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State and explain the competitive forces a business manager needs to evaluate in the business environment.

      

State and explain the competitive forces a business manager needs to evaluate in the business environment.

  

Answers


Lellah
a. Rivalry among existing competitors: involves determining existing competitors, their strategies and weaknesses, their marketing strategies and their developing a superior marketing mix strategy. Existing Competitors and Substitutes may involve .
1. Competitive pressures among existing firms depend on the rate of industry growth.
2. In slow-growth settings, competition is more heated for any possible gains in market share.
3. High fixed costs also create competitive pressures for firms to fill production capacity
b) Threat of new entrants: Involves determining possible entrants and any possible barrier to entry into the business such as heavy capital requirements or special skills or experience that may provide the advantage or reduced production / operating costs. A firm must assess the likelihood of new entrants since more producers increase industry capacity and lower prices.
• Barriers to entry are business practices or conditions that make it difficult for new firms to enter the market. Barriers to entry can be in the form of capital requirements, advertising expenditures, product identity, distribution access, or switching costs. The higher the expense of the barrier, the more likely it will deter new entrants.
c) Threat of substitute products: - Substitute products affect the prices of other goods and services. For instance, the introduction of accounting and design software influence hiring decisions of accounts or designer / craftsmen.
d) Bargaining power of suppliers and buyer: Suppliers influence price and quality of parts and / or raw materials. Thus the manager / marketer needs to determine the number of supplies that control the market. May involve engaging in strategic moves such as relationship marketing or joint ventures or partnerships. Power of Buyers and Suppliers may involve :
a. Powerful buyers exist when:
• they are few in number;
• there are low switching costs; or
• the product represents a significant share of the buyer?s total costs, which leads the buyer to exert pressure for price competition.
A supplier gains power when the product is critical to the buyer and it has built up switching costs.


Lellah answered the question on November 3, 2021 at 12:58


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