MANAGERIAL ECONOMICSPRESENTATION

Topic- TEXTILE INDUSTRIESBy-

SURYANEEL DAS

Sustainable Industry Profits

POWER OF INPUT SUPPLIERS

INDUSTRY RIVALRY

POWER OF

BUYERS

ENTRY

SUBSTITUTES AND COMPLEMENTS

ENTRY1. ENTRY COST2. SUNK COST3. NETWORK EFFECT4. SWITCHING COST5. SPEED OF ADJUSTMENT6. ECONOMIES OF SCALE7. REPUTATION8. GOVERNMENT RESTRAINTS.

POWER OF INPUT SUPPLIERS1. SUPPLIER

CONCENTRATION2. PRICE-PRODUCTIVITY OF ALTERNATIVE INPUTS3. RELATIONSHIP SPECIFIC INVESTMENTS4. SUPPLIER SWITCHING COSTS5. GOVERNMENT RESTRAINTS

POWER IF BUYER1. BUYER CONCENTRATION2. PRICE OF SUBSTITUTE PRODUCTS OR SERVICES3. RELATIONSHIP SPECIFIC INVESTMENTS4. CUSTOMER SWITCHING COSTS5. GOVERNMENT RESTRAINTS

INDUSTRY RIVALRY1. CONCENTRATION

2. SWITCHING COST3. TIMING OF DECISION4. INFORMATION5. GOVERNMENT RESTRAINTS6. PRICE, QUANTITY, QUALITY OR SERVICE COMPETITION7. DEGREE OF DIFFERENTIATION.

SUBSTITUTES AND COMPLEMENTS

1. PRICE OF SURROGATE PRODUCTS OR SERVICES2. NETWORK EFFECTS3. GOVERNMENT RESTRAINTS4. PRICE OF COMPLEMENTARY PRODUCT OR SERVICES

STRUCTURE

PORTERS FIVE FORCES MODEL

1. THREAT OF NEW ENTRANTS

Powerful source of competition (New capacity & product range) Bigger the entrant - more severe Limit prices, affect profitability

2. BARGAINING POWER OF CUSTOMERS

Groups/ cartels (Industrial products), formal/informal groups,

Pressure on price, quality, delivery

Affect cost & investment (demand by customers)

3. BARGAINING POWER OF SUPPLIERS Specialized product

Limited supply Affects cost of raw materials Industry

attractiveness & profitability

4. RIVALRY AMONG EXISTING PLAYERS

Influence price Cost of competing in

industry Production facilities - product development

Advertising, sales force etc.

5. THREAT FROM THE SUBSTITUTES

Price advantage Performance improvement

Coir decreased demand synthetic fiber

Substantial invest - R&D Limit price & profitability

Threat from new entrants (low)

1. Retailing not allowed for foreign players

2. Huge investments in infrastructure is required

3. Availability of skilled labors and technical know-how is low

Availability of substitutes (high)

1. Unorganized retailing

2. E-retailing

3. Catalogue sales

Bargaining power of buyers (moderate)1. Individually, customers have very little bargaining power within the organized retail stores 2. Various shopping formats available to shop from3. Lots of brand choices available for similar qualities with different price

Bargaining power of suppliers (low)

1. Being bulk purchases done by organized retailer’s suppliers have very little bargaining power in organized retailing.

2. Many retailers are doing backward integration and coming out with private labels, thus decreasing dependence on traditional suppliers.

Competitive rivalry (moderate)1. Very few national level players 2. Growth rate 3. Presence of regional and local players 4. High competition between the national brands and retailer’s own

TO SUM UP…

Industry competitorsRivalry among existing

players

Potential entrants

Suppliers Buyers

substitutes

Threat of new entrants

Bargaining powerof

Bargaining powerof

Threat of substitutes

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