...1) Buyer power is high when the buyers have many choices of whom to buy and low when there are few choices. 2) Supplier power is high when the buyers have few choices of whom to buy and low when there are a lot of choices for buyers. 3) threat of substitutes products is high when there are many alternatives to this product and low when there are few alternatives for this product or service. 4) threat of new entrants is high when it is easy for new competitors to enter the market and low when there are significant entry barriers to enter the market. 5) Rivalry among existing competitors is high when the competition is fierce in a market and low when the competition is complacent. 2) Example: Bookshop: The buyer power is high because the buyers have many choices of whom to buy like City Lights and Strand bookshops. In order to have competitive advantage the bookstore should offer loyalty programs to their programs such as “the 5th book is free”, “10% discount for purchased 20 books”. Supplier power is low because the buyers have a lot of choices to shop in different shops. Threat of substitute products or services is high because you can order books online. In order to have competitive advantages I would try to use switching cost. I would offer my customers to order their books through the telephone or mail so I will deliver them the book free without any additional cost. Threat of new entrants is high because it is easy for new competitors to open a shop. It does not...
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...bargaining power of buyers - relatively low power for buyer, since oly few players in the market the buyer has less control over the products, the demand is more and the supply is less. Even now in most of the countries printing play a vital role in the education industry where the printed industry has its control over the buyer. bargaining power of suppliers - moderate influence of suppliers, suppliers who provide the raw materials for the printing industry such as paper pulp, dyes. These suppliers have a moderate control over the industry since there is quite a few number of industries which supplies these materials. Rivalry within d industry - high degree of competition, every nation has several giants in printing industry either in media or the vice versa, hence to catch hold of the market share each player offer prices as low as possible by adopting several cost cutting methods and adopting several innovative methods. Hence innovation is in a continous drive in printing industry threat of new entrants - relatively low, less small scale industry since huge investment is reqd, existing players are of king size,very attractive component for companies who can overcome the barriers because of the excellent stability presented but poses a significant problem for potential entrants. threat of substitute products - there is a great threat from substitute products. Hence constant innovation is required. Tv, internet and ebook readers are the potential threats in the...
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...1.1 Executive Summary Green Paradise Budget Hotel operates in 90, JalanPetaling, 50000, Kuala Lumpur. As a new entrant in budget hotel industry, Green Paradise is selling its brand new Go Green Concept to the customer. Customer can gain new experience and enjoy affordable price in Green Paradise Budget Hotel. In the first year, Green Paradise may suffer loss for the budget hotel’s expenses. Green Paradise Budget Hotel will gain back net profile of RM 200,000 in the second year. Green Paradise Budget Hotel estimated to be at least 15% net profit and revenue increase in the following years. Green Paradise Budget Hotel will develop some marketing strategies to gain the sales target. First of all, the company will advertise through newspaper, social networks such as Facebook and Twitter to raise the popularity and sales. The company website will also be created for customer convenience. The customer can check the rate of room through the website and others related information. The company will gain customer loyalty and satisfaction. Green Paradise Budget Hotel is limited company owned by 5 persons. They are Chia Pei Jing, Choo Yee Ying, Tan Chu Xin, Lim Shee Wei and Chai TeikJian. The company will apply RM 350 000 business loan from bank for the financial sources of the company. The 60% of the capital will be used for buying equipment, renovation, facilities and others. Besides, 40% of the capital will be used for the marketing expenses and also to run the company daily activities...
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...Bargaining Power of Buyers The existence of influential buyers lessens the profit potential in any given industry. They fuel competition by decreasing prices, bargaining for better quality or more services and playing rivalries opposed to other market giants. The consequences include diminished trade profitability. The bargaining power of buyers involves one of Porter’s five forces which regulate the intensity of an industry. The rest includes; Barriers to entry, industry rivalry, threat of substitutes and the bargaining power of suppliers. The influence of an industry‘s significant buyer groups are determined by: * Relatedness to market situation characteristics * The relative significance of trade from industry as measured against the overall business Below conditions conclude the powerful nature of a buyer group: * The buyer is either concentrated or purchases large quantities * Products obtained from the industry represent a noteworthy percentage of the purchases or the costs of the buyer * Purchased products are undifferentiated or standard- substitutes are easy to find as the competition is tough * Switching costs are very low * The backward integration threat is high * Buyers are price sensitive * Buyer possess necessary information ( they are fully aware about the market prices and supplier costs) Product differentiation is one of the conditions that affect the power of buyers. Chocolate is regarded as a standard product and...
