consumer Behaviour – Harward Seth, Nicosia, E& D,
Economic Model; Introduction to Consumer Behaviour
Audit; Consumer Behaviour Studies in India
To download the editable version of this document, go to www.slidebooks.com
Market & competitor analysis template in PPT created by former Deloitte & McKinsey management consultants and talented designers.
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin.
Industry and Competitor Analysis | Five Competitive Forces | Five Primary Ind...FaHaD .H. NooR
Industry and Competitor Analysis | Five Competitive Forces | Five Primary Industry Types | What Is Industry | Competitor Analysis | Studying Industry Trends |
industry, Industry Analysis, Why is Industry Analysis Important? How Industry and Firm-Level Factors Affect Performance, Techniques Available to Assess Industry Attractiveness, Studying Industry Trends
INDUSTRY ANALYSIS One of the major competences that str.docxcarliotwaycave
INDUSTRY ANALYSIS
One of the major competences that strategic managers need is the ability to define their business, conduct an effective industry analysis,
and identify the "key success factors" for firms competing in their industry. This brief note discusses the steps most often found in a
solid analysis of an industry.
A.DEFINE THE INDUSTRY.
The boundaries for an industry analysis are determined by the markets and products that best describe the domain of the industry. Once
you fully understand the business segment that is to be analyzed, you are in a position to identify the capabilities required to participate
successfully in that industry, and the competitors that are likewise able to effectively target the same business segments. These
elements set the parameters for understanding and analyzing the industry. As industries converge and shift, business definitions become
more difficult. In virtually all industries, consumers are becoming more demanding for customized products and services. These
demands encourage the development of innovations, products, and competitors.
B. DESCRIBE THE INDUSTRY STRUCTURE.
For each product-market segment, an industry analysis will describe the "five-forces" of competition. The five forces discussed briefly
below predict the long run profitability of an industry and are an important first step in analyzing the industry once it has been identified.
1. Bargaining Power of Buyers: This primary force comes from the customer segments that make up the markets in which firms
compete. The size and importance of customers influences their power to negotiate prices and terms that reduce the overall
profitability of the industry. The sizes and types of buyers present in an industry determine their potential influence on product
development and influence the level of competition to be found in the industry.
2. Intensity of Rivalry: A second force comes from the competitors and the ways they compete. Each competitor offers a set of
products and services that attempts to provide higher value to the product-market segments they address. Strategies can be
designed to provide combinations of higher performance, more fashion and features, higher quality, or lower price. Increased
rivalry always leads to price or service competition that reduces the profitability of the industry.
3. Bargaining Power of Suppliers: A third influence on the profitability of an industry comes from its suppliers. In some industries,
suppliers might control critical inputs that can affect all firms’ ability to compete. Analogous to Bargaining power of Buyers,
whenever suppliers are large or few, their leverage tends to be high. Limited access to critical factors of production, equipment,
materials, or components can increase prices and accordingly limit profit potential.
4. Threat of New Entrants; a fourth force represents the ease with which a new competitor can compete for exi ...
The Five Competitive Forces That Shape Strategyby Michael E..docxcherry686017
The Five Competitive Forces That Shape Strategy
by Michael E. Porter
Editor’s Note: In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist
and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In
subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations,
regions, nations, and, more recently, health care and philanthropy. “Porter’s five forces” have shaped a generation of academic
research and business practice. With prodding and assistance from Harvard Business School Professor Jan Rivkin and
longtime colleague Joan Magretta, Porter here reaffirms, updates, and extends the classic work. He also addresses common
misunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for
strategy today.
In essence, the job of the strategist is to understand and cope with competition. Often, however, managers define competition
too narrowly, as if it occurred only among today’s direct competitors. Yet competition for profits goes beyond established
industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products.
The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive
interaction within an industry.
As different from one another as industries might appear on the surface, the underlying drivers of profitability are the same. The
global auto industry, for instance, appears to have nothing in common with the worldwide market for art masterpieces or the
heavily regulated health-care delivery industry in Europe. But to understand industry competition and profitability in each of
those three cases, one must analyze the industry’s underlying structure in terms of the five forces. (See the exhibit “The Five
Forces That Shape Industry Competition.”)
The Five Competitive Forces That Shape Strategy - Harvard Business Reviewhttp://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr
1 of 16 9/23/2013 8:58 AM
If the forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no company earns attractive
returns on investment. If the forces are benign, as they are in industries such as software, soft drinks, and toiletries, many
companies are profitable. Industry structure drives competition and profitability, not whether an industry produces a product or
service, is emerging or mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry
profitability in the short run—including the weather and the business cycle—industry structure, manifested in the competitive
forces, sets industry profitability in the medium and long run. (See the exhibit “Differences in Industry Profitability.”)
