MKTG 376 Chapter Notes - Chapter 16: Switching Barriers, Competitive Advantage, Perfect Competition
Document Summary
Industry: a group of firms that produce products that are close substitutes for each other. In any industry, competition works to drive down the rate of return on invested capital towards a. Rates of return that are greater than this competitive rate will stimulate an inflow of capital, either from new entrants or from existing competitors making additional investments. Conversely, rates of return below the competitive rate will result in withdrawal from the industry and a decline in the levels of activity and competition. Porter"s 5 forces model: explains competition in an industry. The threat of new entrants, the threat of substitute products or services, the bargaining power of buyers, the bargaining power of suppliers, and the competitive rivalry among current members of the industry. New entrants: new entrants to an industry bring new capacity, a desire to gain market share and position, and new approaches to serving customer needs.
