RSM392H1 Lecture 2: Week 2 Homework
Document Summary
Industry: competitors that are prominent may be: customers, suppliers, potential entrants or sub products. 5 forces which govern collectively the ultimate potential profit in an industry, profit can be high like in industry for tires, steel (low margin) or mild for oil field eq and service, soft drinks, toiletries (high margin) Perfect competition: jockeying for position is unbridled, entry to industry easy (worst profitability in l-r). Weaker forces collectively (or using them to advantage), the better chance of profit. Find sources for each force -> allows you to then build groundwork for action. Each industry has structure with economic characteristics that make competitive forces. : can leverage resources to cause shake up. Economies of scale: either has to come in at large scale, or accept cost disadvantage. Can act as hurdle in distribution, utilization of sales force, financing and other parts of biz. Product differentiation: forces entrants to spend a lot to overcome customer loyalty.
