Accounting technicians scheme west africa
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- (iii) Substitutes
- (iv) Competitors
| (ii) Suppliers These are organisations and individuals that provide resources to other companies, that use them to conduct their operations. Naturally, the conventional belief has been that it is best to have multiple suppliers in order to reduce dependence on anyone source. However, the global competition is changing the above position. Companies now find it more rewarding to maintain few suppliers and giving them large orders, which will make them enjoy economies of scale in production and marketing. These economies of scale will invariably be passed to the customers in terms of reduced prices. Also, the purchasers are in abetter position to enforce tougher quality standards and build more enduring cooperative working relationships with its suppliers if the number is small. (iii) Substitutes These are goods or services that maybe used in place of another product of a given company. Availability of substitutes fora given product can affect the price of such product. In the packaging industry, polyethylene is a substitute for paper packages plastic containers a substitute for metal containers. Substitutes can have a serious damaging effect on a business by diminishing the life cycle of the product or reducing or eliminating consumers demand for the product. Substitute product is the outcome of technological innovation. Therefore, corporate executives should be alert to the products of technological innovation that maybe substitute for their products and evolve mechanism of dealing with them such as switching to the substitute product if convinced to be superior to the company’s product. A deliberate and continuous scanning of the task environment will signal to the business long before the creating of the substitute product that such product is one its way to the market and necessary strategies should be structured to reduce the impact on the business. (iv) Competitors Competitors are organisations that produce similar or identical goods and services for the market, for profit or consumer patronage. Competitors are often the most powerful in a firm’s operation. Prices, services, and support after sales are all directly compared to those of competitors. (All companies attempt to gain an advantage on competitors in some parts of the business operation, and they hope this advantage will result in increased sales. Companies should therefore constantly be monitoring others in the same field to see what they are not doing properly which can constitute competitive advantage if well done and to anticipate what they might do in the future. 29 Also, business must collect information concerning the profitability of entry of potential new competitors. They must also ensure that their own operations areas efficient as possible and that their goods and services do not have any major weaknesses of which these potential new entrants could capitalise onto secure competitive advantage. Download 3.37 Mb. Share with your friends:
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