Market share of retail autoparts stores with 100 or

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Market share of retail autoparts stores with 100 or more stores has been increasing but is still less than 20 percent, leaving room for much more growth. Average operating margins for retail autoparts companies with 100 or more stores are high and rising. (ii) Because of industry fragmentation (i.e., most of the market share is distributed among many companies with only a few stores), the retail autoparts industry apparently is undergoing marketing innovation and consolidation. The industry is moving toward the “category killer” format, in which a few major companies control large market shares through proliferation of outlets. The evidence suggests that a new “industry within an industry” is emerging in the form of the “category killer” large chain-store company. This industry subgroup is in its consolidation stage (i.e., rapid growth with high operating profit margins and emerging market leaders) despite the fact that the industry is in the maturity stage of its life cycle. 17-6
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20. i. Substitutes – one year from now: Currently the Carrycom, and other products in their industry segment, have automatic language conversion functionality and geographic region flexibility. This market segment is currently in a strong position. Substitutes – five years from now: White expects that other products in the broader consumer electronics industry, such as PDAs, PCs, and other consumer electronics, will eventually be able to incorporate both functionalities and so therefore diminish the strength of this force for Carrycom and other products in their market segment. ii. Threat of new (or potential) entrants – one year from now: Wade has no threat of entrants into its market for the next three years because: (a) Wade has the exclusive ability to manufacture with ordinary copper, while other potential entrants do not have access to pari-copper, and; (b) Potential entrants do not have access to the exclusive production license for Carrycom technology. Threat of new (or potential) entrants – five years from now: Beyond the next three years, however, the threat is high. White expects competitors to market copper- based products, eliminating Carrycom’s unique competitive advantage. In addition, the three-year exclusive production license expires. iii. Intensity of rivalry – one year from now: Wade will experience only modest rivalry for three years as it has an exclusive production license for the next three years, which limits the availability of similar products. However, the broader electronics market may be integrating the automatic language conversion feature into its products after one year. Intensity of rivalry – five years from now: After the license expires in three years, White expects other competitors to produce a number of similar products which will limit their pricing power. This demonstrates a high intensity of rivalry. 21. a. (iii) b. (iii) c. (iv) d. (iii) 17-7
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