The five competitive forces have been placed in two categories, that is, forces that encourage vertical competition and those that favor horizontal competition. Forces that play part in vertical competition are the bargaining power of customers and the bargaining power of suppliers. On the other hand, forces that favor horizontal competition include the threats posed by new entrants, those from established rivals, and those brought about by substitute products. Threats posed by new entrants are normally seen in the markets that are highly profitable and that have huge returns; this is because these types of markets are likely to attract new companies. When new companies join a highly profitable market, profits reaped by all the players in the industry will automatically decrease toward zero. Reduction in profits can only be avoided in a situation whereby the established firms in the industry deliberately block newcomers (Hitt, Ireland, & Hoskisson, 2011). The second competitive force is the threat posed by substitute products; existence of other products outside the sphere of renowned products is likely to increase the likelihood of customers using alternative products. The substitute products in this case do not refer to similar products manufactured by a competitor, but to totally different ones that can replace those of a competitor. The third competitive force is the bargaining power of customers, which refers to the capacity of buyers to pressure the company and influence its pricing policies. The forth force is the bargaining power of suppliers who may exacerbate the cost of unique raw materials, or completely refuse to cooperate with the company. The last competitive force is the threat posed by established rivals, which ... ... middle of paper ... ...g up to one third of the entire cost of production. The cost of advertisement can be reduced by regulating the overcrowding in the industry, which leads to cut throat competition and reduced profits. The movie industry should also expand its target audience and stop relying on the youths whose unpredictable behavior significantly affect the profits generated by companies in this line of business. Works Cited Angwin, D., Paroutis, S., & Mitson, S. (2009). Connecting up strategy: Are senior strategy directors a missing link? California Management Review, 51(3), 74-94. Benshoff, H. M. (2004). Queer cinéma: The film reader. London: Routledge. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management: Competitiveness and globalization, concepts and cases: 2011 custom edition (9th ed.). Mason, OH: South-Western Cengage Learning.
1. Hitt, Ireland and Hoskisson (2005), Strategic Management : Competitiveness and Globalisation, 6th Edition, Thompson & South-Western.
Porter’s Five Forces Model is a widely used tool by strategists to develop a competitive analysis, from which they will be able to develop strategies (David, 2013). When looking at Delta, it would be beneficial to look at the external forces this will help top management develop strategies to combat external factors, threats from external factors could potentially harm Delta. According to Porter, the nature of competitiveness in a given industry can be viewed as a composite of five forces: 1) Rivalry among competing firms, 2) Potential development of new competitors, 3) Potential development of substitute products, 4) Bargaining power of suppliers, 5) Bargaining power of
• Discussing the two forces of competition, which are threat of new entrants and threat of substitutes, and identifying the most significant of those forces for McDonald’s Corporation.
Dess, G. G., Lumpkin, G. T., Eisner, A. B., & McNamara, G. (2012). Strategic Management: Text & Cases (6th Ed.). New York, NY: McGraw-Hill.
Pearce, J.A., & Robinson, R.B. (2013) Strategic Management: Planning for Domestic and Global Competition. (13th Ed.). Boston, MA: McGraw-Hill/Irwin. ISBN-13: 9780078029295
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
Fast Company,(139), 69-70,73,16. Retrieved from Research Library. Document ID: 1870795761. Wheelen, Thomas L. & Hunger, J. David, (2010). Strategic management and business policy.
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic Management: Competitive and Globalization, Concept and Cases. Mason, Ohio: Cengage Learning
Movie theaters are focusing on moving from film projection systems to digital and 3D systems. With these added technological changes, ticket prices typically rise creating revenue gains for the industry. These changes are drawing more consumers into the theaters because the in-theater experience is something that they cannot get from online streaming at
Movies such as the one's mentioned above have been used create revenue for mighty Hollywood, but along the way it has brought awareness to the issue. From terrorism to global warming, issues like these are volatile in the world today and Hollywood knows this and is producing such films with capital as its real intention but at the same time imposing the issue on the people of the world today.
If competitors offer equally attractive products and services, then one will most likely have little power in the situation, because suppliers and buyers will...
Pearce, J. A., & Robinson, R. B. (2013). Strategic management: planning for domestic & global competition (13th ed.). New York: McGraw-Hill/Irwin.
Witcher, B., and Chau, S. V., 2010. Strategic Management: Principles and Practice. Cengage Learning EMEA.
Hitt, M., Ireland, and Hoskisson, R. (2009).Strategic management: Competitiveness and Globalization, Concepts and Cases. In M. Staudt & Stranz (Ed.