competitive environment

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  • Created by: Millie
  • Created on: 23-05-14 10:45
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  • Business and competitive environment
      • Rivalry among competitors
        • Refers to the number of firms within an industry
          • Are there lots of small firms selling a very small proportion of total market sales
            • or is the market dominated by a few large firms, each selling a significant proportion of total market sales
          • Lots of firms - very competitive market and if basically selling the same product, customers can switch easily
          • Competition also depend on price and product differentiation - firms want to appear unique and/or better value
      • Threat of new entrants
        • in some industries, there are barriers of entry, prevent new firms from joining the market. These inclue:
          • - high capital costs, patents, loyalty of customers and brand loyalty, need to achieve economies of scale quickly
        • internet can encourage new entrants as it is easy to sell products
        • in response to new entrants firms can: Integration (mergers and takeovers) Diversify, cut costs, improve branding
      • threat of substitute products
      • Bargaining  power of customers
        • related to their ability to influence price
          • are there lots of customers who have little power or are there only a few customers who have lots of power.
      • Power of suppliers
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