Please enable JavaScript.
Coggle requires JavaScript to display documents.
71.The competitive environment (Rivalry amongst existing competitors…
71.The competitive environment
Competitiveness measures a firms ability to shine in comparison to its rivals
:fire:
A competitive market features intense rivalry between producers of a similar good or service. More firms there are; the more competitive it is
Consumers benefit from competitive markets. Prices & profit margins tend to be squeezed. As such firms try to find a USP or use predatory pricing to gain an advantage over rivals
Porter's Five Forces
Rivalry among existing competitors
Bargaining power of suppliers
Threat of new entrants
Bargaining power of buyers
Threat of substitute products or services
Rivalry amongst existing competitors
Monopoly is a firm that has a market share of 25% or above
Some markets are dominated by one large business
Competition amongst a few giants - oligopoly (competition between the few), firms know that any gains in market share will be at the expense of their rivals
Threat of new entrants
New entrants are usually attracted to a new market by the high profits or rapid growth achieved by existing firms
Threat depends on barriers to entry
If a market suddenly becomes more competitive+less profitable, firms react by trying to find a new market overseas
Some large firms react to changed external forces by buying their way out of potential trouble
If product differentiation can be increased, consumers will be less likely to switch to products supplied by the competiton