1 2.1 Porter’s five forces model Threat of new entrants: The threat of new entrants is quite low‚ as there is a lot of offer already existing in Jomtien. If the restaurants want to make profit they need to distinguish themselves from the others. Furthermore‚ it takes a lot of paperwork for a foreign person to open a restaurant in Thailand. He needs to follow many rules. Many of these rules are not for a Thai person. However‚ they need to have a bit of starting capital in order to start a restaurant
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or event‚ as part of a collection at home‚ or as a special gift. The product is made from durable material that is easily looking in everywhere; so it has the lower price than other flower kinds. We believed that it is a perfect substitute product for traditional fresh flower. The company is also committed to making each arrangement unique and custom-designed based on each customer’s needs. All sample arrangements in the store will be available for purchase. Moreover
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prices and technology. These characteristics mean that a perfectly competitive firm is unable to exert control over the market‚ as a large number of perfect substitutes exist for the output produced by any given firm. The demand curve for a perfectly competitive firm’s output is perfectly elastic. This means that a consumer will not buy a good or service if the price rises‚ due to not being a necessity. An example could be an airplane ticket since vacation travel is not an essential service. Freedom
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3. Technical Threat with Substitute goods This is a different threat from those firms selling similar goods as it’s a threat that comes for firms selling alternative/substitute goods. Technology for example has enabled us to use phones to take photographs and this has presented a huge threat to firms producing and selling cameras and camera related products. It is important for a firm to look substitutes and not just similar goods. What substitutes may exist for a restaurant that
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an activity Utility function example f( good‚ services) 2 types of utilities: cardinal utility-is theoerical Ordinal utility- Compare level of satisfaction between two people- cannot be done. Consumer surveys would like to be able to measure satisfactuin using a measure of cardinal utility Marginal Utility- the added utility derived from increasing consumption of a particular product by one unit holding the consumption of all other goods service constant. Mux= Most marginal
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in the other players. Rather‚ competition in an industry is rooted in its underlying economics‚ and competitive forces exist that go well beyond the established combatants in a particular industry. Customers‚ suppliers‚ potential entrants‚ and substitute products are all competitors that may be more or less prominent or active depending on the industry. - The weaker the forces collectively‚ however‚ the greater the opportunity for superior performance. T-he strongest competitive force or forces
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paribus) ‚ higher the price of a good smaller is the quantity demanded”‚ i.e. There is an inverse relationship between the price of a good and its quantity demanded. So in this case assuming that there is an increase in the price of Iphone5 its demand will fall down and vice-versa. (Put in a graph) Substitution Effect- Substitution effect occurs when the relative price of a good or service raises in this case Iphone5‚ due to which people seek substitutes
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industries creating new industries. The nature of the industry is determined by the composition and strength of Porter’s competitive forces namely the bargaining power of customers‚ bargaining power of suppliers‚ threat of new entrants‚ threat of substitutes and the intensity of rivalry among competitors in the industry. This therefore implies that the industry structure will change when new technology‚ customer needs‚ or other factors shift these five forces. Smart‚ connected products will therefore
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reasons that suppliers might have power: There are very few suppliers of a particular product There are no substitutes The product is extremely important to the buyer‚ they cannot do without it The supplying industry has a higher profitability than the buying industry Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Presence of substitute inputs Supplier concentration to firm concentration ratio Threat of forward integration by suppliers relative
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2: Threat of substitutes Every top decision maker has to ask: How easy can our product or service be substituted? The following needs to be analyzed: * How much does it cost the customer to switch to competing products or services? * How likely are customers to switch? * What is the price-performance trade-off of substitutes? If a product can be easily substituted‚ then it is a threat to the company because it can compete with price only 2. Threat of Substitutes - Rather than
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