Differences in Ind ...
A framework for the analysis of interview data from multiple field research s...Afzaal Ali
Anne Lillis is a Professor of Management Accounting and Head Department of Accounting and Finance, University of Melbourne, Melbourne, Victoria, Australia.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
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1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Memorandum Of Association Constitution of Company.pptseri bangash
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
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Remote sensing and monitoring are changing the mining industry for the better. These are providing innovative solutions to long-standing challenges. Those related to exploration, extraction, and overall environmental management by mining technology companies Odisha. These technologies make use of satellite imaging, aerial photography and sensors to collect data that might be inaccessible or from hazardous locations. With the use of this technology, mining operations are becoming increasingly efficient. Let us gain more insight into the key aspects associated with remote sensing and monitoring when it comes to mining.
Taurus Zodiac Sign_ Personality Traits and Sign Dates.pptxmy Pandit
Explore the world of the Taurus zodiac sign. Learn about their stability, determination, and appreciation for beauty. Discover how Taureans' grounded nature and hardworking mindset define their unique personality.
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Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
2. What is Industry Analysis?
Industry
An industry is a group of firms producing a similar product
or service, such as airlines, fitness drinks, furniture, or
electronic games.
Industry Analysis
Is business research that focuses on the potential of an
industry.
5-2
3. What is Industry Analysis Important?
5-3
Industry Analysis
Importance
• Once it is determined that a new
venture is feasible in regard to the
industry and market in which it
will compete, a more in-depth
analysis is needed to learn the ins
and outs of the industry.
• The analysis helps a firm
determine
if the niche market it identified
during feasibility analysis is
favorable for a new firm.
4. Three Key Questions
5-4
When studying an industry, an entrepreneur must answer
three questions before pursuing the idea of starting a firm.
Is the industry
accessible—in other
words, is it is realistic
place for a new
venture to enter?
Are there positions in
the industry that avoid
some of the negative
attributes of the
industry as a whole?
Does the industry
contain markets that
are ripe for innovation
or are underserved?
Question 1 Question 3Question 2
5. How Industry and Firm-Level Factors
Affect Performance
Firm Level Factors
Include a firm’s assets, products, culture, teamwork among
its employees, reputation, and other resources.
Industry Level Factors
Include threat of new entrants, rivalry among existing firms,
bargaining power of buyers, and related factors.
Conclusion
In various studies, researchers have found that from 8% to
30% of the variation in firm profitability is directly
attributable to the industry in which a firm competes.
5-5
6. Techniques Available to Assess Industry
Attractiveness
5-6
Study Environmental
and Business Trends
The Five Competitive
Forces Model
Assessing Industry Attractiveness
7. Studying Industry Trends
Environmental Trends
Include economic trends, social trends, technological
advances, and political and regulatory changes.
For example, industries that sell products to seniors are
benefiting by the aging of the population.
Business Trends
Other trends that impact an industry.
For example, are profit margins in the industry increasing or
falling? Is innovation accelerating or waning? Are input
costs going up or down?
5-7
8. The Five Competitive Forces Model
1 of 3
Explanation of the Five Forces Model
The five competitive forces model is a framework for
understanding the structure of an industry.
The model is composed of the forces that determine
industry profitability.
They help determine the average rate of return for the firms
in an industry.
5-8
9. The Five Competitive Forces Model
2 of 3
Explanation of the Five Forces Model (continued)
Each of the five-forces impacts the average rate of return for
the firms in an industry by applying pressure on industry
profitability.
Well managed firms try to position their firms in a way that
avoids or diminishes these forces—in an attempt to beat the
average rate of return of the industry.
5-9
11. Threat of Substitutes
1 of 3
Threat of Substitutes
The price that consumers are willing to pay for a product
depends in part on the availability of substitute products.
For example, there are few if any substitutes for prescription
medicines, which is one of the reasons the pharmaceutical
industry is so profitable.
In contrast, when close substitutes for a product exist,
industry profitability is suppressed, because consumers will
opt out if the price gets too high.
5-11
12. Threat of Substitutes
2 of 3
Threat of Substitutes (continued)
The extent to which substitutes suppress the profitability of
an industry depends on the propensity for buyers to
substitute between alternatives.
This is why firms in an industry often offer their customers
amenities to reduce the likelihood that they will switch to a
substitute product, even in light of a price increase.
5-12
13. Threat of Substitutes
3 of 3
5-13
• A customer could easily get
a cup of coffee cheaper at
one of Starbuck’s competitors.
• To decrease the likelihood of
this, Starbucks offers high-
quality fresh coffee, good
service, and a pleasant
atmosphere.
• Starbucks has therefore
reduced the threat of
substitutes.
