EXPLANATION OF KEY TERMS USED IN ANALYSIS OF COMPETITIVE FORCES

Access to Distribution: Availability of distribution channels that a firm may need in order to make its entry into a particular industry Access to Technology: Availability of the technology that a firm may require in order to make its entry into a particular industry Capital Requirements: Finances required by a new entrant for setting up to enter a particular industry, usually exclusive of operating costs that are incurred by the firm on a regular basis after it has entered Economies of Scale: Lowering of costs as a result of increased level of production Number and Size of Competitors: Number of major competitors that already operate within a particular industry and their size relative to each other Rivalry is highest in industries where there are no more than 3-5 major competitors that are relatively equal in their size Threat of Backward Integration: Threat posed by the possibility that buyers from a particular industry may purchase firms within that industry Threat of Forward Integration: Threat posed by the possibility that suppliers to a particular industry may purchase firms within that industry Product Differentiation: Belief among consumers that there are differences within a particular industry among brands, leading to loyalty of each of them to a specific brand Switching costs: One time costs that are incurred by a consumer in switching from one supplier to another, excluding any differences in price Switching costs are always incurred by the buyer