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G3 [FBS-2]Strategist's Toolkit (Threat of entry (Competitive…
G3 [FBS-2]Strategist's Toolkit
Threat of entry
Competitive advantages of incumbents
pioneering brand
build up the entry barrier for entrants
distribution channel
intellectual property
MES
High sunk costs
like the asset specific, which can't be replaced
Retaliations from incumbents
Economic scale of production/ Minimum efficient scale
Threat of substitutes
Similar to our products or services, but not exactly the same.
Laptop vs tablets, smartphone
How to identify the threat (substitutes) ?
Cross-price elasticity of demand is
low
Quantity demanded for a good to a change in the price of another good
Switching costs are
high
means the costs that a consumer incurs as a result of changing brands, suppliers or products
Some consumer can't identify butter and margarine
Bargaining Power of
Buyers
Buyers' options
Fewer options=> Less bargining Power
High switching cost=> Less bargining power
[B2B]The ability of Backward Integrate
Buyers are concentrated
Monopsony
: The buyers accounts for a big fraction of the firm's sales .
Two types of Buyers
[B2B]Channels
[B2C]Individuals
Price Discrimination & Bundling Sale
Price information isn't widely available.
Suppliers
Seller's concentration
Without monopoly
Monopoly
Firm's alternative
Switching cost
Forward integrate
Substitute
Segment difference
Price information
Transparency
Intensity of Rivalry
Circumstances for less intense to rivalry
It's high-positive correlation to the number of competitors
Coordination is feasible
*Antitrust violation
Increase the profitability
Incentives to fight is low
Opportunities to differentiate
What is Five forces analysis for?
Through analyzing the structure, Strategists can know better about potential profitability of an
industry
Reveal the competition beyond the current competitors
Consumers
Suppliers
Substitutes
Potential entrants
THE LOWER,THE BETTER
Hi, Prof.Lo