BU111 Lecture Notes - Lecture 3: Small Business, Capital Intensity, Paradigm Shift
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Rivalry among existing firms - competition with someone that sells something similar to you. Results and price competition, lower volume, increased costs. Low consumer switching cost -consumers easily move around to the best competitor. Must be kept and low quantities, perfect competition. Caused by high fixed costs, can"t leave easily. Supply key inputs for the business, affect cost of outputs. Form strategic alliances, create internal supply chain, in the long-run redesign product or needed input. Who pays for your product, brings in revenue. Reduced price that you can demand, decreases profit. Want to keep happy, have a lot of power. Form alliance with other sellers, increase marketing, differentiate, create switching costs, lock in customers. Elastic demand, people willing to cut back first. Substitutes : products that do a similar job. Put ceiling on price that can be charged. High buyer propensity to substitute (buyers know and wants of better product) People don"t have to stay, can leave you easily.
