BUSSPP 0200 1st Editon Lecture 8 Outline of Last Lecture I What is an Industry II How do we analyze an industry III Diversification Corporate Office Outline of Current Lecture I Analyzing Industries Current Lecture I Analyzing industries A Introduction 1 Porter 5 forces 2 Background B Basic Model Defining the Airline Industry Irregularly scheduled Military Industry Profitability International 1 Competition among rivals a Who s selling what you re selling b Number and relative size you have total revenue i Market share estimated Monopoly Oligopoly or Perfect Competition c aggregate demand i increasing price will go up ii Increased profitability These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute d aggregate capacity i very difficult to estimate excess just right or scarce e Exit costs i low relatively inexpensive to leave ii High very expensive to leave 2 Customer power a assume customers are price sensitive i Offsetting branding switching costs affiliation 3 Supplier power a key inputs 4 Threats of New Entrance a more rivals address the same demand increased competition b build barriers to entry i economies of scale in general the larger you are the lower is your unit cost of production ii Strong brands iii Intellectual property 5 Threats of substitutes
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