Threat of New Entrants: Barriers to Entry Economies of scale Product differentiation Capital requirements Switching costs Access to distribution channels Cost disadvantages independent of scale Government policy Expected retaliation Barriers to Entry Economies of Scale Marginal improvements in efficiency that a firm experiences as it incrementally increases its size Factors (advantages and disadvantages) related to large- and small-scale entry Flexibility
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diminished. Since the establishment of the five force model‚ a sixth factor‚ known as “Impact of Complementors” has been recognized to affect industry profitability. A Complementor is an industry competitor who provides complementary‚ rather than competitive‚ services or products to another competitor within the same industry. There are industry specific factors that will determine the importance of Complementors within that industry. By applying this five force model to an analysis of the U.S. Commercial
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The Right Game: Use Game Theory to Shape Strategy by Adam M. Brandenburger and Barry J. Nalebuff Harvard Business Review Reprint 95402 HBR J U LY- A U G U S T 1 9 9 5 The Right Game: Use Game Theory to Shape Strategy by Adam M. Brandenburger and Barry J. Nalebuff Business is a high-stakes game. The way we approach this game is reflected in the language we use to describe it. Business language is full of expressions borrowed from the military and from sports. Some of them are dangerously
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competitors‚ and turning imitation into a good thing. One way to start thinking in a coopetitive way is to take a look at the “Value Net” for your company. Value Net is a mapping of the relationships between your suppliers‚ substitutors‚ complementors‚ and customers. Suppliers and customers are on a vertical axis‚
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microprocessors Threat of Imitation: * Intel used economies of scale to counter imitation. Project Crush helped it to gain IBM’s contract for the 8088 microprocessor. * By entering into a long term relationship with Microsoft‚ which was its complementor. * R&D also resulted in Intel coming up with upgrades and new generation of chips at a rapid rate. * Intel like many other microprocessors didn’t believe in patents and copyrights as the life cycle of the microprocessor was very low
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Closeness of Substitutes to an Industry’s Products – Boeings airplanes are very close substitutes to Airbuses airplanes. Complementors – The power of complementors is moderate. Complements such as TV screens‚ wi-fi interenet abroad a flight‚ decoration or comfort of the seats has an influence. However‚ with the recent trend towards low cost provider airlines‚ many complementors have not been as important as once expected. Macro-environment Analysis. The macro-environment has a strong influence on
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bargaining power over industry firm; extract high prices raising costs; lower quality supply)‚ customers‚ rivals (if high – there are many identical products; forcing higher quality products)‚ potential entrants (high if barriers to entry are low)‚ complementors‚ and substitute products. Cooperative Forces: working together with suppliers and firms‚ Macro Environment: P.E.S.T.E.L. Critical Industry Value Drivers: impact on value; low cost/differentiation‚ R&D. Firm Specific Factors: Positions of a
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exiting or consolidating through mergers and acquisitions. Downstream and upstream factors are crucial to the specialty pharmaceutical sector of this industry since supply and distribution are different than in traditional branded pharmaceuticals. Complementors such as antiemetics and substitutes such as marijuana and acupuncture exist but currently do not play a large enough role to affect rivalry. In the pharmaceutical market‚ the degree of market concentration changes as one looks more narrowly
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entrepreneurial traits. 1(b) Advantages of firms as innovators include alliances with stakeholders‚ absorptive capacity is built via the firm ’s in-house R&D. A disadvantage is when firms collaborate with complementors‚ the firms produce a range of goods and the line between the firm and the complementors becomes blurred. 1(c) Advantages of universities: staff is encouraged to engage in research that may lead to innovations. If an invention is commercialized‚
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Intel Case DRAM industry analysis - lessons learned By the early 1980‚ Intel’s total share in DRAM was barely 1% and manufacturing was restricted to one fab out of Intel’s eight fab‚ where the Japanese semiconductor companies had captured nearly half of the world memory market. There are several factors that forced Intel to exit the DRAM market‚ those are the same lessons learned. 1. Intel was always the pioneer in inventing and enhancing the DRAM with respect to the price and performance‚
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