Group Exercise1

Identifying protection (or threat) posed

by the elements of Industry Structure.

Industry Structure Examples Advantages/ Disadvantages to Advantages/ Disadvantages to

the referent company the major competitor(s)
Competitiv Element
e Force
1.. New 1. Economies of Scale Mass producer of detergent. Wheel, Surf Wide variety of the product and Competitors need to create the
Entrants excels and Rin the price range. hype similar to their product and
(Entry also their supply chain which is a
Barriers) huge disadvantage.
2. Proprietary product differences HUL entering into Natural products called Build a brand name Pure it which Natural product is a new segment
Nature protects. hygiene segment. is very difficult to replace. and ITC may have an advantage
HUL owns a patent in water purifier over HUL by their natural home
technology. cleaner.
3. Brand Identity Taj mahal and TRESemme This is a premium brand of Tea Tenthly tea brand do not have a
which has a high demand in fan following compared to Taj
premium tea segment due to its Mahal.
rich and strong flavour and the
initial advertisement and use o Taj TRESemme has a brand value
mahal in the logo. and also a unique product quality
at affordable price which cannot
TRESemme created a brand name be replaced easily
for high end hair products
4. Switching costs for customers Low-cost water purifier Pure it Pure it offers a purifier which Raising computation and also
targets low-income family. It was TATA entering to this segment
the first in this segment. caused to lose few of its
customers.
5. Cost Advantage Rin High quality product and Name of Rin brand is well-
affordable price in detergent soap known for its advertisement that
market talks about getting whiter cloths.
And
6. Capital Requirements Natural products Nature product created to ITC has entered this segment by
enter in the natural products taking over a Bengali brand
Nimyle which is well established
Prepared for instructional purposes by Dr. K. Sankaran
1

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7. Differentiation of inputs
8. Switching costs to the supplier
9. Supplier Concentration
2.. Supplier
Power 10. Importance of volume to supplier
11. Cost relative to total purchases in the
industry
12. Impact of inputs on cost or
differentiation
like disinfectant and it and well-known brand has an
entered a late compared to advantage.
competitors
Walmart vis-à-vis its suppliers
Automobile manufacturers vis-à-vis
Proprietary components suppliers auto
components
Jewel manufacturers who buy diamonds
from De Beers
Walmart supplied by a company that
heavily depends on Walmart for its sales
IT industry supplied by high skilled
labour
Supplier of paper to a large manufacturing
company

13. Relative price performance of A Top-notch management consulting firm

3.. substitutes
Substitutes 14. Switching costs Microsoft vis-à-vis Windows users

15. Industry Growth Wind Turbine manufacturer

16. Fixed costs/ Storage costs/ Value Integrated textiles manufacturer
added
4. Rivalry 17. Switching costs Airline
18. Concentration and Balance Airlines
19. Diversity of competitors Coca Cola and Pepsi
20. Exit Barriers General Motors
21. Buyer conc vs. firm conc. De Beers vs. diamond cutters
5a. Buyer 22. Buyer Volum A steel plant that supplies most of its
Power – produce to one roller mill
Bargaining 23. Buyer Information Supplier of a chemical to a
leverage pharmaceutical firm. Supplier does not
exactly know where its product is used
5b. Buyer 24. Price/ Total Purchases Same case as above. Assume The cost of
Power – the chemical is negligible for the Pharma
Price company

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 25. Impact of Quality on performance Same case as above. Assume that Pharma Designing quality inside the
efficacy depends on how well the process will ensure greater
chemical meets the specs.
batch-to-batch consistency.
Sensitivity
26. Buyer Profits Buyer cost mainly depends of cost of sales It increases focus on Ignores capital requirements and
customer services and the return on investment
promote customers brand
loyalty.
Where you make assumptions, state them clearly under comments

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