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The porters Barriers to Entrance
Barriers of entrance by other new competitors into the sensor industry seems not to be a major cause of worry to our company nor to the shareholders’ money since there are a lot of barriers that a new competitor faces, which include high capital requirement, government regulations and brand identity. Thus, the industry is not that attractive for new competitors
Rivalry among Competitors
With the potential of new entrants into the market, resulting from low switching costs, access to distribution channels and low risk of retaliation, there is an increase in competition. Competition seems to be a worrying factor for our company, in terms of switching costs to new products, lack of differentiating our products from those of our competitors and pricing.
Our competitors on the other hand, have competitive advantage to us because by virtue of them been in the initial stages, they incur little switching costs, they can also differentiate their products from ours to get new customers and in so doing, they may offer different low prices from ours. With these, our company has to invest highly in research and development to be in position to counter our competitors.
Availability of Substitute
With competition from new entrants into the market, there are a number of available substitutes for the products offering low prices coupled with the buyer’s high propensity to substitute our products for others. This affects our profits in a huge way.
Bargaining power of the Suppliers and Buyers
Our Company as manufacturing industry is specialized in production of specialized products and with existence of very few competitors producing the same products, the buyers do not have much bargaining power.
In addition, it is very beneficial to the company because there are no substitutes for our supplies, and only a few suppliers exist. In addition, the switching cost to other supplies is quite significant, and this poses as a discouraging factor. In conclusion the general attractiveness of the industry in terms of the bargaining power of the suppliers and buyers is average given that one factor is a constraint and the other an opportunity.
Company’s Strategy for Achieving Monopoly
For our company to achieve monopoly we have to take risks and invest heavily into our products. How then do we fund investments? One option is to sale stock, which is a good option to taking a loan that may put the company in problems if the investment strategy fails.
Secondly, the company has to continuous invest in research and development in order to cut on costs of production, achieve product differentiation and meet the customers’ requirements. For this to be viable, it should be accompanied by extensive market research on the needs customers.
In order to get more customers, the company should make their products accessible to many and increase market awareness. In order to establish their own market niche, the company should differentiate both their products and price from those of the competitors.
The company should with time be increasing its capacity of production so as to cope up with the increase in demand. This may deter other competitors who will ultimately feel that demand is already met. In conclusion the strategy lies in making our products the best, market them, be able to meet the existing demand, making them relatively affordable compared to others, and be in a position to record a high return on equity.
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