Political And Economic

Topics: Economics, Affect, Economics terminology Pages: 2 (285 words) Published: December 6, 2014
Political Factors:

1. Entrants:

Unrest in the city due to differences between political parties acts as a barrier to entry for new entrants, making the industry less attractive for them. There are unexpected delays in supply due to a disrupted transportation network. Well established companies can cope up with any losses that are made as a result however this poses a threat especially for new entrants.

2. Buyers

In times of unstable law and order situation, fluctuations are seen in sales, affecting the company negatively on the whole. However there is no check and balance if low quality raw material is being used.

3. Substitutes

No effect

4. Suppliers

Imposition of additional taxes or charge of import duty will affect bargaining power of suppliers.

5. Rivalry

No effect.

Economic Factors:

1. Entrants

Rapid growth in inflation poses a threat for new entrants with regard to their survival. They are threatened by increasing interest rates as well.

2. Buyers

Inflation causes fluctuations in prices. Consumers may benefit from companies which are able to control cost in order to combat inflation. Others will transfer increased cost to customers; therefore bargaining power of buyers will decrease.

3. Substitutes

In times of rising prices, lower income groups which do not use toothpaste would resist in shifting to its use. They would rather use miswak or whatever current product they were using to clean teeth.

4. Suppliers

Since suppliers cope up with fluctuating economic conditions accordingly, it won’t have any effect on their bargaining power.

5. Rivalry

All competitors usually want to maintain the position of a cost leader. Economic conditions of Pakistan have always favored intense competition in this industry since we are a consumption oriented society. These factors will have an effect on rivalry between existing competitors.
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