An analysis of competitive environment

In analysing the industry and market sector, we are interested in answering two questions: What are the major trends affecting the growth of the industry in the future?

An analysis of competitive environment

The primary source of the competition can vary from one work area to another, but there's competition from other local or area firms, from out-of-state firms and from companies located all over the world.

Competition can emerge seemingly from nowhere, with the emergence of new products that replace current products with more desirable products or with products that provide the same benefits at dramatically lower costs.

One oft-cited model describes the competitive environment as having five distinct elements. Who Is Michael Porter? Not many economics articles remain current for four decades, and most that do were written by Nobel Prize winners.

Porter is the exception -- although he's reportedly been in contention -- probably because until the 21st century, the Nobel Prize in economics was restricted to "pure economists. For the same reason, it has been and continues to be particularly influential on forward-thinking companies looking for a competitive edge.

Porter's Five Forces Porter's analysis of the competitive environment isn't complex. On the contrary, it's straightforward and easily understood.

He proposes that competition in a given industry depends upon the interaction of five separate forces.

How profitable or difficult the competitive environment may be varies widely among given industries. Producers of steel cans, for example, operate in a competitive environment which ensures that profits remain generally low.

Other industries, such as manufacturers of soft drinks and toiletries, exist in competitive environments "where there is room for quite high returns. In an industrialized economy, a company can make a strategic decision to enter an area for any number of reasons, among them: It should be noted that these advantages aren't permanent.

The shape of the competition changes nearly continuously. Porter observes that when Polaroid's instant photography patents expired, Kodak was well-equipped to enter the market.

An analysis of competitive environment

Writing inPorter couldn't have known that in a few years digitization would drive one company out of business and the other into Chapter As it turned out, the most significant competition was a company that in sold a grand total of 35, relatively inexpensive hobby products worldwide. Porter's analysis indicates that Apple's security is no greater than Polaroid's.

Threats can come from anywhere, and are difficult to anticipate. In fact, Porter maintains that concentrating on future sources of competition rather than on present products is key for company survival. Supplier Power Porter points out that when there are only a few sources of supply but many buyers, suppliers will dominate and command a greater share of profits.

China's strategy for solar panel cells is an example of a business strategy based on the expectation of driving prices down far enough that suppliers in countries with higher labor costs can't compete, eventually leaving China's solar industries as the predominating major supplier, at which point China will be able to control profits throughout the industry.

Buyer Power In the reverse situation, where there are only a few buyers and many suppliers, buyers will dominate and will control supplier's profits. Apple, for instance, has more than Chinese component suppliers for its iPhone.

Competition among these suppliers for a single buyer has repeatedly driven down supplier prices to the point where workers have been mistreated and forced to work long hours without breaks under difficult conditions.

Even FoxConn Hon Hai Precision Industry Apple's largest Asian supplier, has been caught using student interns and forcing them to work overtime without overtime pay in an effort to maintain market share.

Threat of Substitutes Another competitive threat comes from the availability of substitutes for a company's existing product.

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The pharmaceutical industry's attempts to devise strategies that hold off the entrance into the marketplace of generic drugs are an instance of a strategy opposing this threat. Sometimes, however, the substitute can come from an unpredictable place.

The volume of first-class mail the U. Postal Service handles has declined dramatically since the introduction of email.Competitive Environmental Analysis. In business, being good is not good enough unless it comes from your customers and is supported by sales and market growth (sustainability).

Competitive Environment: Definition. A competitive environment is the dynamic external system in which a business competes and functions. The more sellers of a similar product or service, the more.

Competitive Environmental Analysis

Jun 27,  · Porter's analysis of the competitive environment isn't complex. On the contrary, it's straightforward and easily understood. He proposes that competition in a . Analysis of competition.

An analysis of competitive environment

The third element of Strategic analysis is to look at the competitive environment - what your competitors are doing, where the next technological developments are coming from and the general directions the market is moving.

Porter's analysis of the competitive environment isn't complex. On the contrary, it's straightforward and easily understood. He proposes that competition in a given industry depends upon the interaction of five separate forces.

Analysis of competition. The third element of Strategic analysis is to look at the competitive environment - what your competitors are doing, where the next technological developments are coming from and the general directions the market is moving. Porter's analysis of the competitive environment isn't complex. On the contrary, it's straightforward and easily understood. He proposes that competition in a given industry depends upon the interaction of five separate forces. Analysis of the competitive environment The aim of this essay is to provide brief and structured analysis of the competitive environment of a Burberry. Burberry was founded in by Thomas Burberry in Basingstoke, Hampshire, England. Burberry brand is defined by its Britishness, authentic.

5 Forces Analysis Of The Environment The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works.

Description: There are five forces that act on any product/ brand/ company: 1.

Competitive Environmental Analysis