• Global Segment influences from foreign countries, including foreign market opportunities, foreign-based completion, and extended capital markets. • Competitive Environment factors that pertain to an industry and affect a firm's strategy. Porter's Five Force to analyze competitive environment: • Threat of New Entrants possibility that the profits of established firms in the industry may be eroded by new competitors. Entry barriers are: Economies of Scale, Product Differntiation, Capital Requirements, Switching Costs, Access to Distribution Channels, Cost Disadvantages Independent of Scale. • Economies of Scale reflect spreading the cost of production over the number of units produced. • Product Differentiation is the degree that a produt has a strong brand loyalty or customer loyalty. • Capital Requirements need to invest large financial resources to compete creates a barrier • Switching Costs one-time costs that a buyer/supplier faces when switching from one supplier to another
10/12/2018 BA 405 Sloan Test 1 SDSU Flashcards | Quizlet 3/5 • Access to Distribution Channels secure distribution for its products • Cost Disadvantages Independent of Scale proprietary produtcts, favorable access to raw materials, government subsidies, favorable government policies • Bargaining Power of Buyer threat that buyers may force down prices, bargain for higher quality or more services, and play competitors' against each other. Powerful when: concentrated or purchse large volumes relative to sellers' sales; buyer faces few switching costs, products purchase or undifferentiated, buyers pose a credible theat of background integration, product is unimportant to quality of the buyer's products or services • Bargaining Power of Supplier threat suppliers may raise prices or reduce the quality of purchased goods and services. A supplier group will be powerful when: supplier group dominated by few companies, supplier group is not obliged to contend with substitute products, unimportant industry, product important to buyer business, high switching costs, forward integration • Threat of Substitute Products & Services threat of limiting the potential retursn of an industry by placing a ceiling n the prices that firms in that industry can profitably charge without losing too many customers to similar products. Outside the industry that servce the same customer needs • Intensity of Rivalry threat that customers will switch their business to competitors within industry. Inlcude, numerous or equally balanced competitors, slow industry growth, high fixed or storage costs, lack of differentiation or switching costs, capacity augmented in large increments. High exit barriers. • Value Chain Analysis views the organization as a sequential process of value-creating activities. Firm is profitable when the value it receives exceeds the total costs involved in creating its product or services.
- Fall '15