ADMS 1000 Lecture Notes - Ikea, Learning Curve, Central Processing Unit
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Strategic management attempts to explain differential performance. Analysing the external environment: industry: group of firms with similar resource requirements in raw materials, labour, technology, customers . Ex: fedex and ups: the five-forces models. Can be new firms or diversifying entrants. Bring new capacity, gain market share, substantial resources and capabilities. Price will be lower reduce profitability. Economies of scale: the cost of product decrease when the number of product increase. Capital requirement: the threat of new entrants is reduced when the level of required capital increases (airline industry, mining industry) Switching cost: the cost of changing from on supplier to another from buyer perspective, the threat of new entrants increases when the switching cost decrease. Access to distribution channels: the threat of new entrants decreases when the accessibility to distribution channels decreases. Incumbent have advantages such as governmental policies, legal protection create the barriers for new entrants.