3.7.7 Revision
- Created by: Jessiiccaa
- Created on: 03-12-21 12:09
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- 3.7.7 The Competitive Environment
- Porter's Five Forces Model
- Power of Suppliers
- Number of suppliers
- Costs involved
- Availablity of substututes
- Power of Buyers
- Products are similar
- High price elastcity of demand
- Switching suppliers is cheap
- Threat of Substitutes
- Prices of substitutes falls
- Easy for consumers to switch
- Customers are willing and able to substitute
- Competitive Rivalry
- Greater if...
- Easy to substitute products
- Competitors are similar size
- Market growth is stunt
- Greater if...
- Threat of New Entrants
- Customer loyalty
- Access to suppliers
- Barriers to entry
- Power of Suppliers
- Changes in the competitive envirnoment
- A business's competitive environment is made up of the power of rivals and the potential rivals that the business faces in a battle to win customers and market share, but it also includes its customers and its suppliers and the influence that they wield.
- Impact of changes in the competitive environment
- The entry of a new competitors or the emergence of a dominant business may influence businesses to make stategic decisions to seek new markets or develop new product ranges.
- Increasing power of buyers - functional decisions such as reducing prices
- Negotiating favourable deals with smaller rivals
- Threat of substitute products - heavy investment in R&D
- May seek alliances or merge with other businesses.
- Dominant Businesses
- A dominant business is able to have a substantial influence over market prices
- They become a threat for competitors
- Competitors may have to invest in new products, new marketing campaigns and cut prices to protect their market positions
- Porter's Five Forces Model
- Entry is staight forward
- Greater if...
- Easy to substitute products
- Competitors are similar size
- Market growth is stunt
- Greater if...
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