Professional Documents
Culture Documents
Competitive strategy
Nov. 2006
Competitive Strategy &
Environment
■ Competitive Strategy Is Based On Relating
A Firm To Its Environment
■ Economies Of Scale
■ Brand Identity
■ Product Differentiation
■ Capital Requirements
■ Access To Inputs
Threat of New Entry
■ Proprietary Technology (patents)
■ Cost Advantages Independent Of Size
(Learning Curve)
■ Access To Distribution Channels
■ Switching Costs
Threat of New Entry
■ Government policy
• Industrial license
• Location restrictions
• Environmental policies
Threat of New Entry
■ Retaliation by incubates
• History of vigorous retaliation
• Slow industry growth
• Established firms with large resources to
fight back
• Entry deterring price
– Price which just balances the potential returns
from entry with expected cost of overcoming
entry barriers & retaliation
Entry Barriers
■ Entry barriers change as conditions
change
■ Firm’s strategic decisions have major
impact in shaping entry barriers
■ Barriers can be negated by product or
process innovation, new technology or
experience curve
Bargaining Power of Suppliers
■ Power of suppliers is determined by
whether:
• It is dominated by a few companies and is
more concentrated than industry it sells to
• Its product is unique, differentiated, or has
built-in switching costs
Bargaining Power of Suppliers
• It poses a credible threat of integrating
forward
• Importance of volume to suppliers
• Threat of forward/backward integration
• No one customer is an important customer
of the supplier group
Bargaining Power of Buyers