Intensity of Rivalry (High)
Intense competition between numerous competitors has initiated major action between rivals that have led to lower profit margins in the electronic industry. In the recent years, the electronic store sector had consolidated in fewer players, since major competitors such CompUSA and Circuit City have exit the competition for lack of differentiation and the different downturns in the economy. This industry has high exit barriers, leading to higher lose if exiting without a plan. Numerous large competitors such as E-Bay, Wal-Mart and Target compete in the electronic and appliances sales. Therefore, this has created a price war. Different strategies have been implemented in order to stand out from the crowd and attract more consumers. For example: E-Bay specializes in better costumer service, Wal-Mart focuses in low cost and Target aims to be in the middle. This has led to an intense and war between all the competitors. Threat of New Entrants (Low) Since the evolution of e-Commerce and the downturns of the economy, fewer competitors are less likely to enter the consumer electronic retail industry, and therefore few competitors have gone out of business and consolidated the industry with different acquisitions and mergers. Huge capital requirements and technology investments have discouraged the establishment for new incumbents. Many of the main players have expanded extensionally, created brand loyalty and therefore created economies of scale. Also, they have established good relationship with suppliers and distributors, which is a very important key in this industry, because of the very consolidated list. This creates a significant barrier for new entries. Bargaining Power of Suppliers (Low) In the past, where suppliers were less, they were more powerful and therefore increased profitability if firms were unable to recover cost increases. …show more content…
In the recent years the list of suppliers have increased and therefore they are forced to cut their prices or go out of business. Many industry’s suppliers such as Sony, Apple, Dell, Vizio and LG have provided with appliances and electronics to major electronic retailers exerting power in the industry. Electronic retailers depend heavily on the relationship with their suppliers, since products can be obtained at a lower price, faster delivery and reliable supply, which ultimately can lead to a competitive advantage. Different retailers have integrated vertical strategies by starting to produce their own products and cutting the dependency on their suppliers. Best Buy dominates the consumer electronic industry and purchases 60% of its supplies from the 20 largest suppliers stated above. Therefore popular brands have power over the direct negotiation electronic retailers, since can threat retailers to raise prices or to reduce the quality of their products. Bargaining Power of Buyers (High) Individuals and small businesses …show more content…
In the past, when the electronic industry was very fragmented, consumers had very little power of the bargaining price. However, in the recent years e-commerce has revolutionized the way people purchase electronics and customer’s buying power has been increasing since this represent a major threat for the industry retailers. Buyers are price sensitive and demand high quality products. Today, customers have access to perfect information through out the online tools about price availability from different competitors in the industry and low switching costs. Retailers have launched different marketing strategies to remain competitive by implementing price matching guarantees polices. The bargaining power of buyers in the industry is
Intense competition between numerous competitors has initiated major action between rivals that have led to lower profit margins in the electronic industry. In the recent years, the electronic store sector had consolidated in fewer players, since major competitors such CompUSA and Circuit City have exit the competition for lack of differentiation and the different downturns in the economy. This industry has high exit barriers, leading to higher lose if exiting without a plan. Numerous large competitors such as E-Bay, Wal-Mart and Target compete in the electronic and appliances sales. Therefore, this has created a price war. Different strategies have been implemented in order to stand out from the crowd and attract more consumers. For example: E-Bay specializes in better costumer service, Wal-Mart focuses in low cost and Target aims to be in the middle. This has led to an intense and war between all the competitors. Threat of New Entrants (Low) Since the evolution of e-Commerce and the downturns of the economy, fewer competitors are less likely to enter the consumer electronic retail industry, and therefore few competitors have gone out of business and consolidated the industry with different acquisitions and mergers. Huge capital requirements and technology investments have discouraged the establishment for new incumbents. Many of the main players have expanded extensionally, created brand loyalty and therefore created economies of scale. Also, they have established good relationship with suppliers and distributors, which is a very important key in this industry, because of the very consolidated list. This creates a significant barrier for new entries. Bargaining Power of Suppliers (Low) In the past, where suppliers were less, they were more powerful and therefore increased profitability if firms were unable to recover cost increases. …show more content…
In the recent years the list of suppliers have increased and therefore they are forced to cut their prices or go out of business. Many industry’s suppliers such as Sony, Apple, Dell, Vizio and LG have provided with appliances and electronics to major electronic retailers exerting power in the industry. Electronic retailers depend heavily on the relationship with their suppliers, since products can be obtained at a lower price, faster delivery and reliable supply, which ultimately can lead to a competitive advantage. Different retailers have integrated vertical strategies by starting to produce their own products and cutting the dependency on their suppliers. Best Buy dominates the consumer electronic industry and purchases 60% of its supplies from the 20 largest suppliers stated above. Therefore popular brands have power over the direct negotiation electronic retailers, since can threat retailers to raise prices or to reduce the quality of their products. Bargaining Power of Buyers (High) Individuals and small businesses …show more content…
In the past, when the electronic industry was very fragmented, consumers had very little power of the bargaining price. However, in the recent years e-commerce has revolutionized the way people purchase electronics and customer’s buying power has been increasing since this represent a major threat for the industry retailers. Buyers are price sensitive and demand high quality products. Today, customers have access to perfect information through out the online tools about price availability from different competitors in the industry and low switching costs. Retailers have launched different marketing strategies to remain competitive by implementing price matching guarantees polices. The bargaining power of buyers in the industry is