Strat 4

• 1)Buyers
• 2)Suppliers
• 3)Competitors
• 4)New Entrants
• 5)Substitute Products
• 6)Complements

• 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

• 1)bargaining down prices
• 2)Forcing higher quality
• 3)playing firms off of each other

• 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*

• -Economies of Scale
• -Product Differentiation
• -Capital Requirements
• -Switching Costs
• -Access to critical resources
• -Cost disadvantages independent of scale
• -Govt. Policy

Products with similar function limit the prices firms can charge

• 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

• -products that used together by consumers to satisfy one type of need
• Ex:computer software/hardware

• -Low entry barriers
• -Suppliers+Buyers have strong bargaining positions
• -Strong threats from substitute products
• -Intense rivalry
• -Low profit potential
• -Complementaries are weak

All opposite from unattractive industry

suppliers, competitors within industry, out of industry substitutes, potential entrants, customers,