BU481 Chapter Notes - Chapter 4: Bargaining Power, Product Differentiation, Capital Requirement
Document Summary
Marco forces effect the micro: supply, competition, demand. Company"s attractiveness is related to its profitability. Five forces: rivalry amongst competitors, threat of new entrants, threat of substitute products, bargaining powers of suppliers, bargaining power of buyers. Barriers to entry include: economies of scale. As volume increases the unit costs per product tend to decreases. This creates a cost advantage over new entrants: product differentiation. Brand recognition and customer loyalty: capital requirements. Some industries involve a large capital requirement in order to compete: cost disadvantages independent of size. Learning curves or limited access to raw materials: access to distribution channels. Difficult access to distribution channels: government policy. Identify stakeholders: customers, competitors, suppliers, community, government. Define stakeholder interests: determine what each stakeholder desires and do some stakeholders interest align who is the dominant stakeholder. Take action to make sure you align strategy with stakeholder interests.
