Place ceiling on the prices that firms in the industry can profitably charge

Place ceiling on the prices that firms in the

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Place ceiling on the prices that firms in the industry can profitably charge Products that perform the same function as the industry’s offerings can exist in very different industries e.g. video conferencing as a substitute for air travel to business meetings
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Factors That Increase Intensity of Competitive Rivalry Numerous or equally balanced competitors Slow industry growth High fixed costs Lack of differentiation Low switching costs Capacity augmented in large increments
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Use of Porter’s Five Forces Model Goals of model are to: assess attractiveness of an industry Identify forces that must be neutralized to achieve success Generally speaking… An attractive industry supports: Entry into the market Investment in resources needed to compete A variety of strategies An unattractive industry supports: Possible exit from the market, or entry into a new market Limited, or no incremental, investment Necessity for very clear strategy
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Criticisms of Five Forces Analysis Managers should not always avoid low profit industries or market segments High returns can be obtained for some players with sound strategies Five-forces analysis implicitly assumes a zero-sum game May overlook opportunity to develop constructive win-win relationships with suppliers and customers Analytic framework is static External forces are continually changing the structure of industries Need to anticipate changes, especially cause-and-effect changes
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Competitor Analysis Competitors represent key aspect of external environment Key choices in analysis: Choice of competitors (direct vs. adjacent, size) Key success factors Price point Quality Other product features Goal is to develop assessment of strategic position relative to competitors
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Rogers Chocolates Competitive Analysis Key Success Factors in Retail Chocolate
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  • Summer '12
  • Willmore
  • Management, Porter five forces analysis, external environment

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