Industry evolution michael porter

June 29th, 8:

Industry evolution michael porter

Rivalry In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers.

Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences.

Industry evolution michael porter

The Concentration Ratio CR is one such measure. The CR indicates the percent of market share held by the four largest firms CR's for the largest 8, 25, and 50 firms in an industry also are available.

A high concentration ratio indicates that a high concentration of market share is held by the largest firms - the industry is concentrated. With only a few firms holding a large market share, the competitive landscape is less competitive closer to a monopoly.

A low concentration ratio indicates that the industry is characterized by many rivals, none of which has a significant market share.

Michael Porter’s 5 forces model – Business Fundas

These fragmented markets are said to be competitive. The concentration ratio is not the only available measure; the trend is to define industries in terms that convey more information than distribution of market share.

If rivalry among firms in an industry is low, the industry is considered to be disciplined. This discipline may result from the industry's history of competition, the role of a leading firm, or informal compliance with a generally understood code of conduct.

Explicit collusion generally is illegal and not an option; in low-rivalry industries competitive moves must be constrained informally.

However, a maverick firm seeking a competitive advantage can displace the otherwise disciplined market. When a rival acts in a way that elicits a counter-response by other firms, rivalry intensifies. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate, or weak, based on the firms' aggressiveness in attempting to gain an advantage.

In pursuing an advantage over its rivals, a firm can choose from several competitive moves: Changing prices - raising or lowering prices to gain a temporary advantage. Improving product differentiation - improving features, implementing innovations in the manufacturing process and in the product itself.

Creatively using channels of distribution - using vertical integration or using a distribution channel that is novel to the industry. For example, with high-end jewelry stores reluctant to carry its watches, Timex moved into drugstores and other non-traditional outlets and cornered the low to mid-price watch market.

Exploiting relationships with suppliers - for example, from the 's to the 's Sears, Roebuck and Co. Sears set high quality standards and required suppliers to meet its demands for product specifications and price. The intensity of rivalry is influenced by the following industry characteristics: A larger number of firms increases rivalry because more firms must compete for the same customers and resources.

The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership. Slow market growth causes firms to fight for market share. In a growing market, firms are able to improve revenues simply because of the expanding market.The theory of evolution is a naturalistic theory of the history of life on earth (this refers to the theory of evolution which employs methodological naturalism and is taught in schools and universities).

Merriam-Webster's dictionary gives the following definition of evolution: "a theory that the various types of animals and plants have their origin in other preexisting types and that the.

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Evolution - Conservapedia Early life[ edit ] Michael Porter's father was a civil engineer and Georgia Tech graduate who had gone on to a career as an army officer.
ORGANIZATIONAL STRUCTURE Each of these kinds was created with a vast amount of information.
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Paradoxically, the enduring competitive advantages in a global economy lie increasingly in local things—knowledge, relationships, and motivation that distant rivals cannot match. Dear Twitpic Community - thank you for all the wonderful photos you have taken over the years.

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Porter's Generic Strategies