14. Threat of New Entrants
Threat of New Entrants
If the firms in an industry are highly profitable, the industry
becomes a magnet to new entrants.
Unless something is done to stop this, the competition in the
industry will increase, and average industry profitability
will decline.
Firms in an industry try to keep the number of new entrants
low by erecting barriers to entry.
A barrier to entry is a condition that creates a disincentive for a new
firm to enter an industry.
5-14
15. Threat of New Entrants
5-15
Barrier to Entry Explanation
Economies of Scale
Product
differentiation
Capital
requirements
Barriers to Entry
Industries that are characterized by large economies
of scale are difficult for new firms to enter, unless
they are willing to accept a cost disadvantage.
Industries such as the soft drink industry that are
characterized by firms with strong brands are difficult
to break into without spending heavily on advertising.
The need to invest large amounts of money to gain
entrance to an industry is another barrier to entry.
16. Threat of New Entrants
3 of 6
5-16
Barrier to Entry Explanation
Cost advantages
independent of size
Access to distribution
channels
Government and
legal barriers
Barriers to Entry (continued)
Existing firm may have cost advantages not related to
size. For example, the existing firms in an industry
may have purchased land when it was less expensive
than it is today.
Distribution channels are often hard to crack. This is
particularly true in crowded markets, such as the
convenience store market.
Some industries, such as broadcasting, require the
granting of a license by a public authority to compete.
17. Threat of New Entrants
Non Traditional Barriers to Entry
It is difficult for start-ups to execute barriers to entry that
are expensive, such as economies of scale, because money
is usually tight.
Start-ups have to rely on nontraditional barriers to entry to
discourage new entrants, such as assembling a world-class
management team that would be difficult for another
company to replicate.
5-17
18. Threat of New Entrants
5-18
Barrier to Entry Explanation
Nontraditional Barriers to Entry
Strength of
management team
If a start-up puts together a world-class management
team, it may give potential rivals pause in taking on
the start-up in its chosen industry.
First-mover
advantage
If a start-up pioneers an industry or a new concept
within an industry, the name recognition the start-up
establishes may create a barrier to entry.
Passion of the
management team
and employees
If the employees of a start-up are motivated by the
unique culture of a start-up, and anticipate large
financial reward, this is a combination that cannot be
replicated by larger firms.
19. Threat of New Entrants
5-19
Barrier to Entry Explanation
Nontraditional Barriers to Entry (continued)
Unique Business
Model
Inventing a new
approach to an
industry
If a start-up is able to construct a unique business
model and establish a network of relationships that
makes the business model work, this set of advantages
creates a barrier to entry.
If a start-up invents a new approach to an industry
and executes it in an exemplary fashion, these factors
create a barrier to entry for potential imitators.
Internet Domain
Name
Some Internet domain names are so “spot-on” that
they give a start-up a meaningful leg up in terms of e-
commerce opportunities.
20. Rivalry Among Existing Firms
Rivalry Among Existing Firms
In most industries, the major determinant of industry
profitability is the level of competition among existing
firms.
Some industries are fiercely competitive, to the point where
prices are pushed below the level of costs, and industry-
wide losses occur.
In other industries, competition is much less intense and
price competition is subdued.
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21. Rivalry Among Existing Firms
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Factors that determine the intensity of the rivalry among
existing firms in an industry.
Number and
balance of
competitors
Degree of
difference
between products
The more competitors there are, the more likely it
is that one or more will try to gain customers by
cutting its price.
The degree to which products differ from one
product to another affects industry rivalry.
22. Rivalry Among Existing Firms
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Factors that determine the intensity of the rivalry among existing
firms in an industry (continued)
Growth rate of an
industry
Level of fixed
costs
The competition among firms in a slow-growth
industry is stronger than among those in fast-
growth industries.
Firms that have high fixed costs must sell a higher
volume of their product to reach the break-even
point than firms with low fixed costs.
23. Bargaining Power of Suppliers
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Bargaining Power of Suppliers
Suppliers can suppress the profitability of the industries to
which they sell by raising prices or reducing the quality of
the components they provide.
If a supplier reduces the quality of the components it
supplies, the quality of the finished product will suffer, and
the manufacturer will eventually have to lower its price.
If the suppliers are powerful relative to the firms in the
industry to which they sell, industry profitability can suffer.
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24. Bargaining Power of Suppliers
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Factors that have an impact on the ability of suppliers to
exert pressure on buyers
Supplier
concentration
Switching costs
Switching costs are the fixed costs that buyers
encounter when switching or changing from one
supplier to another. If switching costs are high, a
buyer will be less likely to switch suppliers.
When they are only a few suppliers that supply a
critical product to a large number of buyers, the
supplier has an advantage.
