Five power models of the hottest competition

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Generally speaking, the industry is composed of such a group of enterprises, whose products are very similar substitutes. In the process of competition, these enterprises interact with each other. Research shows that compared with the overall environment, the industry environment has a more direct impact on competitive advantage and excess profits. The degree of competition and profit potential of an industry can be reflected and determined by five competitive forces: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, and competition among competitors

The five forces model of competition expands the field of competition analysis. In the past, when enterprises studied the competitive environment, they often only focused on those enterprises that competed directly with them. But today, competition is not only a battle between competitors, but also a competition between various feasible ways for customers to obtain the required value. This now seems particularly important as the boundaries between different industries become increasingly blurred. For example, manufacturers are involved in the automotive industry, telecommunications companies compete with radio and television companies, hardware manufacturers provide ERP services, and so on. Therefore, we can no longer define a market by industry boundaries, but should focus on customers

the five forces model tells us that suppliers may become competitors through forward integration, and the total annual demand for buying Chinese PP film materials is about 3.6 million tons, which will also be the case through backward integration. Next, we analyze the characteristics of the industry environment through the analysis of the five force models

the threat of new entrants

research shows that most enterprises fail to pay enough attention to the threat caused by new entrants. In fact, many new entrants often carry a lot of resources, which has a great adverse impact on the current enterprises in the industry. It makes the current enterprises in the industry have to improve production efficiency and expand new fields

we know that the possibility of an enterprise entering an industry is determined by two factors: one is the entry barrier; The second is the expectation of current corporate retaliation. If it is difficult for an enterprise to enter an industry, or it will be at a disadvantage to enter a new industry, then we say that there are entry barriers in this industry

1. Entry barriers

enterprises in the industry always don't welcome those new enterprises, so they will try their best to enter the market and manufacture airware, which has been used in the manufacturing of new generation aircraft. On the contrary, potential entrants will also carefully select those industries with low barriers to entry. More significant barriers to entry may include the following

economies of scale are first analyzed from the concept of economies of scale, that is, when an enterprise gradually increases its scale, its marginal profit increases accordingly. From the perspective of cost, that is, in the process of production and operation, when the unit variable cost remains unchanged, the higher the output, the less the allocation of fixed cost per unit product, so as to achieve the purpose of reducing unit cost

the obstacles created by economies of scale can be realized through various economic activities, including production, R & D, marketing, procurement, services, etc. In this environment, new entrants will hesitate. If the scale is large, there may be a lot of entry risks, and they will be retaliated by competition. If the scale is small, they will not be able to reduce costs, so they are at a cost disadvantage

the scale barrier caused by this economies of scale is most obvious for Galanz, a microwave oven manufacturer. Its largest production scale in the world has greatly reduced its production costs, giving Galanz microwave ovens enough price space, so that new entrants cannot compete with it and withdraw from the competition one after another

product differentiation we know that the market positioning of products is very important. At present, we pay more attention to product differentiation. In fact, only by providing customers with personalized products or services and showing the characteristics of products or services can enterprises have the opportunity to win customers. In this way, enterprises can give priority to other companies to provide products or services to customers, making advertising more effective. It is not difficult to understand why many well-known brands, such as Coca Cola, Toyota, Haier, Olay and other manufacturers have invested so much advertising money in order to publicize the characteristics of their products that are different from other products and establish consumers' trust and loyalty to their products. In view of this, new entrants will spend a large number of guangwanli plastic packaging at the largest research and production base of functional membrane materials in Zhejiang Province, adhere to innovation, quietly change information and publicity investment to eliminate customers' loyalty to the original products, or compete with lower prices, which will undoubtedly reduce the profits of enterprises

capital requirements in new industries, competition means a lot of investment. In addition to plant facilities and equipment, inventory, marketing activities and other important functions of enterprises require a lot of capital. Therefore, even if the new industry has a good development prospect, the new enterprise may not be able to bear a large amount of capital to support the various expenses of the enterprise

conversion cost conversion cost refers to the one-time cost caused by customers turning to new suppliers, such as purchasing new auxiliary equipment. Sometimes the conversion cost is very low. For example, customers change from Chinese canteen fast food to Western fast food, and there is almost no conversion cost. Sometimes the conversion cost is high. For example, manufacturers produce newer or more creative products, which will bring great conversion costs to the final consumers of the products. For example, VCD is replaced by DVD, Walkman is replaced by MP3 and so on. The cost for consumers to realize this conversion is very high. If new entrants want to enter, they must provide better products and services, or give consumers lower prices. Generally, the stronger the current relationship between the parties, the higher the cost of transferring to other supplies

to enter the distribution channel, products must enter the market through good and effective distribution channels. Once the enterprise establishes a distribution relationship with the distributor, the enterprise will carefully cultivate the market and manufacture conversion costs for new entrants. Distribution channels may be a big barrier to entry for new entrants. Especially in the fast-moving consumer goods industry, the shelf space of shopping malls and supermarkets is limited. Enterprises must persuade dealers to operate their own products, either increase or replace existing products. The way to attract dealers to make the above decisions is to increase the profit margin of distributors or put more advertising efforts. These will undoubtedly reduce the profits of manufacturers

cost disadvantages unrelated to scale sometimes, current competitors may have cost advantages that new entrants cannot match. For example, cooked

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