Study Guide(4 and 5) - Chapter 4 Development of the firm's...

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Chapter 4: Development of the firm’s international  competitiveness 13/02/2008 20:10:00 Porter’s 5 Forces     Macro Level:       o Analysis of national competitiveness Meso Level:     o Competition analysis in an industry Micro Level:     o Value chain analysis (Firm Level) Macro Level Porter’s Diamond: o Firm strategy, structure, and rivalry  Demand Conditions  Related  and supporting industries  Factor Conditions Factor Conditions      Climate Physical infrastructure  Natural resources Educational system Human resources  Technological infrastructure Capital o Degree of mobility goes from Low  High Demand Conditions    
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Nature of home demand Size of home demand Economies of scale Transportation costs Buyer sophistication  Porter’s 5 forces model: o Industry- a group of firms that offer a product or class of products which  are close substitutes for each other o Market - a set of actual and potential buyers of a product, and sellers Industry Level o All types of actors with potential or current interest in the industry New entrants Suppliers Buyers Substitutes  Market competitors- intensity of rivalry between competitors  depends on: Concentration of industry-high  high R Rate of market growth- slow   high R Structure of costs- high FC   high R Degree of differentiation- highly differentiated   low R Switching costs- high   high R Exit barriers-high   high R
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Suppliers – bargaining power of suppliers leads to high costs.  Bargaining power: Supply is dominated by few Products are unique Not obliged to contend with other products Threat of integrating forward into industry Buyers do not threaten to integrate back towards supply Market is not an important customer to supplier Buyers- bargaining power of buyers is higher when: Buyers are concentrated/purchase in large volumes Buyers threaten to integrate backwards to manufacture  the industry’s product Products are standard/undifferentiated 
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