2.Potential entry of new competitors
3.Potential Development of Substitute Products
4.Bargaining power of suppliers
5.Bargaining power of consumers
Rivalry Among Competitive Firms
Rivalry among competing firms is the most powerful of the five competitive forces.The ongoing war between firms competing in the same industry for gaining customer share to increase revenues and profits. The competition is more intense if firm pursue strategies that gives competitive advantage over the strategies pursued by rivals. Developing new strategies is more easier than retaining the uniqueness of the strategies to gain competitive edge over rivals in the industry. Changes in strategy by one firm may be met with retaliatory countermoves, such as lowering the prices, enhancing quality,adding features,providing services, extending warranties and increasing advertising. Examples,
- In telecommunication industry firms are lowering their prices to increase consumer call ratio by minimize per minute profit margin but increasing overall company revenues. - In the past few years number of new features were added in the mobiles now it not only give the functionality of cell phone but able to take pictures, make videos, watch streaming and use Internet. The firms like Nokia, Siemens, Samsung and other are following each other strategies to minimize the differentiation in the product so customer can easily switch brands. - In the past television companies offer maximum one year warranty but now competition is tough other market player Samsung, LG, Haier, Philips and others enter in the market with their high quality products to compete Sony, that’s the reason customer is getting more services in the form of extended warranty periods. - Pepsi Vs Coca Cola are competing by increasing advertising and offering new beverages in the market.
We discuss about offline business when it comes to online business on Internet the competition is more fierce, consumer get more control over its purchasing by sitting at home on computer and comparing the similar and substitute products on bases of features and prices. Amazon.com is the best selling online book store offering huge library containing millions of books on variety of subjects. People come to amazon because they enjoy user friendly design, products, books and search capability of the site but when it come to purchase the product customer move to other site such as buy.com for purchase on discounts. Buy.com CEO says, ” The Internet is going to shrink retailers margins to the point where they will not survive.” Examples,
- Dell.com offer computers and laptops of high quality at low prices as compared to the competitors. - EBay.com is a place where people like to go to purchase products online at low price. The rivalry among competing firm increase as the number of competitors increases, as competitors more equal in size and capability, as...