9609 · 6.1.5
Competitors and suppliers flashcards
Revision flashcards for Cambridge 9609 Competitors and suppliers (syllabus 6.1.5). Flip, recall, then mark a real past-paper question.
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High rivalry causes?
Many competitors, slow growth, similar products, high fixed costs.
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Supplier power high when?
Few suppliers, unique input, switching costly, forward integration threat.
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Differentiation effect?
Less price competition; brand loyalty; premium pricing possible.
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Vertical integration?
Firm owns supplier or distributor — secures supply, captures margin.
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Link to Porter?
Competitors/suppliers are key forces in industry analysis (extends PESTLE).
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Link to 3.3 portfolio?
Cash cows fund fight in star/question mark markets.
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What is the 'micro-environment'?
The immediate external environment affecting a business's performance, over which it can exert some influence. It includes competitors, suppliers, customers, and intermediaries.
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Define 'competitive rivalry'.
One of Porter's Five Forces, it measures the intensity of competition between existing firms in an industry. High rivalry erodes profits through price wars, advertising battles, and increased innovation costs.
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What is 'supplier power'?
The ability of suppliers to influence the price, availability, and quality of inputs. Powerful suppliers can increase a business's costs and reduce its profitability.
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List three factors that increase the intensity of competitive rivalry.
1. A large number of firms of similar size. 2. Slow market growth. 3. Low product differentiation (products are commodities). 4. High exit barriers.
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How can a business reduce the power of its suppliers?
By sourcing from multiple suppliers (multi-sourcing), building long-term strategic partnerships, standardising components to make switching easier, or through backward vertical integration.