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THREAT OF SUBSTITUTES
COMPETITOR S RIVALRY
BARRIERS TO ENTRY
Analysis criteria
Description
Refers to the proportion of the total industry costs that are fixed and variable.
Product differences
Refers to your ability to differentiate your product based on tangible product differences.
Analysis criteria
Description
Switching Costs
Refers to the cost incurred by customers of your industry to switch their source of supply
Informational Complexity
Exit Barriers
Refers to the ease with which your competitors can exit your industry.
BARGAINING POWER OF THE BUyERS: Bargaining power of the buyers is the ability of the buyers to put the firm under pressure to reduce the prices. It is also called as the Market of Output
To analyze the Bargaining Power of your Customers you will need to review your industry by considering the following generic criteria :
Analysis criteria
Description
if the products or services in your industry are similar or are you able to easily differentiate your products and services from those of your competitors?
Presence of Substitutes
A substitute is a different product or service that can be used instead of your industries products or services. Substitutes are typically products/services that are not in your industry.
Buyers who buy only a few of your products each year are less likely to shop around for price on those items.
Analysis criteria
Description
Buyers tend to prioritize their negotiation efforts in the areas where they spend the most money. If your product or service is a large expense for your customer, then you are more likely to be the focus of their negotiations.
This tends to relate to technical products, where the technology in the product is different to the technology of the industry. How easy is it for your customers to understand your product? or your competitors products?
Buyer profitability
Buyer profitability are your customers profitable and likely to remain profitable?
Analysis criteria
Description
Differentiation of Inputs
Refers to valued, unique and tangible product differences that exist only in your suppliers products.
Switching Costs
Analysis criteria
Description Refers to the suppliers capacity and the volume that you purchase.
Cost relative to the total purchases of Refers to the value to be derived from entering into price negotiations the industry
Refers to the role your suppliers product plays in differentiating your product or service.
Threat of substitutes
An analysis of the threat of substitute products will identify the likelihood that customers to your industry will switch to purchasing an alternative product from outside your industry.
To analyze the threat of Substitute Products, one needs to consider the following factors :
Analysis criteria
Description
Refers to the cost effectiveness of the substitute products, (Total supply chain costs)
Switching costs
BARRIERS TO ENTRY:
An analysis of the threat of new entrants will discover how high the entry barriers are in your industry. An industry with high barriers to entry will have less risk from new competitors than an industry with low barriers to entry. An analysis of the threat of new entrants seeks to identify the barriers to entry or the things about the industry that will make it harder for a new entrant to shift into the industry. To analyses the threat of new entrants to ones industry, one needs to consider the following factors :
Analysis criteria
Description
Economies of scale
Refers to the total size of an industry and the level of concentration within that industry
Government policy
Refers to a government regulation or policy which prevents or prohibits others from entering your industry
Expected retaliation
Refers to the response existing competitors may take to the emergence of a new competitor.
Analysis criteria
Description
If an industry is new or emerging you will expect to see an increase in the number of competitors in that industry, however if an industry is mature or in decline you are less likely to see new entrants.
Capital requirements
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