MGMT 310 Lecture Notes - Lecture 5: Piggly Wiggly, Redbox, Social Complexity
Document Summary
Threat of new entrants: new entrants increase rivalry and reduce profits, barriers to entry: Demand-side benefits of scale (willingness to buy a product: ex. Customer switching costs: customer switching from pc to macbook, iphone to android. Capital requirements due to scale of entry: pharma companies. Unequal access to distribution channels: beverage industry -> vitamin water. Restrictive government policy and regulations: taxi industry. Competitor"s product or some other product that satisfies the same consumer need. Limit an industry"s profit potential by placing a ceiling on the prices that firms in an industry can charge. Bargaining power of suppliers: suppliers provide a firm with essential inputs in the manufacturing or production process, characteristics of a powerful supplier: Buyer is not one of its major customers. Bargaining power to customers: a customer group tends to be powerful when: Concentrated or has purchases in large volumes relative to the supplier: ex. Fewer switching costs in changing vendors/suppliers: office depot, staples.
