MGMT 490 Ch. 3

When substitutes are readily available, are attractively priced, and have comparable or better attributes and performance features

(1) identifying the specific competitive pressures associated with each of the five competitive forces (2) evaluating how mstrong the pressures comprising each competitive force are: and (3) determining whether the collective strength of all five competitive forces is conducive to earning attractive profits.

whether entry barriers are high or low, the size of the pool of likely entry candidates and their resource capabilities, the expected reaction of industry members in defending against new entry, and how attractive the industry's growth and profit prospects are to potential entry candidates.

the pool of entry candidates is large and some have adequate resources to overcome entry barriers and combat defensive actions of existing industry.

Industry incumbents are will and able to launch strong defensive maneuvers to and their positions and make it harder for a newcomer to compete successfully profitably.

enabling managers to prepare effective countermoves (perhaps to even beat a rival to the punch) and to take rivals' probable actions into account in crafting their own best course of action.

Competitive pressures created by shifting industry key success factors

because forces in the industry environment are enticing or pressuring certain industry participants (competitors, customers, suppliers) to alter their actions in important ways.

are those competitive factors that most affect industry members abilities to prosper in the marketplace particular strategy elements, product attributes resource strengths, competitive capabilities, and market achievements that spell the difference between being a strong competitor and a weak competitor (and sometimes the difference between profit and loss).

Constructing the biggest production plant of any company in the industry

the best variables to use as axes are those where there are big differences among the rival industry members--when rivals differ on both variables, the locations of the rivals will be scattered, thus showing how they are positioned differently.

rapid growth in buyer demand, high buyer costs to switch brands, and so many industry rivals that any one company's actions have little impact on rivals businesses.

the easier it is for industry members to earn good profits and a nice return on investment.

whether buyer switching costs are high or low, and how well informed buyers are about the product offerings of industry members.

industry members have too much inventory or significant amounts of idle production capacity, especially if the industry's product entails high storage costs or high fixed costs.

How big is the market for the industry's product/service and how fast is it growing?

Rapid market growth and weakly differentiated product offerings on the part of o existing industry members

whether the item being supplied is a standard item (or commodity) or, instead, whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry's product.

whether the industry's product is strongly or weakly differentiated, how many companies have entered and exited the industry over the past five years, and whether many of the companies in the industry have experienced losses in any of the past five years

Mounting competition from substitutes, increasing efforts on the part of industry members to collaborate with suppliers, and the speed with which the number of industry key success factors is either rising or falling