Week 5- “E-Business Strategy”

The threat of substitute products (The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases):

My website www.celticfc.net that i choose can relate to this in so many ways. The Celtic home shirt is the main item sold from this website, other websites and any major sports store in the world. There will always be the threat of customers switching to alternative sports stores websites ect but no matter were the shirt is sold Celtic football club always gets a percentage. There is no threat of substitute products because Celtic football club will already own the rights to everything in there name, there only a threat of competitors.

 

The threat of the entry of new competitors (Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, then the profit rate will fall towards a competitive level)

Celtic will always compare and contrast there prices to the current market. Celtic might not be the most succesful club in the world but it has one of the biggest fan based clubs in the world. Being one of the biggest supported clubs in the world will always have the threat of new compeitors but new compeitors will need the fan base and revenue to support there challenge. Celtic and other big football clubs sell there products near enough the same price and the competitive level roughly always the same,all depends on the team you support.

The intensity of competitive rivalry (For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.)

For innovation to occur, something more than the generation of a creative idea or insight is required. The insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organization, or changes in the products and services provided. A new idea or product different from competitive rivalry would be needed to excell.

The bargaining power of customers (The ability of customers to put the firm under pressure and it also affects the customer’s sensitivity to price changes)

Bargaining power is the ability to influence the setting of prices. Buyers will use their power to extract better terms (higher profit margins or ) at the expense of the market. In a truly competitive market, no one buyer can set the prices. Instead they are set by supply and demand. Prices are set by supply and demand and the market reaches a point where the highest possible number of buyers are satisfied at a price that still allow for the supplier to be profitable.

The bargaining power of suppliers (Suppliers of raw materials, components, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources.)

 Bargaining power is the ability to influence the setting of prices. The more concentrated and controlled the supply, the more power it wields against the market. Suppliers will use their power to extract better terms (higher profit margins or ) at the expense of the market. In a truly competitive market, no one supplier can set the prices.