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...challenge for new entrants to the market, well established companies in the industry carry a brand identity that new entrants would have trouble capturing. High costs are another barrier that has reduced the threat of new entrants as licensing and capital costs for a new company would be very high. Overall, the threat of new entrants in the industry would be Low. Bargaining Power of Suppliers Suppliers play a role in the industry as providers of major goods like handsets that are subsidized for the carriers for their customers. Prices in that regard remain relatively similar across the competition. Companies maintain relationships with upstream suppliers to remain successful in the industry, which does gives suppliers some power in the industry. Other costs are relatively similar across the industry for the top companies in terms of usage and customer base, as well as in-house equipment. Overall the bargaining power of suppliers in this industry would be Medium. Bargaining Power of Buyers The buyers sector of the industry is heavily dependent on price sensitivity, which is high in the industry. Buyer subscriptions and volumes have been...
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...the brands in the industry | How easy/ Hard is it for customers to switch their business between competitors in the industry | | | POWER OF SUPPLIERS - (Manufacturer of the parts) Power of the supplier LOW – PROFIT HIGH | | What is the number and concentration of suppliers | How inportant are specific suppliers inputs | how likely are suppliers to forward intergrate | how easily can organisations in the industry switch suppliers | what is the proportion of the cost of the suppliers products relative to the total cost of the industry product or service | Is information about the suppliers product easily avaliable | how profitable are the suppliers? | | | POWER OF BUYERS -STRONG | | How concentrated are the buyers in the industry? Is distribution controlled by a few important outlets | Are there alternative channels of distribution | what impact does the product or service being purchased by the buyer have on their business? | How likely are buyers to backwards intergrate? | How easy or difficult is it for buyers to switch to alternative suppliers? | How important are industry volumes to buyers? | What is the porportion of the cost of the industry product being purchased relative to other products and services the buyers buy? | How profitable is the buyer? | How easliy can the buyer access information about the industrys products and...
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...It is often said that information is power in today’s economy, and this is aptly demonstrated by the emergence of many new types of information intermediaries in the last decade. The term infomediary is used for many such intermediaries, since their role is to capture, aggregate, and exploit information about participating parties in order to facilitate the efficient allocation of goods or services. Wise and Morrison (2000) note, in the context of business-to- business markets, that with the spread of digitization “value has shifted from the product itself to informa- tion about the product.” Intermediaries create value via information collection, aggregation, display, and information processing; by managing workflow for a set of transactions between a buyer and seller; by coordinating logistical services to buyers and sellers; or by providing information processing services for end-to-end transaction management. Such infomedi- aries are becoming commonplace in many business and consumer market settings, including in hotel and travel coordination (Dube and Renaghan 2000), retail marketing (Chen et al. 2002), and private online exchanges for B2B commerce (Hoffman et al. 2002). Bailey and Bakos (1997) discuss four services offered by intermediaries: (a) aggregation of buyer demand and seller products, (b) providing trust between participants, (c) market facilitation, and (d) matching buyers and sellers. Kaplan and Sawhney (2000) reinforce the notion that electronic intermedi-...
