SGMT 3000 Lecture Notes - Lecture 2: Customer Switching, Switching Barriers, Bargaining Power
Document Summary
Industry: a group of companies offering products/services that are close substitutes for one another. Identifying the industry involves looking at the basic customer needs the company is serving. Industry boundaries can change over time as customer needs evolve or as new technologies allow companies in unrelated industries to satisfy customer needs in new ways. Porter"s competitive forces model: managers must analyze competitive forces in the market to identify opportunities and threats, as each of the forces grows stronger, it limits the ability of established companies to raise prices and earn greater profits. Strong competitive force can be considered a threat as it depresses profits: managers must look at how the six forces give rise to new opportunities and threats and formulating new strategic responses. Risk of entry by potential competitors: potential competitors: companies that are currently not competing in the industry but have potential to do so.