The 6 Barriers of

Entry
➀ Economies
Economies of of Scale.
Scale.
➁ Product
Product Differentiation.
Differentiation.
➂ Capital
Capital Requirements.
Requirements.
➃ Cost
Cost Disadvantages
Disadvantages Independent
Independent of
of Size.
Size.
➄ Access
Access to
to Distribution
Distribution Channels.
Channels.
➅ Government
Government Policy.
Policy.

89
Buyer Power
Determinants
☛ Bargaining
Bargaining Leverage.
Leverage.
Buyer
Buyer Concentration
Concentration
Buyer
Buyer Volume.
Volume.
Buyer
Buyer Switching
Switching Costs
Costs..
Buyer
Buyer Information.
Information.
Ability
Ability to
to Integrate
Integrate Backward
Backward..
Substitute
Substitute Products.
Products.
Pull-Through.
Pull-Through.

90
Buyer Power
Determinants
☛ Price
Price Sensitivity.
Sensitivity.

 Price/Total
Price/Total Purchases
Purchases

Product
Product Differences.
Differences.

Brand
Brand Identity.
Identity.

Impact
Impact on
on Quality/Performance.
Quality/Performance.

Buyer
Buyer Profits.
Profits.

Decision-Maker’s
Decision-Maker’s Incentives.
Incentives.

90
Supplier Power
Determinants
☛ Differentiation of Inputs.
☛ Differentiation of Inputs.
☛ Switching
Switching Costs
Costs of
ofSuppliers.
Suppliers.
☛
☛ Presence of Substitute Products.
☛ Presence of Substitute Products.
☛ Supplier
Supplier Concentration.
Concentration.
☛
☛ Importance of Volume to Supplier.
☛ Importance of Volume to Supplier.
☛ Cost Relative to Total Purchases in
☛ Cost Relative to Total Purchases in
the
the
Industry.
Industry.
☛ Impact
☛ Impactof
ofInputs
Inputson
onCost
Costor
or

Differentiation.
Differentiation.

90
Power of
Substitutes
☛
☛ Relative
Relative Price
Price Performance
Performance of
of

Substitute.
Substitute.
☛
☛ Switching
Switching Costs.
Costs.
☛
☛ Buyer
Buyer Propensity
Propensity to
to Substitute.
Substitute.

92
Determinants of
Rivalry
☛ Industry
Industry Growth.
Growth.
☛ Fixed
Fixed Costs/Value
Costs/Value Added.
Added.
☛ Intermittent
Intermittent Overcapacity.
Overcapacity.
☛ Product
Product Differences.
Differences.
☛ Brand
Brand Identity.
Identity.
☛ Switching
Switching Costs.
Costs.
☛ Concentration
Concentration andand Balance.
Balance.
☛ Informational
Informational Complexity.
Complexity.
☛ Diversity
Diversity of
of Competitors.
Competitors.
☛ Corporate
Corporate Stakes.
Stakes.
☛ Exit
Exit Barriers.
Barriers. 92
Determinants of
Rivalry
Competition is
☛ Industry Growth.
Everything!!!
☛ Fixed Costs/Value Added.
☛ Intermittent Overcapacity.
☛ Product Differences.
☛ Brand Identity.
☛ Switching Costs.
☛ Concentration and Balance.
☛ Informational Complexity.
☛ Diversity of Competitors.
☛ Corporate Stakes.
☛ Exit Barriers.
 Value Chain Analysis
AA
C
SS T
C Procurement
T
U

Ma
U II
PP V
V Human Resource Management

rg
PP I

in
I
O
R
O TT Technology Development
R II
TT E
E Procurement
SS

Ma
Ma Sale
Op

Ou gist

Se
Inb gist

&
Lo

r
Lo

g
er

tbo ics

r ke s

rvi
o u ic s

in
at i

ce
un

tin
nd

on

g
s

Figure 3 Primary
Primary Activities
Activities
Value Chain
Analysis

Importance of value-chain analysis is that

✎
it provides a framework for identifying or
developing a distinctive competence.

82
Devising a Plan of Action

❐ Position the Company.

❐ Influence the Balance of the Forces.
❐ Anticipate Shifts in the Forces.

93
Creating Families of Strategies

1 . Locating the core business.

2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.

94
Creating Families of Strategies

1 . Locating the core business.

2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.

The Core Business is reflected in the

Choice of Generic Strategies
 Porter’s Generic
Strategies
Cost Advantage
Lower Cost Differentiation

Broad
1. Cost Leadership 2. Differentiation
Target
Competitive
Scope
3B. Differentiation
Narrow 3A. Cost Focus
Focus
Target

Figure 4
Strategies of Differentiation

➭ Price Differentiation.
➭ Image Differentiation.
➭ Support Differentiation.
➭ Quality Differentiation.
➭ Design Differentiation.
➭ Undifferentiation.
99
Strategies of Scope

➭ Unsegmentation.
➭ Segmentation.
➭ Niche.
➭ Customizing.

100
Elaborating the Core Business

➭ Penetration Strategies.
➭ Market Development Strategies.
➭ Geographic Expansion Strategies.
➭ Product Development Strategies.

101
Elaborating the Core Business

➭ Penetration Strategies.
➭ Market Development Strategies.
➭ Geographic Expansion Strategies.
➭ Product Development Strategies.
 Ways to Elaborate a Given
Business

Existing Product New Product

Product
Existing Penetration
Development
Market Strategies
Strategies
Market
New
Diversification
Development
Market Strategies
Strategies

Figure 5 101