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Essay text:
Structural determinants of the intensity of competition (pag 5)
Forces driving industry competition
- Industry competitors (rivalry among existing firms)
- Potential entrants (threat of new entrants)
- Substitutes (threat of substitute products)
- Suppliers (bargaining power of suppliers)
- Buyers (bargaining power of buyers)
Threat of entry
? Six barriers to entry:
- economies of scale
- product differentiation
- capital requirements
- switching costs
- access to distribution channels
- cost disadvantages independent of scale
- government policy
? Expected retaliation (fight back)
? The entry deterring price
Structural analysis and competitive strategy
Positioning – build defense against competitive forces or find positioning where compettive forces are weak
Influencing the balance – take the offensive, influence competitive forces
Exploiting change – envisage industry evolution
Chapter 2 – generic competitive strategies
Three generic strategies
? overall cost leadership
? differentiation
? focus (niche)
Risks of the three generic strategies...
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