Macro-Environment Factors

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Presentation transcript:

Macro-Environment Factors Restaurant industry association report

Evaluating the External Situation Pressure from industry’s competitive forces Competitors New Entrants Substitutes Buyers Suppliers

Competitors: Pressure High When Demand slow/declining Low switching costs Low product differentiation Excess capacity/supply More competing firms High exit barriers KTA Super Stores, Hilo?

New Entrants: Pressure Reduced When Incumbents have scale cost advantages Brand loyalty established Incumbents own expertise, patents, etc. High capital requirements Distribution channel requirements Sig Zane Designs?

Substitutes: Pressure High When Substitutes are Available Value / price is attractive Low switching costs Goodyear Tires, Hilo?

Supplier’s Leverage: Pressure High When Industry demand high Product differentiation is important Switching suppliers is costly Few suppliers Backward integration is not feasible (buyer can’t make the product) Suppliers have non-industry (diverse) customers Ace Hardware, Hilo?

Buyer’s Leverage: Pressure High When Industry demand weak Product differentiation is not important Customers can switch easily Few buyers and they buy in quantity Backward integration is feasible (buyer can make the product) Product information highly available Buyers have low income or product is large part of their spending Basically Books, Hilo?

Industry Key Success Factors What product characteristics are most important in purchase decision making? What resources / capabilities are required to compete? What shortcomings will lead to competitive disadvantage?

Industry Key Success Factors Mobile phone Technology reliability, after sale service, innovative features Apparel manufacturing Appealing designs and colors, low-cost production efficiencies Restaurant Quality food, effective service, convenient location Your Simulation footwear company?