Recognizing opportunities - Industry analysis - Competition (Porter)
9 important questions on Recognizing opportunities - Industry analysis - Competition (Porter)
When becomes an industry attractive to new entrants?
What is the result of the increased competition due to new entrants?
- Lower prices
- Higher costs company
What are barriers for new entrants to enter the market?
- Patents
- Trade names
- High switching costs
- High investments to start new production
- Limited access to distribution channels (hebben bestaande bedrijven al)
- High customer loyalty
- Economies of scale (reduction of costs by high volumes)
- Government regulations restrict newcomers
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What are favourable factors for newcomers to enter the market?
- Age of industry (young: no dominant design -> compete on design)
- Level of sophistication
- The need to make use of existing assets
- Production process is simple
- Production requires low levels of knowledge
- Production is not capital- or advertising intensive
- No complementary assets in marketing and distribution are needed
- Locus of innovation (innovation from outside the value chain makes it easier to access)
What are the factors that are involved in the threat of substitutes?
- Availability of alternatives
- Perception of customers towards the differences in products
- Prices of alternatives
- Costs of switching to alternatives
What are the 3 types of substitution?
- Product substitution (one product substitutes another product; e-mail-post)
- Need substitution (longer-lasting car-spare parts)
- General substitution (products compete for available sources of funds; familie wil op vakantie of een nieuwe auto dus competitie om geld familie)
What is the influence of bargaining power of buyers?
What is the influence of bargaining power of suppliers and complementors?
- High concentration of suppliers increases bargaining power
- Switching costs are high
- Brand of supplier is strong
- Customers of suppliers are fragmented
On what depends the intensity of rivalry?
- The extent of equality in size or power (equil =high competition)
- Growth of the industry (slow growth = high competition)
- High fixed costs (price ware, additional produced products)
- Short-term overcapacity (by excess more agressive sales)
- Product differentiation (less differentiation, more competition)
The question on the page originate from the summary of the following study material:
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