02 BUS 444 Chap 2

the suppliers product is an important input to the

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Unformatted text preview: he industry it sells to The supplier group is not obliged to contend with substitute products for sale to the industry The industry is not an important customer of the supplier group 29 of 40 The Bargaining Power of Suppliers • A supplier group will be powerful when (cont.) The supplier’s product is an important input to the buyer’s business The supplier group’s products are differentiated or it has built up switching costs for the buyer The supplier group poses a credible threat of forward integration 30 of 40 The Threat of Substitute Products and Services • Substitutes limit the potential returns of an industry Ceiling on the prices that firms in that industry can profitably charge Price/performance ratio 31 of 40 The Intensity of Rivalry among Competitors in an Industry • Price competition • Advertising battles • Product introductions • Increased customer service or warranties 32 of 40 The Intensity of Rivalry among Competitors in an Industry Interacting factors lead to intense rivalry • Numerous or equally balanced competitors • Slow industry growth • High fixed or shortage costs • Lack of differentiation or switching costs • Capacity augmented in large increments • High exit barriers 33 of 40 How the Internet and Digital Technologies Influences Industry 34 of 40 Using Industry Analysis: A Few C...
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