Midterm exam Flashcards
But history tells us that monopolies that are truly benevolent and effective are rare
Michael Porter
between incumbents is a threat that reduces the profits of the established enterprises.
Intensity of Rivalry
New entrants inject substantial resources and bring new capacity to the industry, thus increasing competition and placing additional pressure on profitability among all players.
Threat of Entry
The ability of buyers to bargain down prices
Bargaining Power of Buyers
this is the stage wherein the product is new, so there will not have been time for advertising and promotional work to come to fruition.
Introduction
It occurs when companies within one industry are forced to compete with industries producing substitute products or services.
Threats of Substitutes
Ability of suppliers to bargain up prices charged by firms
Bargaining Power of Suppliers
this is the stage wherein sales accelerate markedly as advertising and promotional work comes to fruition, and the product benefits from imitative buying as consumers see it being bought and used by others.
Growth
this is the stage wherein the growth in the size of the total market for the product begins to slow.
Maturity
this is where market growth comes to an end, and the product is overwhelmed by newer rivals.
Decline
low share of the market, but the overall market is growing quickly.
Wildcat Products
defined as the situation wherein the overall market is growing quickly and the firm’s product has a good share of the market.
Star Products
This is the one where the product in question still has a good share of the market, but where the total market is no longer growing strongly.
Cash Cow Products
are those where the total market is not growing and the firm has only a low share of the existing small market.
Dog Products
This is characterized by low entry barriers and commodity products that are hard to differentiate
Fragmented Industry
firms are interdependent because one firm’s competitive actions or moves directly affect the market share of its rivals and thus their profitability.
consolidated industries
Factors that make it costly for potential competitors to enter an industry and compete with firms already in the industry.
Barriers to Entry
declines in unit costs of a products the absolute volume per period increases.
Economies of Scale
Established firms have brand identification and customer loyalties
Product Differentiation
The need to invest large financial resources in order to compete creates a barrier to entry
Capital Requirements
A barrier to entry can be created by the new entrant’ s need to secure distribution for its product.
Access to Distribution Channels
Established firms may have cost advantages not replicable by potential entrants no matter what their size and attained economies of scale.
Cost Disadvantages Independent of Scale
Government can limit or even foreclose entry into industries with such controls as licensing requirements and limits on access to raw materials.
Government Policy
one-time costs facing the buyer of switching from one supplier ‘ s product to another.
Switching Costs
are those who supply the organization with what it needs to produce the product or service.
Suppliers
Where just a few producers dominate supply, suppliers have more power over buyers.
Concentrated Supplier
If it is expensive or disruptive to move from one supplier to another, then the buyer becomes relatively dependent and correspondingly weak.
High Switching cost
The goods or services of different businesses or industries that can satisfy similar customer needs.
Substitutes Products
an intangible one which is instantly perishable and cannot be stored.
product
New products must be substantially better value-for-money than those they are replacing, in order for consumers to accept the risks of using them.
Relative Advantage
An innovation is unlikely to be successful if it is a
very radical departure from the existing ways in which business is
done in the market sector in question,
Compatibility
Some innovations fail because they are perceived as being extremely difficult to use, requiring purchasers to invest a great deal of time and effort in becoming familiar with them.
Complexity
It is often easier to persuade consumers to take a series of short steps, rather than one very large and risky one.
Divisibility
Customers are unlikely to be persuaded to buy a product if the benefits this product will bring cannot be communicated to them persuasively.
Communicability
well-illustrated by applications which can be found both in the aerospace industry, and, by analogy, in airline marketing as well.
Product Life Cycle
the collection of all the products or services offered by a company.
Product Portfolio
Aircraft is one which can be converted from a passenger to a freighter aircraft quickly
Quick-Change
