Exammm

Explain how a company could develop its business to stay competitive

Competitive strategy aims to define what actions should be undertaken to obtain better results in each of thebusinesses in which the Company serves. The five forces (direct competitors, new entrants, substitutes, suppliers and buyers) that determine the degree of rivalry and the maximum profit potential ofcompanies in the industry.

✓ Power and influence of each force: The different competitive forces have an impact on behavior, costs and prices of the companies involved in the sector,being of interest to establish what influence each of them and under what conditions to expect more or less pressure.

✓ Direct competitors: Each of the competitors looking to gain a betterposition in the market, either by reducing prices or through actions such as product improvement, increased advertising or sales force propping, with a consequent increase in costs.

✓New competitors: Possible to the imminent entry of new competitors often is the greatest threat facing as to provide additional capacity and in their desire to achieve good participationcontribute to greater rivalry, sometime up to create serious imbalances.

✓ Substitutes: The generality of substitute products face fixing a ceiling on prices and may even take them out of themarket, so they play the role of a competitor.

✓ Providers: Suppliers can exert bargaining power to raise prices or to limit the quality of the products or services they provide. (Seecase Walt Mart).

✓ Buyers: Place that in many cases is occupied by marketing channels, use their bargaining power to force down prices or demand better quality and better services atthe expense of the company.

✓ Competitive position: Can significantly affect the company, which should assess the capacity to withstand it, counter or avoid facing negative influence