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...benefits from establishing a JIT relationship with a buyer such as Dixon. Usually, such relationships are longer term, more cooperative, and with a small set of vendors. D&S will then have a more certain, steady demand for their product. They should also have more accurate forecasts further into the future. Besides these demand benefits, D&S could improve its production and distribution efficiency. Better knowledge of the size and timing of orders would allow them to plan operations more efficiently. As they are responsible for much of the ordering, they can better coordinate their operations with the order cycles. However, D&S does have some reasons to be concerned also.. The relationship shifts supply responsibility to D&S. The guaranteed business would be at risk if D&S were to forecast or perform poorly. Further, the responsibility for placing orders in now a D&S paid employee. 2. Identify the pros and cons of a JIT relationship from a buyer’s point of view. A buyer, such as Dixon, can obtain many relationships from a JIT relationship with a supplier. Order timing becomes the responsibility of the vendor. Quality should improve and deliveries should become more reliable. Through better coordination, the supplier’s costs should improve, which may eventually be reflected in their price. Buyers often have several concerns of such an arrangement. For one, seldom does a supplier have only one customer in a market. Buyers worry that sensitive information, such as upcoming...
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...What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry? The competition of rivals in the U.S. family industry is strong because the competitors are numerous, buyer demand is growing slowly, and the rivals face high exit barriers. The threat of new entrants is weak because the entry barriers are high and the industry outlook is risky and uncertain. The threat of substitute products is strong because good substitutes are readily available, substitutes have comparable or better performance features, and buyers have low costs in switching to substitutes. The bargaining power of suppliers is weak because good substitutes for supplier products/services exist and the number of suppliers is large relative to the number of industry members and there are no suppliers with large market share. The bargaining power of buyers is strong because buyer costs of switching to competing products are low and the industry’s products are standardized or undifferentiated. This analysis reveals that the strength of competition in the industry is strong especially since the recession that began in 2008 caused buyer demand to decrease. This decrease in buyer demand strengthened the intensity of competition. What factors are critical to success in the U.S. family clothing stores industry? The factors critical to success in the U.S. family clothing stores industry are the ability to successfully develop new product lines that...
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...Power of Buyers * price sensitivity * No brand identity, customer more care about price rather than which drug store to buy * No bargaining leverage * buyer volume * No buyer switching costs, same drug they can buy at any drug store * product differences * No brand identity, costomer more care about price rather than which drug store to buy * Many key players are acquiring small stores, industry concentration Advanced 5 forces Analysis * Population aging * As the population ages, demand for pharmaceutical products to address health ailments, such as chronic illnesses, typically rises. * According to data from the Centers for Disease Control and Prevention, an estimated 89.7% of individuals aged 65 and older used a prescription drug during a 30-day period between 2009 and 2012 (latest data available). As a result, the industry benefits from strong need-based demand for prescription drugs from this age demographic. In 2015, the number of adults aged 65 and older is expected to increase. * External competition for the Pharmacies and Drug Stores industry * Pharmacies and drug stores face mounting competition from mass merchandisers (e.g. discount stores, supercenters and warehouse clubs), mail-order prescription providers, online pharmacies, convenience stores, wholesalers (e.g. Costco) and health clinics. Due to intensifying competition, the industry will contend with many external competitors cutting into consumer demand...
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...A Problem of Price This vignette is characteristic of what happens when buyers are asleep at the wheel. Sue Jones is a newly promoted buyer that is paying close attention to details of her new job. Sue finds that the companies that have bided in this process are all within about $50 of one another. The strange thing about thus is not the fact that the bids are so close but that the winning bid is not low enough. How does she get her cost down even lower? Sue should focus on the startup costs associated with the chemicals. Based upon her discussions with other companies, sue should see a reduction of at least between $750k-$850 dollars in the overall costs that is paid to Chicago Chemical. Chicago Chemical has already been producing the chemical for the past 5 years; therefore, there isn’t any startup costs associated with their production of the chemical. Because of this Sue should be able to reopen negotiations with them. The overall cost should be about $2.1M or $210 per barrel. The other bidders have already said that the startup costs re added into their bids. Chicago Chemical has been reaping too much profit at the expense of Prestige Plastic. One method that Sue could deploy would be to take the business away from Chicago Chemical or threaten to do so. Chicago Chemical would have to react to this demand from Prestige. Chicago would not be able to offer up huge disdain to this idea because this bid process is commercial in nature and not governmental. Because of this...
