and loyalty), capital requirements (new entrants will face a risk premium), switching cost involved by the customer, access to distribution channels and cost disadvantages (patents, location, subsidies).Some of the elements involved with the barriers to entry force are shown in the list below.Economies of scale Proprietary product differences Brand identity Switching costs capital requirements Access to distribution Absolute cost advantages Proprietary learning curve Access to necessary inputs Proprietary low-cost product design Government policy Expected retaliation Rivalry among existing competitorsIn most industries, especially when there are only a few major competitors, competition will very closely match the offering of others. Aggressiveness will depend mainly on factors like number of competitors, industry growth, high fixed costs, lack of differentiation, capacity augmented in large increments, diversity in type of competitors and strategic importance of the business unit.Some of the elements involved with the rivalry among existing competitors force are shown in the list below.Industry growth Fixed (or storage) costs/value added Intermittent over capacity Product differences Brand identity Switching costs Concentration and balance Informational over complexity Diversity of competitors Corporate stakes Exit barriers SubstitutesThese are products or solutions that basically perform the same function but are often based on a different technology. Depending on the level of abstraction nearly everything can be a substitution. In general the only factor that really matters is a shift in technology.Some of the elements involved with the substitutes force are shown in the list below.Relative price performance of substitutes Switching costs Buyer propensity to substitutePower of buyersThrough their bargaining power buyers can force the competitors to lower their prices or force higher quality or better service. The major factors which ...
