6 Matching Annotations
  1. Jul 2021
    1. Powerful suppliers, including suppliers of labor, can squeeze profi tability out of an industry that is unable to pass on cost increases in its own prices.

      Suppliers with bargaining power can squeeze the profitability out of an industry by raising prices on industry participants that cannot pass on cost increases in their own prices.

    2. It is the threat of entry, not whether entry actually occurs, that holds down profi tability.
    3. The threat of entry in an industry depends on the height of entry barriers that are present and on the reaction en-trants can expect from incumbents. If entry barriers are low and newcomers expect little retaliation from the entrenched competitors, the threat of entry is high and industry profi t-ability is moderated.

      The threat of entry depends on the barriers (i.e. moat) that are present and the reaction entrants can expect from incumbents. If both are low, the threat of new entrants is high.

    4. Particularly when new entrants are diversifying from other markets, they can leverage exist-ing capabilities and cash fl ows to shake up competition, as Pepsi did when it entered the bottled water industry, Micro-soft did when it began to offer internet browsers, and Apple did when it entered the music distribution business.

      When new entrants enter a market, they can often leverage existing cash flows and capabilities e.g. Apple when it entered the music distribution business.

    5. Industry structure drives competition and profi tability, not whether an industry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated.

      Profitability is not driven by market maturation but by industry structure carved out by the five forces.

  2. Jul 2019