Wednesday, September 8, 2010

Competition primer

If you're in the new products projects business, here's a quick review of the competition basics taken from Michael Porter's classic "Competitive Advantage: Creating and Sustaining Superior Performance"

Porter writes: "...the rules of competition are embodied in five competitive forces: the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and rivalry among the existing competitors".

For emphasis:
  • Entry of new competitors
    • Entry barriers
    • Expected retaliation
  • Threat of substitutes
    • Switching costs
    • Brand loyalty
  • Bargaining power of buyers
    • Bargaining leverage
    • Price Sensitivity and incentives
  • Bargaining power of suppliers, and
    • Switching costs
    • Forward integration risks 
  • Rivalry among the existing competitors
    • Over capacity
    • Exit barriers


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