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GMS 200 Lecture : Chapter 7.docx

97 views5 pages
bronzemink376
26 Feb 2012
School
Ryerson University
Department
Global Management Studies
Course
GMS 200
Professor
Shavin Malhotra

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GMS 200 Full Course Notes
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GMS 200 Full Course Notes
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Document Summary

Large economies of scale: threat of substitutes. Industries with close competition with producers of substitute products have higher competition. As pricing for substitute products decline higher competitive pressure on the industry: bargaining power of suppliers. Cost of switching raw materials is high. Also includes suppliers of labour: bargaining power of consumers. When customers are large and buy in bulk they enjoy more power. Bargaining power of customers is also higher when. Sellers are struggling in the face of the falling consumer demand. Two cut-off lines for high/low market growth rate, and high/low relative market share. Market growth rate: total market in 2009- total market in 2008/ total market in 2008. If all your businesses are in one industry then the cut-off could be the avg growth rate of industry. If you are highly diversified then you could use the gnp. Or use the weighted average of the growth rate of each individual business.

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Related Questions

The competitive pressures from substitute products tend to be stronger when
Β 
a. buyers are relatively comfortable with using substitutes and the costs to buyers of switching over to the substitutes are low.
Β 
b. there are more than 10 sellers of substitute products.
Β 
c. the quality and performance of the substitutes is well above what buyers need to meet their requirements.
Β 
d. buyers have high psychic costs in severing existing brand relationships and establishing new ones.
Β 
e. demand for the industry's product is not very price sensitive.
Which of the following is not one of the competitive forces in Porter's model?
Β 
A) Other competitors
B) External environment
C) Suppliers
D) New market entrants
E) Customers

A competitive strategy of striving to be the low-cost provider is particularly attractive when:

A) buyers are not price sensitive.

B) the industry is made up of a large number or equal-sized rivals.

C) there are many ways to achieve product differentiation that have value to buyers.

D) price competition is especially vigorous, buyers have low switching costs, and the majority of industry sales are made to a few, large volume buyers.

E) switching costs are high, price competition is strong, and buyers tend to use the industry's products in many different ways.