B A 405 Chapter Notes - Chapter 2: Switching Barriers, Pest Analysis, Product Differentiation

• School: SDSU
• Department: Business Administration
• Course: B A 405
• Professor: Michael Sloan

Document Summary

Threat of new entrants (entry barriers: economies of scale, product differentiation, capital requirements, switching costs, access to distribution channels, cost disadvantages independent of scale) Bargaining power of buyers (powerful when: concentrated or purchases large volumes relative to seller sales, undifferentiated/standard products, few switching costs, threat of backward i(cid:374)tegratio(cid:374), produ(cid:272)t u(cid:374)i(cid:373)porta(cid:374)t to (cid:271)uyer"s produ(cid:272)t/ser(cid:448)i(cid:272)e) Bargaining power of suppliers (powerful when: dominated by few companies, not important (cid:272)usto(cid:373)er, produ(cid:272)t is i(cid:373)porta(cid:374)t i(cid:374)put to (cid:271)uyer"s (cid:271)usi(cid:374)ess, differe(cid:374)tiated produ(cid:272)ts, s(cid:449)it(cid:272)hi(cid:374)g costs for buyer, threat of forward integration) Substitute products and services (outside the industry that serve the same customer needs) Competitive rivalry (threat that customers will switch to competitors: many or equally balanced competitors, slow industry growth, high fixed costs, undifferentiated, low switching costs, high exit barriers) Demographic (age, sex, race, ethnicity, education, geographic region, income) Industry lifecycle analysis: threat of new entrants and competitive rivalry among existing firms changes as an industry evolves.