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G2-[FBS-2] Analyzing Industry Structure-Five Forces Analysis (extra forces…
G2-[FBS-2] Analyzing Industry Structure-Five Forces Analysis
threat of entry
How to lower the threat of entry
higher competitive advantage
be the Pioneering brands
Pre-commitment contracts
patents and licenses
intellectual property, secret sauce
learning curves
economics of scale(MES)
entrants face retaliation
Aggressive reputation of incumbents
excess capacity of incumbents
high sunk costs
investments that can't be recovered
threat of substitutes
how to lower the threat of substitutes
switching cost is high
cross-price elasticity is low
the price change affects the quantities of demand of other firms
bargaining power of buyers
How to lower the bargaining power
in a highly differentiated market
buyers can't concentrate
high switching costs
e.g. OS and Windows
buyers can't backward integrate
bargaining power of suppliers
opposite
How to lower the bargaining power
price segment transparent
many substitutes of suppliers
low switching costs
Introduction
A tool to analyze the dynamic structure in a industry or market segment
In order to see whether there are future profitability potential or not, so we make this analysis
intensity of rivalry
how to lower incentives to fight or intense competition
low exit costs
If incumbents know they have high exit cost, incumbents might fight new entrants
when exit costs are high, new firms might not enter because of higher risks
Tacitly coordinate
the less the competitors, the less intense the rivalry will be
extra forces
Role of Complements
Role of Institutions
conclusion
If the five forces are lower, it's the good thing for the industry.