33:620:301 Lecture Notes - Lecture 3: Switching Barriers, Market Power, Habitat
18 Mar 2016
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Document Summary
Macro-environment encompasses the broad environmental context in which a company"s industry is situated. Pestel analysis focuses on the 6 principal components of strategic signiicance in the macro- environment. 6 principle components: poliical, economic, social, technological, environmental, legal forces. 5 sources of compeiive pressure: rival sellers, potenial new entrants, subsitute products, supplier bargaining power, customer bargaining power. Idenify the diferent paries involved & the factors that bring compeiive pressure. 1: evaluate how strong the pressures are [strong, moderate, weak] Rivalry increases: buyer demand is growing slowly/declining, less costly for buyers to switch brands, products of rival sellers become less strongly difereniated. & countries of origin: stronger when high exit barriers keep unproitable irms from leaving the industry. *when rivalry is strong the batle for market share is so vigorous that proit margins of most industry members are squeezed to bare-bone levels. Moderate rivalry = normal state members earn acceptable proit.
