Identify a growth industry, a mature industry, and a declining industry. For each industry, identify the following;
the number and size distribution of companies;
the nature of barriers to entry;
the height of barriers to entry; and (d) the extent of product differentiation.
Once you have identified an example for each, then, answer the following questions:
What do these factors tell you about the nature of competition in each industry?
What are the implications for the company in terms of opportunities and threats?
Answers
Answer:
An example of growth industry is e-commerce and online auctions industry. In this industry
- There are many companies. But big player are few like Amazon and EBay.
- Barriers of entry are capital requirements and an efficient website.
- Both these barriers are medium to high. Capital required is medium to high and making a useful and user friendly website is not easy.
- Product differentiation is low. All players sell same or similar kind of products. the only differentiation lies in online presentation of store and prices of products.
Competition is very high. But opportunities are also high. People today prefer online buying. So there is too much scope for the companies to grow. There is only one threat and that is lack of product differentiation.