Английский язык. Практический курс для решения бизнес-задач, Пусенкова Нина

Английский язык. Практический курс для решения бизнес-задач

на обложку

Пусенкова Нина

Шрифт:

– BCG founder Bruce Henderson generalized this observation as the Rule of Three and Four: a stable market will not have more than three significant competitors, and the largest competitor will have no more than four times the market share of the smallest. It implies that:

– If there is a larger number of competitors, a shakeout is inevitable.

– Surviving rivals will have to grow faster than the market.

– Eventual losers will have a negative cash flow if they attempt to grow.

– All except the two largest rivals will be losers.

II. Threat of Substitutes

In Porter’s model, substitute products refer to products in other industries. A threat of substitutes exists when a product’s demand is affected by the price change of a substitute product. A product’s price elasticity is affected by substitute products – as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices. The competition engendered by a Threat of Substitutes comes from products outside the industry.

III. Buyer Power

The power of buyers is the impact that customers have on a producing industry.

When buyer power is strong, the relationship to the producing industry is near to a monopsony – a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopsonies exist, but frequently there is some asymmetry between a producing industry and buyers.

IV. Supplier Power

A producing industry requires raw materials – labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry’s profits.

V. Barriers to Entry / Threat of Entry

It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry.

Barriers to entry are more than the normal equilibrium adjustments that markets typically make. When industry profits increase, we would expect additional firms to enter the market to take advantage of the high profit levels, over time driving down profits for all firms in the industry. When profits decrease, we would expect some firms to exit the market thus restoring a market equilibrium. Falling prices deter rivals from entering a market. Firms also may be reluctant to enter highly uncertain markets, especially if entering involves expensive start-up costs. If firms individually keep prices artificially low as a strategy to prevent potential entrants from entering the market, such entry-deterring pricing establishes a barrier.

Barriers to entry reduce the rate of entry of new firms, thus maintaining a level of profits for those already in the industry. Barriers to entry arise from several sources:

– Government creates barriers.

– Patents and proprietary knowledge serve to restrict entry into an industry.

– Asset specificity inhibits entry into an industry.

– Organizational (Internal) Economies of Scale. The most cost efficient level of production is termed Minimum Efficient Scale (MES). This is the point at which unit costs for production are at minimum.

Barriers to exit work similarly to barriers to entry. Exit barriers limit the ability of a firm to leave the market and can exacerbate rivalry – unable to leave the industry, a firm must compete.

Source: www.quickmba.com

Essential Vocabulary

1. pure competition –

совершенная конкуренция

2. risk-adjusted – скорректированный на риск

3. rate of return – ставка доходности

4. learning curve – кривая освоения

5. switching costs – издержки переключения

6.forward integration – прямая интеграция

7. backward integration – обратная интеграция

8. bargain n – сделка или операция; договоренность; выгодная покупка

bargaining n – ведение переговоров