Chapter 15 Powerpoint

Chapter 15 Powerpoint - Chapter 15 Strategic Elements of...

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Chapter 15 Strategic Elements of Competitive Advantage
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15-2 Introduction This chapter looks at Industry analysis Competitor analysis Competitive advantage  at the industry and  national levels
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15-3 Industry Analysis: Forces Influencing Competition Industry—group of firms that produce  products that are close substitutes for  one another Five forces influence competition in an  industry described by Michael Porter
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15-4 Porter’s Force 1: Threat of New Entrants New entrants mean downward pressure  on prices and reduced profitability Barriers to entry determine the extent of  threat of new industry entrants
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15-5 Threat of New Entrants: Barriers to Entry Economies of scale   Refers to the decline in per-unit product costs as  the absolute volume of production per period  increases Product differentiation The extent of a product’s perceived uniqueness Capital requirements advertising, field sales and service, and so on Switching costs Costs related to changing suppliers or products
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15-6 Threat of New Entrants: Barriers to Entry Distribution channels Are there current distribution channels available with  capacity? Government policy Are there regulations in place that restrict competitive entry? Cost advantages independent of scale  economies Is there access to raw materials, large pool of low-cost labor,  favorable locations, and government subsidies? Competitor response How will the market react in anticipation of increased  competition within a given market?
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15-7 Porter’s Force 2: Threat of Substitute Products Availability of substitute products places  limits on the prices market leaders can  charge High prices induce buyers to switch to  the substitute
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15-8 Porter’s Force 3: Bargaining Power of Buyers Buyers = manufacturers and retailers, not  consumers Buyers seek to pay the lowest possible price Buyers have leverage over suppliers when They purchase in large quantities (enhances  supplier dependence on buyer) Suppliers’ products are commodities Product represents significant portion of buyer’s  costs Buyer is willing and able to achieve backward  integration
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15-9 Bargaining Power of Buyers We do not quibble or argue with anyone’s right to sing what they want, to print what they want, and say what they want. But we reserve the right to sell what we want. —Wal-Mart’s response to the accusation that it is using its financial power to dictate what is appropriate music and art
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15-10 Porter’s Force 4: Bargaining Power of Suppliers When suppliers have leverage, they can raise  prices high enough to affect the profitability of  their customers Leverage accrues when Suppliers are large and few in number Supplier’s products are critical inputs, are highly 
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Chapter 15 Powerpoint - Chapter 15 Strategic Elements of...

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