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THE MICRO ENVIRONMENT - Coggle Diagram

- - - - THE CAPITAL COSTS OF ENTRY: THE HIGHER THE INVESTMENT REQUIRED, THE LESS THE THREAT FROM NEW ENTRANTS IS LIKELY TO BE. THE LOWER THE REQUIRED INVESTMENT, THE GREATER THE THREAT
      - BRAND LOYALTY AND CUSTOMER SWITCHING COSTS
      - ECONOMIES OF SCALE OR SCOPE TO EXISTING COMPETITORS: IF EXISTING COMPETITORS ARE ALREADY OBTAINING SUBSTANTIAL ECONOMIES OF SCALE IT WILL GIVE THEM AN ADVANTAGE OVER NEW COMPETITORS WHO WILL NOT BE ABLE TO MATCH THEIR LOWER UNIT COSTS OF PRODUCTION
      - ACCESS TO INPUT AND DISTRIBUTION CHANNELS: NEW COMPETITORS MAY FIND IT DIFFICULT TO GAIN ACCESS TO CHANNELS DISTRIBUTION, MAKE IT DIFFICULT TO PROVIDE THEIR PRODUCTS TO CUSTOMERS OR OBTAIN THE INPUTS REQUIRED
      - THE RESISTANCE OFFERED BY EXISTING BUSINESSES: IF EXISTING COMPETITORS CHOOSE TO RESIST STRONGLY IT WILL MAKE IT DIFFICULT FOR NEW ORGANIZATIONS TO ENTER THE INDUSTRY
      - GOVERNMENT REGULATION
    - - THE EXTENT TO WHICH THE PRICE AND PERFORMANCE OF THE SUBSTITUTE CAN MATCH THE INDUSTRY'S PRODUCT: THE MORE INDIRECT THE SUBSTITUTE, THE LESS LIKELY THE PRICE AND PERFORMANCE WILL BE COMPARABLE
      - THE WILLINGNESS OF BUYERS TO SWITCH TO THE SUBSTITUTE: BUYERS WILL BE MORE WILLING TO CHANGE SUPPLIERS IF SWITCHING COSTS ARE LOW OR IF COMPETITOR PRODUCTS OFFER LOWER PRICE OR IMPROVE PERFORMANCE
    - - THE NUMBER OF CUSTOMERS AND THE VOLUME OF THEIR PURCHASES: THE FEWER THE BUYERS AND THE GREATER THE VOLUME OF THEIR PURCHASES, THE GREATER WILL BE THEIR BARGAINING POWER
      - THE NUMBER OF BUSINESSES SUPPLYING THE PRODUCT AND THEIR SIZE: IF THE SUPPLIER OF A PRODUCT ARE LARGE IN THE COMPARISON TO THE BUYERS, THEN BUYING POWER WILL TEND TO BE REDUCED.
      - SWITCHING COST AND THE AVAILABILITY OF SUBSTITUTE: IF THE COSTS OF SWITCHING TO SUBSTITUTE ARE LOW, CUSTOMERS WILL BE ACCORDINGLY MORE POWERFUL
    - - THE UNIQUE AND SCARCITY OF THE RESOURCE THAT SUPPLIERS PROVIDE: IF THE RESOURCES PROVIDED TO THE INDUSTRY ARE ESSENTIAL TO IT AND HAVE NO CLOSE SUBSTITUTE THEN SUPPLIERS ARE LIKELY TO COMMAND SIGNIFICANT POWER OVER THE INDUSTRY
      - NUMBER OF OTHER INDUSTRIES HAVE A REQUIREMENT FOR THE RESOURCE: IF SUPPLIERS PROVIDE A PARTICULAR RESOURCE TO SEVERAL INDUSTRIES THEN THEY ARE LESS LIKELY TO BE DEPENDENT UPON ONE SINGLE INDUSTRY
      - SWITCHING COST BETWEEN SUPPLIERS: NEW SUPPLIER WOULD NOT HAVE THE NECESSARY KNOWLEDGE OR EXPERIENCE REQUIRED OR SYSTEM AND SERVICES MAY HAVE BEEN TAILORED TOWARDS THE REQUIREMENT OF A PARTICULAR SUPPLIER
      - THE NUMBER AND SIZE OF THE RESOURCE SUPPLIERS: IF THE NUMBER OF ORGANIZATION SUPPLYING A RESOURCE IS SMALL AND THE NUMBER OF BUYERS IS LARGE, THE POWER OF THE SUPPLIERS OVER THE ORGANIZATION WILL BE GREATER IN ANY INDUSTRY
    - - THE RELATIVE SIZE OF COMPETITORS
      - THE NATURE COSTS IN INDUSTRY SECTORS
      - THE MATURITY OF THE MARKET SERVED
      - THE DEGREE OF BRAND LOYALTY OF CUSTOMERS
      - THE DEGREE OF DIFFERENTIATION
      - GOVERNMENT REGULATION
      - THE HEIGHT OF EXIT BARRIERS
    - - IT IMPLIES THAT SUPPLIERS, BUYERS AND COMPETITORS ARE THREATS
      - IT CLAIMS TO ASSESS INDUSTRY PROFITABILITY
      - IT IMPLIES THAT THE FIVE FORCES APPLY EQUALLY TO ALL COMPETITORS IN AN INDUSTRY