Substitutes supplier and buyer power force threat

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Unformatted text preview: ierce internal rivalry or competition? 1996: Fierce internal rivalry or competition? Entry? Magnitude of entry barriers? Substitutes? Supplier Power? Who/What are the main suppliers to hospitals? Who are the buyers? Asset specificity? (Relationship-specific investments?) ECL 2-34 R.E. Marks ECL 2-35 R.E. Marks ECL 2-36 Buyer Power? 2.8.2 Tobacco Who are the buyers? Internal Rivalry? Hospitals’ responses? Fierce internal rivalry? _ ________________________________________________ Force Threat to Profits 1980 1996 _ ________________________________________________ Internal Rivalry Low High Entry Low Medium Substitutes Medium High Supplier Power Medium Medium Buyer Power Low High _ ________________________________________________ The margin P MC as a measure of rivalry. Reasons? Entry? Magnitude of entry barriers? Substitutes? Supplier and Buyer Power? _ _________________________________ Force Threat to Profits _ _________________________________ Internal Rivalry Low Entry Low Substitutes Low Supplier Power Low Low _ Buyer Power _________________________________ Recent developments outside the five-force framework? R.E. Marks ECL 2-37 R.E. Marks ECL 2-38 2.8.3 Photocopiers 2.8.4 Commercial Banking History and development of today’s technology. History and development of today’s industry. Rivals? Internal Rivalry? Internal Rivalry? Markets for mortgages, commercial loans. Consumers: price, speed, reliability, service. Credit cards. Margins: copiers, supplies Deregulation. Market segments? Entry? Entry? Magnitude of entry barriers? Magnitude of entry barriers? R&D, service networks. Substitutes? Substitutes? _ _________________________________ Force Threat to Profits _ _________________________________ Buyer Power? Who are the buyers? Dealers and manufacturers. Supplier Power? ____________________________________ Force Threat to Profits ____________________________________ Internal Rivalry Entry Substitutes Supplier Power Buyer Power Supplier Power and Buyer Power? Medium to Low Low Low Low Medium (growing?) Internal Rivalry High Entry High Substitutes High Supplier Power (Government) Low _ Buyer Power _________________________________ R.E. Marks ECL 2-39 2.9 Comment on the following: All of Porter’s wisdom regarding the five forces is reflected in the economic identity: Profit = (Price – Average Cost) × Quantity 2.10 It has been said that Porter’s five-forces analysis turns antitrust law — law intended to protect consumers from monopolies — on its head. What do you think this means? R.E. Marks ECL 2-40 CONTENTS 2. Industry Analysis . . . . . . . . . . . . . . . . . . 2.1 Porter’s Five Forces . . . . . . . . . . . . . . . 2.2 The Economics of the Five Forces .......... 2.2.1 Internal Industry Rivalry 3 2.2.2 Entry 4 2.2.3 Substitutes 6 2.2.4 Supplier Power and Buyer Power 8 2.2.5 Strategies for Coping with the Five Forces 10 2.3 Make versus Buy: the Vertical Boundaries of the Firm .................... 2.3.1 Tapered Integration: Make & Buy 12 2.4 Rents and Quasi-Rents . . . . . . . . . . . . . . 2.5 Economies of Scale and Scope . . . . . . . . . . . . 2.5.1 Economies of Scale 16 2.5.2 Economies of Scope 17 2.5.3 Sources of Economies of Scale and Scope 19 2.5.4 Limits to Economies of Scale 20 2.5.5 The Learning Curve 21 2.5.6 The Learning Curve v. Economies of Scale 22 2.6 The Importance of Scale and Scope Economies: Firm Size, Profitability, and Market Structure . . . . . . . . . . 2.6.1 Scale, Scope, and Firm Size 23 2.6.2 Market Share and Profitability 25 2.6.3 Scale, Scope, and Market Structure 26 2.6.3.1 Exogenous v. Endogenous Fixed Costs and Market Structure 30 2.6.3.2 The Survivor Principle 31 2.7 How Does the Magnitude of Scale Economies Affect the Intensity of Each of the Five Forces? ......... 2.8 Applying the Five Forces ............. 2.8.1 U.S. Hospital Markets 34 2.8.2 Tobacco 36 2.8.3 Photocopiers 37 2.8.4 Commercial Banking 38 2.9 Comment on the following: All of Porter’s wisdom regarding the five forces is reflected in the economic identity: . . . . . . 2.10 It has been said that Porter’s five-forces analysis turns antitrust law — law intended to protect consumers from monopolies — on its head. What do you think this means? ................... -i- 1 2 3 11 14 16 23 32 34 39 39...
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