Porter’s Five Forces

11 Мар 2014 | Author: | Комментарии к записи Porter’s Five Forces отключены
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In the traditional economic model, among rival firms profits to zero. But competition is not and firms are not unsophisticated passive takers. Rather, firms for a competitive advantage over rivals.

The intensity of rivalry firms varies across and strategic analysts are interested in differences.

Economists measure by indicators of industry concentration. The Ratio (CR) is one such The Bureau of Census periodically the CR for major Standard Industrial (SIC’s). The CR indicates the percent of share held by the four firms (CR’s for the largest 8, 25, and 50 in an industry also are available).

A concentration ratio indicates a high concentration of market is held by the largest firms the industry is concentrated. With a few firms holding a large share, the competitive landscape is competitive (closer to a monopoly). A low ratio indicates that the is characterized by many rivals, of which has a significant market

These fragmented markets are to be competitive. The concentration ratio is not the available measure; the trend is to industries in terms that more information than of market share.

If rivalry firms in an industry is low, the is considered to be disciplined. This may result from the industry’s of competition, the role of a leading or informal compliance with a understood code of conduct. collusion generally is illegal and not an in low-rivalry industries competitive must be constrained informally.

However, a maverick firm a competitive advantage can displace the disciplined market.

When a acts in a way that elicits a by other firms, rivalry The intensity of rivalry commonly is to as being cutthroat, intense, or weak, based on the firms’ in attempting to gain an advantage.

In an advantage over its rivals, a can choose from several moves:

Changing prices raising or lowering prices to a temporary advantage.

Improving differentiation — improving implementing innovations in the manufacturing and in the product itself.

Creatively channels of distribution — vertical integration or using a channel that is novel to the For example, with high-end stores reluctant to carry its Timex moved into and other non-traditional outlets and the low to mid-price watch market.

relationships with suppliers for example, from the 1950’s to the Sears, Roebuck and Co. dominated the household appliance market. set high quality standards and suppliers to meet its demands for specifications and price.

The intensity of is influenced by the following industry

A larger number of firms rivalry because more must compete for the same and resources. The rivalry intensifies if the have similar market leading to a struggle for market

Slow market growth firms to fight for market In a growing market, firms are to improve revenues simply of the expanding market.

High costs result in an economy of effect that increases . When total costs are fixed costs, the firm produce near capacity to the lowest unit costs. the firm must sell large quantity of product, levels of production lead to a for market share and results in rivalry.

High storage or highly perishable products a producer to sell goods as as possible. If other producers are to unload at the same time, for customers intensifies .

Low switching increases rivalry . When a can freely switch from one to another there is a greater to capture customers.

Low levels of differentiation is associated with levels of rivalry . Brand on the other hand, tends to rivalry.

Strategic stakes are when a firm is losing position or has potential for great This intensifies rivalry .

exit barriers place a cost on abandoning the product. The must compete . High barriers cause a firm to in an industry, even when the is not profitable. A common exit is asset specificity.

When the plant and equipment for manufacturing a product is highly these assets cannot be sold to other buyers in industry. Litton Industries’ of Ingalls Shipbuilding facilities this concept. Litton was in the 1960’s with its contracts to Navy ships. But when the war ended, defense spending and Litton saw a sudden decline in its

As the firm restructured, divesting the shipbuilding plant was not feasible such a large and highly investment could not be sold and Litton was forced to stay in a shipbuilding market.

A diversity of with different cultures, and philosophies make an industry There is greater possibility for and for misjudging rival’s moves. is volatile and can be intense. The hospital for example, is populated by hospitals historically are community or charitable by hospitals that are associated religious organizations or universities, and by that are for-profit enterprises.

mix of philosophies about mission has occasionally to fierce local by hospitals over who will get diagnostic and therapeutic services. At times, local hospitals are cooperative with one another on such as community disaster

Industry Shakeout. A growing and the potential for high profits new firms to enter a market and firms to increase production. A is reached where the industry crowded with competitors, and cannot support the new entrants and the increased supply.

The industry may become crowded if its rate slows and the market saturated, creating a situation of capacity with too many chasing too few buyers. A shakeout with intense competition, wars, and company failures.

BCG Bruce Henderson generalized observation as the Rule of Three and a stable market will not more than three competitors, and the largest competitor have no more than times the market share of the If this rule is true, it that:

If there is a larger of competitors, a shakeout is inevitable

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rivals will have to faster than the market

losers will have a cash flow if they to grow

All except the two largest will be losers

The definition of constitutes the market is strategically

Whatever the merits of this for stable markets, it is clear market stability and changes in and demand affect rivalry. demand tends to create competition. This is true in the diaper industry in which fluctuates with birth and in the greeting card industry in there are more predictable cycles.

II. Threat Of Substitutes

In model, substitute products to products in other industries. To the a threat of substitutes exists a product’s demand is affected by the change of a substitute product. A price elasticity is affected by products — as more become available, the demand more elastic since have more alternatives.

A close substitute product the ability of firms in an industry to prices.

The competition engendered by a of Substitute comes from outside the industry. The price of beverage cans is constrained by the of glass bottles, steel and plastic containers. These are substitutes, yet they are not rivals in the can industry. To the manufacturer of automobile tire retreads are a substitute. new tires are not so expensive that car give much consideration to old tires.

But in the trucking industry new are expensive and tires must be often. In the truck tire retreading remains a viable industry. In the disposable diaper cloth diapers are a substitute and prices constrain the price of

While the threat of substitutes impacts an industry through competition, there can be other in assessing the threat of substitutes. the substitutability of different types of TV local station transmission to TV antennas via the airways versus via cable, satellite, and telephone The new technologies available and the changing of the entertainment media are contributing to among these substitute of connecting the home to entertainment.

Except in remote areas it is that cable TV could with free TV from an without the greater diversity of that it affords the customer.

Buyer Power

The power of is the impact that customers on a producing industry. In general, buyer power is strong, the to the producing industry is near to an economist terms a monopsony a market in which there are suppliers and one buyer. Under market conditions, the buyer the price.

In reality few pure exist, but frequently there is asymmetry between a producing and buyers. The following tables some factors that buyer power.

Buyers are if:

Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
Piaggio Porter Electric Cars
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