What is competition

• Endeavouring to seek or gain what others are

endeavouring to seek or gain by outdoing
them.
• In business, competitive activity can threaten
profitability by reducing sales and/or
increasing costs.
 Porter's model decoded. ...
1. Porter's model identifies 5 forces that determine the attractiveness of a
market segment.
2. Threat of industry competition: A segment is not attractive if there are
numerous, strong and aggressive competitors; if the segment growth is
stable or declining and if there are exit barriers. (airlines, textile)
3. The most attractive segments are those where entry and exit barriers are
low. New entrants will attack these segments. (retail)
4. Substitute products place upper limits on price. (steel and fibre glass)
5. Buyers have bargaining power when: they have low switching costs, they
are price sensitive due to reducing profits, the product is undifferenciated,
when the product represents a significant fraction of their cost, when they
can integrate upstream. (auto-components)
6. Suppliers have bargaining power when: there are few substitutes, when the
product is an important input, when switching costs are high, when they
can integrate downstream.

10/12/2019
 Types of competition
• "industry" vs 'market' definition of competition
• Product class, product type/category and brand
competition
• 3 important factors while analysing competition are:
1. Share of the wallet-market share
2. Share of the mind-customer awareness
3. Share of the heart-brand loyalty
• Value chain as a a basis for assessing strengths and
weaknesses.

10/12/2019