Sample Essay

The degree of competition determines the competitiveness of the industry. In a highly competitive industry, like in the manufacturing industry, high advertising campaigns are employed besides having continuously invented new competitive strategies ((Hitt , et,al, 2007, p136). This has been the case in major manufacturing industry. Due to the competitiveness in the industry, the firms are forced to continuously invent new custom-made products to beat the competitors. Liebher Group has used this strategy to manufacture T282B, which the largest mining truck in the world. Firms compete in terms of technology, prices and quality. In a very competitive industry, there less price competition but firms focuses on promotional strategies and integration.

Bargaining power of the customer

This is determined by the buyer concentration ratio to the firm concentration ratio. When the firms are concentrated, they share the market information, can integrate and can therefore influence the prices of the suppliers.

Suppliers bargaining power

The suppliers supply the market with inputs. When there are few substitutes, the firms are price takers. The supplier bargaining power is determined by supplier concentration and firm concentration, availability of labor unions among many other forces (Gall, 2006, 34). Just like in the Japanese automobile industry, many firms have to integrate with suppliers to cut down the cost of raw materials (Ikeda, Nakagawa, 1999, online)

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