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...these stores create additional revenue for the online giant. For buyers, eBay offers many choices by setting up comparisons of similar products’ prices and auction bidding function which increases the products’ value. Finally, eBay serves up third party advertising to its customers based on their product searches. 2. What potential contracting problems exist on eBay? Potential contracting problems with eBay exist within both the selling and the buying arenas. The most common problems that arise are when the products are not shipped or when buyers do not pay for items that they are contractually obligated to purchase. Naturally, fraud can exist in any big online market like eBay because it is difficult to sort through millions of transactions. Thus, eBay has set up a feedback system which allows users to rate their experiences with other students on the website. This feedback system has its own weakness because sometimes a seller or buyer could easily apply for more than one account and mislead users with fake reviews and ratings. However, eBay has made this much more difficult to do than it used to be. The auction system can be scammed in other ways too. Take deceptive sellers for example, who can disguise themselves as bidders to increase the price of their item are not satisfied with the bidding activity. Shipping is also always a potential problem. A fairly common occurrence is that buyers are not...
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...Like most who are tempted by evil Jordan Belfort too was corrupted by power. He became consumed in the life of Wall Street. Exhibiting personalities of both narcissistic and antisocial behavior. Along with his constant substance abuse, Jordan Belfort truly became the monstrous Wolf of Wall Street. Belfort is depicted as both narcissistic and antisocial through his egocentric mentality. Belfort used his charm and manipulative well spoken words to swindle his investors into purchasing stock, guaranteeing them fortunes that he would not fulfill. His ambitious attitude drove him to acquire power through any means necessary. Belfort’s unwillingness to follow federal laws provoked him to treat the stock market system as well as his investors with no remorse. He treated his relationships the same as his business with no sympathy towards the opposite sex, driven off impulse to satisfy his sexual needs through promiscuous activities. Finally Belfort's exciting, fast paced competitive attitude drove him to acquire the most expensive objects declaring his greatness to the...
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...and with all the changes in technology, buyers bargaining power has increased greatly. With the emergence of companies like Amazon.com and online stores like Half Price Books.com (where you can buy school books or any book) university book stores and big chain stores now have to compete buy price. Stores like Barnes & Noble have to compete buy price because now-a-days all you have to do is do a Google search of whatever book you what to buy and the search will come up with thousands of hits of people wanting to sell you that book. Also with devices like the kindle, and iPad, readers can buy eBooks and download them rite to that device for a discounted price. Stores that have already adopted the new way of buying and reading books such as Amazon will survive a downfall in actual published books because there philosophy has always been online and competitive. Barnes & Noble over the last few years has started to do more on-line sales and they specialize in sales of eBooks for the Nook, which Barnes & Noble came up with to compete with other e-readers. There are two types of buyer power. The first is related to the customer’s price sensitivity. If each brand of a product is similar to all the others, then the buyer will base the purchase decision mainly on price. This will increase the competitive rivalry, resulting in lower prices, and lower profitability. The other type of buyer power relates to negotiating power. Larger buyers like Barnes & Noble tend to have more...
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...Poter’s five forces 1, the bargaining power of suppliers Haidilao Pot has its own four large modern logistics center and a raw material production base, it uses Backward Integration Strategy on its raw material, the company is a large enterprise with national chains in China, the need for raw materials is large, enhance their ability to bargain, recently some vegetables (cabbage, etc. ) oversupply, causing prices to fall, this is good for the company’s business; Shuanghui clenbuterol issue regulations require companies to make safety requirements for food, meat supply is under attack, but also good for the company’s business. It means suppliers has low influence on the company. 2, the bargaining power of buyers Haidilao’s guiding strategy is service differentiation, maximum to meet customers’rationalize requirements. In Haidilao, even waiting for seats can be enjoyable. There are different drinks and kinds of chess on the desk, newest play cards aside and services like nail care for women and shoe care for men available all the time. During dining, you are provided frequently with warm hand towels, a pinafore with ethnic feature, hair string for girls, glass cloth in case that the drop splits to your glasses and a small plastic bag to put your big screen cell phone in. Every waiter and waitress has the right to give you a free meal in particular situation. These uncommon attributes attract more and more interest. On the products, the company will often...
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