Strat 4

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  1. Competitive Forces that Determine Profit Potential of and Industry
    • 1)Buyers
    • 2)Suppliers
    • 3)Competitors
    • 4)New Entrants
    • 5)Substitute Products
    • 6)Complements
  2. Buyers High Bargaining Power:
    • 1)buyers are concentrated or purchases are large relative to industry sales
    • 2)buyer presents credible threat of backward integration
    • 3)Products undifferentiated
    • 4)buyers face low switching costs
    • 5)buyers industry earns low profits
    • 6)buyer has full information
  3. Buyers Compete with Supply Industry by:
    • 1)bargaining down prices
    • 2)Forcing higher quality
    • 3)playing firms off of each other
  4. Suppliers Bargaining Power
    • 1)industry dominated by few firms
    • 2)few substitutes
    • 3)high switching costs
    • 4)supplier poses threat of fwd. integration
    • 5)products are differentiated
    • *suppliers exert power by threatening to raise price/quality of supply*
  5. Threat of New Entrants
    • -Economies of Scale
    • -Product Differentiation
    • -Capital Requirements
    • -Switching Costs
    • -Access to critical resources
    • -Cost disadvantages independent of scale
    • -Govt. Policy
  6. Threat of Substitute Products
    Products with similar function limit the prices firms can charge
  7. Intensity of Within Industry Rivalry
    • Cutthroat competition likely to occur when:
    • -many/equally balanced competitors
    • -slow growth industry
    • -high fixed/storage costs
    • -lack of differentiation/switching costs
    • -diverse competitors
    • -high strategic stakes
    • -high exit barriers
  8. 6th Force: Strength of Complements
    • -products that used together by consumers to satisfy one type of need
    • Ex:computer software/hardware
  9. Unattractive Industry Characteristics:
    • -Low entry barriers
    • -Suppliers+Buyers have strong bargaining positions
    • -Strong threats from substitute products
    • -Intense rivalry
    • -Low profit potential
    • -Complementaries are weak
  10. Attractive Industry Characteristics:
    All opposite from unattractive industry
  11. Porters 5 Forces
    suppliers, competitors within industry, out of industry substitutes, potential entrants, customers,
Card Set
Strat 4
Strat 4
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