Dominant Economic Characteristics free essay sample

Degree of Vertical Integration: How prevalent is backward (suppliers) and forward integration (distributors, retailers). Ease of Entry/Exit: Barriers to enter/leave the industry. EX: Moderate entry barriers exist in the form of capital requirements to construct a new plant of minimum efficient size (cost equals $10 million) and ability to build a customer base inside a 250-mile radius of plant Technology/Innovation: What is the pace of technological change in both productions, process innovation and new products introductions? Product Characteristics: Goods/services highly differentiated, weakly differentiated or essentially identical? Buyers perceive little real difference from seller to seller? Scale Economies: What impact does large volume have on – purchasing, mfg, transportation, and marketing? Experience Curve What is the impact of learning and experience in this industry? Capacity Utilization: Do you only achieve low cost production efficiency with high levels of capacity? EX: Manufacturing efficiency is highest between 90-100 percent of rated capacity; below 90 percent utilization unit costs run significantly higher Industry Profitability: Is it above or below the norm? Do profits track the strength of demand for the industry’s products? Impact on prices?