Quiz 2 SEVI Flashcards
Value Chain Analysis:
Analyzes the sequential process of value-creating activities.
How is value created within the organization?
How is value created for other organizations int he overall supply chain or distribution channel?
Value =
amount buyers are willing to pay for the firm’s products, service
The General Environment
Factors that have a broad influence across industries and firms, are hard to predict, difficult to control
General Environment Categories:
Demographic
Sociocultural
Political/Legal
Technology
Economic
Global
Digital economy:
economic transactions, business operations based on digital computing technologies
The Competitive Environment
The set of factors within an industry and that directly influence a firm and its strategies
Industry:
A group of firms producing similar goods or services
5 Forces Model
Power of Suppliers
Power of Buyers
Threat of Substitutes
Threat of New Entrants
Intensity of competition.
Threat of new entrants
The possibility that new competitors might enter the industry
AND
Profits for firms in the industry will be negatively impacted by the new competitors
Threat of new entrants: Barriers to entry
Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of scale
Favorable access to raw materials
Government policies, subsidies
Bargaining Power of Buyers. Buyers have bargaining power when:
Can force down prices.
Bargain for higher quality or more services.
Play competitors against each other.
Buyer power increases when:
Buyers are large and few in number.
Buyers purchase large volumes
Switching cost are low
Pose a threat to integrate backwards into sellers’ industry.
Profitability is low.
Input has little impact on quality of buyer’s product or service.
Bargaining power of suppliers. Suppliers have power when they can reduce quality or raise prices.
Suppliers are powerful when:
Few, large suppliers.
Sell to multiple industries.
No good substitutes.
Supplier goods are critical and impact buyer products greatly.
High switching / differentiated product
Threat of Substitute Products
Substitutes come from outside the industry.
Substitute products and services limit the potential returns of an industry.
The threat of substitute products increases when:
Buyers face few switching costs.
The substitute product’s price is lower.
Substitute product’s quality and performance are equal to or greater than the existing product.
