STRATEGIC MANAGEMENT REVISION CHAPTER-4 STRATEGIC MANAGEMENT - - PowerPoint PPT Presentation

STRATEGIC MANAGEMENT REVISION CHAPTER-4

STRATEGIC MANAGEMENT REVISION CHAPTER-4

STRATEGIC MANAGEMENT REVISION CHAPTER-5

COMPETITION ANALYSIS

5 Forces Model Michael Porter Forces Process (Steps)

i) Rivalry among irm ii) Threat of New entrant iii) Threat of Substitute Product iv) Bargaining Power of Supplier v) Bargaining Power of Buyer Step 1 : Identify Pressures associated with each force Step 2 : Evaluate hour Strong the pressure comprising each of ive forces are Step 3 : Determine whether the collective strength

• f the ive competitive forces is conductive to

earning attractive proits 3 Steps

STRATEGIC MANAGEMENT REVISION CHAPTER-5

Rivalry Tends to be cut throat and proitability low when: i) Now Clear leader ii) Competitors in industry are numerous iii) Competitors operate with high ixed cost iv) High exit bemeans v) Little Opp. to differentiate offerings vi) Industry faces slow growth

RIVATRY AMONG FIRM q Threat of New Entrants

Powerful source of competition May reduce proitability Pressures in terms of: u Product range u Low Price u Big Size irm u Brand Image

Capital Requirement Larger Capital Requirement

Threat of Substitute Product

Pressures: * Advance Technology * Price * Useful Life * Availability * Ease of use

q Bargaining Power of Buyers

Inluence Price & Quality

q q

Factors Inluencing

• Cartel Formed by Buyer
• Big Buyers
• Knowledge of Substitutes
• Number of Buyers
• Undifferentiated Products

Bargaining Power of Suppliers q

Factors Inluencing:

• Volume of Purchase
• No. of Suppliers
• Availability of resource
• Unavailability of Substitutes
• High Switching Costs

Economies of Scale

• Reduced per-unit cost
• High volm at lower cost

Product Differentiation Physical or perceptual difference in eye of cust. Switching Cost High Cost " Brand Identity of product " Infrequent " Vantly Purchased Product Brand Identity Access to distribution channel Unavailability of distribution Channel to New Entrant Aggressive retaliation : Through pricing, advertising etc.

STRATEGIC MANAGEMENT REVISION CHAPTER-5

COMPETITIVE STRATEGY