25. Bargaining Power of Suppliers
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Factors that have an impact on the ability of suppliers to exert
pressure on buyers (continued)
Attractiveness of
substitutes
Threat of
forward
integration
The power of a supplier is enhanced if there is a
credible possibility that the supplier might enter
the buyer’s industry.
Supplier power is enhanced if there are no
attractive substitutes for the product or services
the supplier offers.
26. Bargaining Power of Buyers
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Bargaining Power of Buyers
Buyers can suppress the profitability of the industries from
which they purchase by demanding price concessions or
increases in quality.
For example, the automobile industry is dominated by a
handful of large companies that buy products from
thousands of suppliers in different industries. This allows
the automakers to suppress the profitability of the industries
from which they buy by demanding price reductions.
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27. Bargaining Power of Buyers
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Factors that have an impact on the ability of suppliers to exert
pressure on buyers
Buyer group
concentration
Buyer’s costs
The greater the importance of an item is to a
buyer, the more sensitive the buyer will be to the
price it pays.
If there are only a few large buyers, and they buy
from a large number of suppliers, they can
pressure the suppliers to lower costs and thus
affect the profitability of the industries from which
they buy.
28. Bargaining Power of Buyers
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Factors that have an impact on the ability of buyers to exert
pressure on suppliers (continued)
Degree of
standardization
of supplier’s
products
Threat of
backward
integration
The power of buyers is enhanced if there is a
credible threat that the buyer might enter the
supplier’s industry.
The degree to which a supplier’s product
differs from its competitors affect the buyer’s
bargaining power.
29. First Application of the Five Forces Model
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First Application of the Model
The five forces model can be used to assess the
attractiveness of an industry by determining the level of
threat to industry profitability for each of the forces.
If a firm fills out the form shown on the next slide and
several of the threats to industry profitability are high, the
firm may want to reconsider entering the industry or think
carefully about the position it would occupy.
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30. First Application of the Five Forced Model
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Assessing Industry Attractiveness Using the Five Forces Model
31. Second Application of the Five Forces Model
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Second Application of the Model
The second way a new firm can apply the five forces model
to help determine whether it should enter an industry is by
using the model to answer several key questions.
The questions are shown in the figure on the next slide, and
help a firm project the potential success of a new venture in
a particular industry.
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32. Second Application of the Five Forced Model
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Using the Five Forces Model to Pose Questions to Determine the Potential
Success of a New Venture in an Industry
33. Industry Types and the Opportunities
They Offer
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Emerging Industries
Industries in which standard operating procedures have yet
to be developed.
Opportunity: First-mover advantage.
Fragmented Industries
Industries that are characterized by a large number of firms
of approximately equal size.
Opportunity: Consolidation.-mergers and acquisitions
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34. Industry Types and the Opportunities
They Offer
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Mature Industries
Industries that are experiencing slow or no increase in
demand.
Opportunities: Process innovation and after-sale service innovation.
Declining Industries
Industries that are experiencing a reduction in demand.
Opportunities: Leadership, establishing a niche market, and pursuing
a cost reduction strategy.
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35. Industry Types and the Opportunities
They Offer
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Global Industries
Industries that are experiencing significant international
sales.
Opportunities: Multidomestic and global strategies.
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36. Competitor Analysis
What is a Competitor Analysis?
A competitor analysis is a detailed analysis of a firm’s
competition.
It helps a firm understand the positions of its major
competitors and the opportunities that are available.
A competitive analysis grid is a tool for organizing the
information a firm collects about its competitors.
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38. Sources of Competitive Intelligence
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Collecting Competitive Intelligence
To complete a competitive analysis grid, a firm must first
understand the strategies and behaviors of its competitors.
The information that is gathered by a firm to learn about its
competitors is referred to as competitive intelligence.
A new venture should take care that it collects competitive
intelligence in a professional and ethical manner.
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39. Sources of Competitive Intelligence
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Ethical ways to obtain information about competitors
• Attend conferences and trade shows.
• Purchase competitor’s products.
• Study competitors’ Web sites.
• Set up Google and Yahoo! e-mail alerts.
• Read industry-related books, magazines, and Web sites.
• Talk to customers about what motivated them to buy your
product as opposed to your competitor’s product.
40. Sources of Competitive Intelligence
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• Many companies attend
trade shows to not only
display their products,
but to see what their
competitors are up to.
• This is a photo of the
the 2008 Consumer
Electronics Trade Show
in Las Vegas.
41. Completing a Competitive Analysis Grid
Competitive Analysis Grid
A tool for organizing the information a firm collects about
its competitors
A competitive analysis grid can help a firm see how it
stakes up against its competitors, provide ideas for markets
to pursue, and identify its primary sources of competitive
advantage.
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