Industry Analysis
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Presentation Transcript
Industry Analysis Chapter 03
Aggregate Category Factors • Category size • Category growth • Stage in product life cycle • Sales cyclicity • Seasonality • Profits
Category Factors • Threat of new entrants • Bargaining power of buyers • Bargaining power of suppliers • Current category rivalry • Pressure from substitutes • Category capacity
Factors in Assessing the Structure of Industries • Threat of new entrants • Bargaining power of buyers • Bargaining power of suppliers • Amount of intracategory rivalry • Threat of substitute products or services
Threat of new entrants • Economies of Scale • Product Differentiation • Capital Requirements • Switching Costs • Distribution
Buyer Bargaining Power is High When: • Product bought is a large percentage of the buyer’s cost. • Product bought is undifferentiated. • Buyers earn low profits. • Buyer threatens to backward integrate. • Buyer has full information. • Substitutes exist for the seller’s product or service.
Supplier Bargaining Power is High When: • Suppliers are highly concentrated, that is, dominated by a few firms. • There is no substitute for the product supplied. • Supplier has differentiated its product or built in switching costs. • Supply is limited.
Major Characteristics of Categories Exhibiting Intensive Rivalries • Many or balanced competitors • Slow growth • High fixed costs • Lack of product differentiation • Personal rivalries
Environmental Factors • Technological • Political • Economic • Regulatory • Social
Evidence of Inequality, as Cited by Federal Reserve Chairman Ben Bernanke