Competitive Forces Analysis (R1)

Competitive Analysis

What kinds of competitive forces are the steel industry members facing? There are 5 major dimensions of this: (1) competitive rivalry, (2) new entrants, (3) substitute products, (4) suppliers' power, and (5) buyers' power. In analyzing the strength of these competitive forces, you will identify the sources of competitive pressure and judge their strength.

1. Rivalry among Competing Sellersthis is a function of how aggressively and how frequently firms undertake fresh moves to threaten other firms' profitability. This will hinge upon the strategies used and the amount of resources used. Draft a paragraph describing the competitive rivalry in your industry and how you expect it to change in the next 2-4 years.

1. Potential Entry of New Competitorsthis is a function of barriers to entry for the industry and the expected reaction of incumbent firms. There are 3 entry issues to consider: (1) how formidable are the barriers for each potential entrant; (2) how attractive are the prospects for profits; and (3) how will incumbents react to the entry of a new firm? Draft a paragraph describing the likelihood (likely or unlikely) that new rivals will enter your industry and why.

1. Competitive Pressure from Substitutessubstitute products create pressure: (1) the more available the substitute and lower its price; (2) the higher the substitute's quality and performance; and (3) the lower the cost of switching. Draft a paragraph describing the likelihood (likely or unlikely) that there will be an introduction of substitute products in your industry.

1. Supplier Bargaining Powerthe relative strength of suppliers when negotiating terms of supply to the industry. Draft a paragraph describing suppliers' power in your industry and how you expect their power will change during the next 2 years.

1. Buyer Bargaining Powerthe relative strength of buyers when negotiating terms of purchasing products from industry participants. Draft a paragraph describing customers' power in your industry and how you expect their power will change during the next 2 years.

Competitive Pressures Conclusion

1. State how companies compete in your industry. What are the bases of competition upon which your industry operates?
2. Which of the forces will affect the competitive rivalry in your industry the most over the next 3 years? Rank them.
3. Does your expected state of competition promote future profitability? Why?

Sources:https://slideplayer.com/slide/17537928/

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