|
|
|
|
ECONOMIC TRENDS - a list of economic trends which are taking place and directly impact the industry's structure. Some examples: U.S. GNP; world GNP; U.S. inflation; world inflation; U.S. interest rates; world interest rates; growth in number and size of multinationals; frequency of corporate mergers and acquisitions; globalization and volatility of financial markets; etc. Economic trends which impact a business, horizontal unit and corporation are a small subset of the general economic trends occurring in the global economy. ECONOMIES OF SCALE - refer to declines in unit cost of a product as the absolute volume per period increases. Also refers to being able to spread advertising costs or research and development costs over a larger customer base. Economies of scale deter entry by forcing the entrant to come in at a large scale and risk strong reaction from existing firms or come in at a small scale and accept a cost disadvantage, both undesirable options. Scale is not the same as market share. The relevant measure of scale differs among value activities. The relevant cost driver for some value activities may be: global scale; national scale; regional scale; local scale; plant scale; project scale; scale per production line; scale per buyer; scale per order; or other measure may underlie behavior of cost. [Source: M. Porter] For economies of scale impact rating, use: Very High (5); High (4); Medium (3); Low (2); Very Low (1). ELASTIC - see Price Elasticity. END USER - a buyer who uses the product or service. Compare with Channel. ESTIMATE - either 1) the most optimistic prediction that has a non-zero probability of coming true; or 2) a prediction that is equally likely to be above or below the actual result (or, in the case of time estimates, an equal probability to be before or after the actual result). EXIT BARRIERS - are economic, strategic, and emotional factors that keep companies competing in businesses even though they may be earning low or even negative returns on investment. Major sources of exit barriers include: specialized assets; fixed costs of exit; emotional barriers; government and social restrictions; and strategic interrelationships. (Example of government regulation: many insurance companies have been prevented from exiting personal automobile insurance in numerous states. Example of strategic interrelations: an insurer may feel compelled to remain in the workers' compensation business, even with poor returns, because of interrelationships in terms of marketing ability and shared facilities with other corporate businesses.) EXPECTED RETALIATION - the expected reaction of competitors to an action by an existing competitor, or to the entry of a new competitor. For example: will competitors lower prices dramatically, in the short term, to significantly hurt a new entrant? |
Send e- mail to
webmaster@e-competitors.com with comments. Or
use Feedback.
|
