COMPETITIVE FACTORS

AFFECTING BUSINESS

A:- The Threat of New Entrants

Examples Include:

Existing Loyalty to a major Brand

Incentives for using a particular Brand

High Fixed Costs

Scarcity of Resources

High Costs of Switching Companies

Government Restrictions or Legislations

B:- The Power of Buyers

Examples Include:

Small Numbers of Buyers

Large Volume Purchases

Switching to a competitive world is simple

Product is not Extremely important to buyers ;they can

do without a product for a period of time

Customers are price Sensitive

C:- The Availability of Substitutes

What is the likelihood that someone will switch to a

competitive product or service?

Examples Include:

Switching to a Competitors Product is Costly

Switching to a Competitors Product is Easy and Cheap

No Substitutes and the Product is Extremely important to the Buyers-

can’t do without it

No Substitutes and the Product is unimportant to buyers- can’t do

without it

D:- Power of Suppliers

Examples Include:

Few Suppliers of a particular product

Numerous Suppliers of a particular product

A Business could react to an increase in competition(e.g. a

launch rival product)

in the following ways:

Cut Prices (but can reduce profits)

Improve Quality (but increases cost)

Spend more on Promotion (e.g. do more advertising,

increase brand loyalty; but costs money.

Cut Costs (e.g. use cheaper materials, make some workers

redundant)

THANK YOU

ANY QUESTIONS

?