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Airline industry oligopoly
Introduction to the fast food industry
Airline industry oligopoly
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Introduction:
The competitive environment, otherwise called the market structure, is the dynamic framework in which your business contends. The condition of the framework all in all restrains the adaptability of your business. World monetary conditions, for instance, may build the costs of crude materials, constraining organizations that supply your industry to charge all the more, raising your overhead expenses. At the flip side of the scale, nearby occasions, for example, regional labor shortages or natural disasters additionally influence the competitive environment.
There are many business environments these environments are divided to internal & external environment, as followed:
Internal & External Environmental Factors That Affect Business
The internal business environment includes factors within the organization that affect the approach and achievement of your operations. The external environment consists a variety of factors outside your
The lot of sellers of the same product or service, the lot of competitive the environment in which you compete. Consider fast food restaurants - there are a unit such a large amount of to decide on from; the competition is high. However, if you consider airlines servicing Hawaii, only a few really fly to the islands.
Direct competitors are businesses that are marketing a similar style of product or service as you. For example, McDonalds may be a direct competitor with Burger King.
Indirect competitors are businesses that also contend although they sell a unique service or product. The product or services offered by indirect competitors tend to be people who may be substituted for each other. Again, considering travel, you have got the choice to go plane, train, or car. Therefore, airlines also are competitor with train lines and buses (assuming the travel doesn't go
The large retailers have many options when it comes to selecting suppliers. The scale of operations of Walmart, for example, give it tremendous bargaining power, and this has enabled its cost leadership in the industry. As will be discussed further in the next question, Trader Joe’s has an extensive supply of private labels; it is argued that private labels enable strategic bargaining power of supermarkets. The retailers are able to imitate the national brands under a lower-priced private label, thus the national brand manufacturers must provide better negotiation terms with the retailers (Meza and Sudhir, 2009). Technology may also strengthen the supermarkets purchasing power, as their point-of sale data provides information on what is not selling, or what is selling. They are able to purchase the popular items in larger amounts, possibly strategically negotiating prices and obtain the low-selling items at reduced
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
As soon as a competitor changes their plans or a new competition comes along customers may not want to change their mind about going to a different location (Belonwu). Having a “rivalry” may help concentrate on what needs to be improved in a business depending on what their weaknesses and strengths are. Having competition may be wonderful for the consumers because they have different choices to select what kind of brand of clothing, shoes, or a variety of tools, food and etc. Being able to choose a certain type of customer, may bring in a flow of customers that they’re are trying to reach out for; such as Walmart, they chose to sell products that are family oriented while having different areas in the store pertaining to men’s, women’s, and children’s necessities. If a customer is loyal and you all of a sudden are raising prices on items where they can get goods at a lower price elsewhere, that is causing a business to be disloyal due to competition.
Some dominant economic features of this industry include the number of rivals, the number of buyers, vertical integration, and supply/demand conditions. The number of rivals in this industry varies on the scope of how large or small the firm is. Larger rivals include Whole Foods and Walmart and smaller rivals include Lucky’s Food Market and Pathmark. For example, Walmart has a highly differentiated product selection. it offers various forms of products that are ‘identical’ to better convenience its consumers. Walmart also has large channels of distribution where its “shippers are always on the lookout for ways to speed product from source through supply chains to the consumer” (Walmart, 2014 Pg.1). The number of buyers in this industry is consumers who are buying large volumes of products, where these buyers do not necessarily have any buying power. The majority of of grocery stores are in the retail industry, where larger involvement occurs from integrating operations, and suits the industry as a competitive
Degree of Rivalry - Very High to Intense – Multiple competitors, high strategic stakes, innovation often easily imitated, and low switching costs for consumers
Environmental – External environmental factors are forces or trends that can affect a business whether it is an opportunity, threat, or constraint. They can be divided into three interrelated subcategories of remote, industry, and operating environments. The remote environment includes factors beyond a company’s operating situation such as the economic, social, political, technological, and ecological factors. The industry environment includes factors that have more of a direct influence on a company’s business such as entry barriers, competitor rivalry, the availability of substitutes, and the bargaining power of buyers and suppliers.
Large players can offer competitive prices if they buy in bulk. Smaller players can differentiate themselves by offering niche products and superior customer delight at a premium price.
A well-known company that I know of is Subway. Three direct competitors for Subway are Jimmy John’s, Quiznos, and Firehouse Subs. They all are direct competitors because they all specialize in a variety of subs. Three indirect competitors for subway are Magic Wok, Starbucks, and Chipotle Mexican Grill. They all are a restaurant/fast-food chain, but they don’t specialize in subs like Subway. Therefore, they are competitors but not direct competitors because if a consumer is seeking fast-food they can choose one or the other without getting the same type of food.
Other competitive activities included sales promotion, advertising, and product differentiation. Larger companies have a much greater financial ability to be able to invest more into advertising than a new business starting out would be able to. Shelf space and competitive pricing were two major issues that affected sales. Because they are already recognizable brands, they can afford to purchase the best shelf space. Consumers will see their products before noticing other, not so well known products.
Competitors. Rosewood is competing with corporate branded properties and individually branded properties. Main competitors are:
A firm?s external environment is divided into three major areas : the general, industry and competitor environments. Below is an elaboration in further detail regarding the firm?s opportunities and threats in these three environments.
These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below for more information. Traditional Competitors (competitive rivalry). McDonalds traditional competitors include many of the other fast food outlets across the country, i.e. Burger King, Taco Bell, KFC, Wendy’s. It has been shown by Professor Michael Waterson (2004) that the presence of a Burger King, for example, will increase the likelihood that McDonalds will open nearby.
1) As companies trying to sell consumers stuff, they are not competing with them, only other companies,
Environmental scanning "is the acquisition and use of information about events, trends, and relationships in an organization's external environment, the knowledge of which would assist management in planning the organization's future course of action." Choo (2001) As explained by Gazzale (2007) all businesses external environment are made up of three facets ": 1) the remote environment (macroeconomic factors including inflation, GDP, interest rates, etc.), 2) the industry environment (barriers to entry, the level of competition within the industry, etc.), and 3) the operating environment (the business's customers, suppliers, and workforce, etc.).
Analysis of the external environment is very important for the development strategy of the organization and a very complex process requiring a process tracking and assessment factors and also the establishment of links between those factors and the strengths and weaknesses as well as opportunities and threats. External environment has its complexity and uncertainty. It is obvious that without knowing the environment the organization can not exist. The organization studies the environment in order to secure a successful progress towards its goals.