G3 [FBS-2]Strategist's Toolkit (Threat of substitutes (How to identify…
G3 [FBS-2]Strategist's Toolkit
What is Five forces analysis for?
Through analyzing the structure, Strategists can know better about potential profitability of an
Reveal the competition beyond the current competitors
Intensity of Rivalry
Circumstances for less intense to rivalry
Incentives to fight is low
Opportunities to differentiate
Coordination is feasible
Increase the profitability
It's high-positive correlation to the number of competitors
Bargaining Power of
Price Discrimination & Bundling Sale
Price information isn't widely available.
Two types of Buyers
Buyers are concentrated
: The buyers accounts for a big fraction of the firm's sales .
[B2B]The ability of Backward Integrate
High switching cost=> Less bargining power
Fewer options=> Less bargining Power
Threat of substitutes
Some consumer can't identify butter and margarine
How to identify the threat (substitutes) ?
Switching costs are
means the costs that a consumer incurs as a result of changing brands, suppliers or products
Cross-price elasticity of demand is
Quantity demanded for a good to a change in the price of another good
Similar to our products or services, but not exactly the same.
Laptop vs tablets, smartphone
Threat of entry
Retaliations from incumbents
Economic scale of production/ Minimum efficient scale
High sunk costs
like the asset specific, which can't be replaced
Competitive advantages of incumbents
build up the entry barrier for entrants
THE LOWER,THE BETTER