Lesson 2: Recognizing Potential Market (Forces) Flashcards
What are the five forces competing within the industry?
- Buyers
- Potential new entrants
- Rivalry among existing firms
- Substitute products
- Suppliers
The ones that pays cash in exchange for your goods and services
Buyers
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e.
The buyer purchases large portions of the seller’s product or services.
Buyers
defined as companies or businesses that have the ability to penetrate or enter into a particular industry
Potential new entrants
a. Substantial capital requirement
b.
Strict government policy
c. Difficulty in accessing distribution channels
d. Economies of scale
e. High cost of product differentiation
f. High switching cost
Potential new entrants
is a state or situation wherein business organizations are competing with each other in a particular market.
Rivalry among existing firms
a. Diversity of rivals
b. Number of competing firms
c. Characteristics of the products or services
d. Increased capacity
e. Amount of fixed costs
f. Rate of industry growth
Rivalry among existing firms
is one that serves the same purpose as another product in the market.
Substitute product
a. Switching cost is low
b. Preferences and tastes of the customers easily change
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves
e. The price of substitute product is substantially lower
Substitute product
the one that provide something that is needed in business operations such as office supplies and equipment.
Suppliers
a. The supplier has the ability for forward integration
b. Suppliers in the industry are few, but the sales volume is high
c. Substitute products are not readily available in the market
d. The switching cost is very high
e. The product or service is unique
Suppliers
