Competitive Forces and Industry Profitability

Flashcards covering key concepts related to competitive forces that determine industry profitability.

Threat of New Entrants

Barriers that protect industry profitability, such as economies of scale, brand loyalty, capital requirements, and regulation.

Economies of Scale

Cost advantages that large firms, like Glanbia or Kerry Group, have due to their large production volumes.

Brand Loyalty

Consumer preference for established brands, such as Tayto or Guinness, which deters new competitors.

Capital Requirements

The significant investment needed to enter certain industries, such as telecoms and energy.

Bargaining Power of Suppliers

The ability of suppliers to demand higher prices or reduce quality, influenced by the number of substitutes and switching costs.

Supplier Concentration

A situation where a few suppliers dominate, increasing their bargaining power.

Bargaining Power of Buyers

The influence buyers have on prices and quality, often linked to the number of buyers and switching costs.

Threat of Substitute Products

The presence of alternative products or services that perform the same function, capping potential prices.

Rivalry Among Existing Competitors

The competition intensity in an industry, influenced by the number of competitors, industry growth rate, and product differentiation.

Favorable Competitive Environment

Characterized by few competitors, low threat of new entrants, and low bargaining power of suppliers and customers.

Unfavorable Competitive Environment

Marked by many competitors, high threat of new entrants, and high bargaining power of suppliers and customers.