MGTA36H3 Study Guide - Virgin Cola, Competitive Advantage, Global Marketing
Document Summary
Group of firms that produce products that are close substitutes for each other. Works to drive down rate of return on invested capital(roric) towards the perfectly competitive industry rate. If greater than competitive rate will stimulate inflow of capital either from new entrants or from existing competitors making additional investment. If below this competitive rate will result in withdrawal from the industry and a decline in the levels of activity and competition. Threat of new entrants: barriers to entry (mp #1: economies of scale . Decline in per-unit product costs as absolute volume of production per period increases: product differentiation . Achieved as a result of unique product attributes &/or effective marketing communications: capital requirements . Required investment for manufacturing, r&d, advertising, field sales and service, etc: switching costs . Costs related to making a change in suppliers or products (eg. retraining, equip cost: distribution channels .
