Agenda Review Michael Porters 5 as long as ces model Rivalry Non-price competition Firm
Paen, Alex, Executive Producer and Host has reference to this Academic Journal, PHwiki organized this Journal Agenda Review Michael Porters 5 as long as ces model Rivalry Non-price competition Firm size / market share Interdependence Bargaining power Sustainability Porters Five as long as ces model SUPPLIERS BUYERS POTENTIAL ENTRANTS SUBSTITUTES INDUSTRY COMPETITORS Competitive Strategy, Porter, M.E., McMillan, 1980 Three stages in Porters external analysis Analyze industry structure How concentrated is it What are the dynamics Analyze the industry’s appropriability Are there powerful buyers Are there powerful suppliers Analyze its long term viability Will more firms enter Will substitute products or services be found
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Industry competitors: Cournots model of competition LRAC Industry competitors: Concentration How many firms (i.e. competitors) are there in our industry 4 Firm concentration ratio Sum of revenues of four largest firms divided by total industry revenues Sum of market shares of four largest firms (These are equivalent) Firm sales ordered by size Industry Rivalry Rivalry refers to the extent to which firms compete on the basis of price alone Competing by out spending on advertising is not considered highly rivalrous Competing by out spending on innovation is not considered highly rivalrous Competing by cutting prices is considered highly rivalrous
Industry Competitors: Summary Is it a concentrated industry 4 firm concentration ratio (what % of total industry output is accounted as long as by the 4 largest firms) concentrated if > 70% fragmented if < 30% If fragmented STOP HERE AND PROCEED INTERNAL ANALYSIS Otherwise Is there non-price competition e.g. around br in addition to , through product innovation Are there large economies of scale Are there high barriers to exit Is the product a commodity Do companies segment the market in addition to differentiate their products from each another 2. Bargaining power Buyers (2b) Are we selling to a monopsony, (or into a highly concentrated market) (bad) Does our product represent a significant portion of the buyers product costs (bad) Do they take a significant proportion of our output (bad) Can they backward integrate into our business (bad) Can they easily switch suppliers (bad) Suppliers (2a) Are we buying from a monopoly (or from a highly concentrated industry) (bad) Does their product represent an insignificant portion of our product costs () Do we take a small (insignificant) proportion of their output (bad) Can they as long as ward integrate into our business (bad) Is it difficult as long as them to switch suppliers (good) Porters Five as long as ces model SUPPLIERS BUYERS POTENTIAL ENTRANTS SUBSTITUTES INDUSTRY COMPETITORS Competitive Strategy, Porter, M.E., McMillan, 1980 3. Threat of new entry or substitution Are there barriers to entry (3a) Economies of scale (good) Significant sunk costs (e.g. br in addition to ) to act as a deterrent Does regulation restrict entry (good) How likely is it that a substitute product as long as the needs the industry currently meets will be found (3b) If no likely substitutes in addition to entry barriers are high, above normal returns may persist over time. Entry Deterrence Product proliferation closing any open niches Pricing Limit pricing (scale) Predatory pricing (illegal) Price signaling Excess capacity Porter 5 Forces Model Summary Grew out of industrial organization economics. Concern with monopoly in addition to oligopoly markets. Focus was industry concentration. Deals with the firms external environment. Specifically its industry in addition to the up- in addition to down-stream industries. Buyers are those that pay the focal firm as long as its services, not end users or consumers. Sellers are those that sell goods in addition to services to the focal firm, not the firm itself. Large investments in irrecoverable assets are a barrier to entry, requiring large amounts of capital per se is not.
Paen, Alex Executive Producer and Host
Paen, Alex is from United States and they belong to Animal Rescue and they are from Santa Monica, United States got related to this Particular Journal. and Paen, Alex deal with the subjects like Animal Rights and Protection; Human Interest; Pets and Pet Products; Wildlife
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