44769
Description
Mind Map by laura-wilson134, updated more than 1 year ago
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Created by laura-wilson134
about 11 years ago
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Analysing the
Competitive Environment
- All industries and markets are
different, which means industry profits
are different too
- Size (revenues,
quantity)
- Structure
- Distribution
Channels
- Customer needs
and wants
- Profitability
- Growth
- Product
Life Cycle
- Alternatives for
the consumers
- Size (revenues,
quantity)
- Key Reasons Why
Industry Profits Vary
- High Industry Profits
Associated With:
- Weak
Suppliers
- Weak
Customers
(buyers)
- High Entry
Barriers
- Few
Opportunities
for Substitutes
- Little Rivalry
Between
Competitors
- Weak
Suppliers
- Low Industry Profits
Associated With:
- Strong
Suppliers
- Strong
Customers
(buyers)
- Low Entry
Barriers
- Many Opportunities
for Substitutes
- Intense Rivalry Between
Competitors
- Strong
Suppliers
- High Industry Profits
Associated With:
- What Determines the
Extent of the
Competitive Rivalry in
Market
- Number of
competitors in the
market
- competitive rivalry will be
higher in an industry with
many current and
potential competitors
- competitive rivalry will be
higher in an industry with
many current and
potential competitors
- Market size and
growth prospects
- competition is always most
intense in stagnating markets
- competition is always most
intense in stagnating markets
- Product
differentiation and
brand loyalty
- the greater the customer loyalty
the less intense the competition
- the lower the degree of product
differentiation the greater the intensity of
price competition
- the greater the customer loyalty
the less intense the competition
- Power of buyers and
the availability of
substitutes
- If buyers are strong and/or if close
substitutes are available, there will
be more intense competitive rivalry
- If buyers are strong and/or if close
substitutes are available, there will
be more intense competitive rivalry
- Capacity
Utilisation
- the existence of spare capacity
will increase the intensity of
competition
- the existence of spare capacity
will increase the intensity of
competition
- Cost structure
of the industry
- where fixed costs are a high
percentage of costs then
profits will be very dependent
on volume
- As a result there
will be intense
competition over
market shares
- where fixed costs are a high
percentage of costs then
profits will be very dependent
on volume
- Exit Barriers
- if it is expensive to exit an
industry, firms will remain
thus adding to the
intensity of competition
- if it is expensive to exit an
industry, firms will remain
thus adding to the
intensity of competition
- Number of
competitors in the
market
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