Walker Week 8

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Jan 9, 2024

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Porter's Five Forces model offers a holistic framework for understanding the dynamics of industry competition. It delineates five primary forces shaping competitive intensity: competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entry (Mind Tools Content Team, n.d.). Buyer power and supplier power gauge the sway that buyers and suppliers respectively hold over businesses. Competitive rivalry, on the other hand, focuses on the degree of competition among existing industry players. The model also addresses barriers to new entrants and gauges the ease with which consumers can switch to alternative products. In the context of international marketing, these barriers hold considerable weight. Startups, for instance, face an uphill battle against entrenched firms, especially given the high fixed and sunk costs associated with wholesale financial services (Hayes, 2022). Economic barriers, such as significant capital requirements, profoundly influence decisions related to international expansion. The regulatory landscape, often varied and complex across countries, presents another substantial hurdle, making compliance a complex endeavor. Cultural nuances, ranging from language differences to varying consumer preferences, mandate a tailored global marketing approach (Johansson, 2010). Moreover, new entrants contending for a foothold in international arenas often grapple with the strong brand loyalty and entrenched relationships of established competitors. Access to distribution channels, crucial for market penetration, can also be skewed in favor of existing players. The economies of scale enjoyed by industry giants pose yet another challenge, potentially making cost competition difficult for newcomers.

Navigating these challenges can ensure successful market entry, but businesses or startups must possess a deep understanding of these barriers. This knowledge enables them to tailor their strategies and allocate resources effectively, optimizing their chances of global success. V/R Brandon Walker Works Cited Hayes, A. (2022). Barriers to Entry: Understanding What Limits Competition. Guide to Microeconomics , 1-13. Retrieved from https://www.investopedia.com/terms/b/barrierstoentry.asp Johansson, J. K. (2010). Global Marketing Strategy. Wiley International Encyclopedia of Marketing , 1-10. doi: https://doi.org/10.1002/9781444316568.wiem01024 Mind Tools Content Team. (n.d.). Porter's Five Forces - The Framework Explained . Retrieved from Mind Tools: https://www.mindtools.com/at7k8my/porter-s-five-forces Olivia Wills, Good morning class and professor, Congratulations everyone on the last week of class! For our final discussion, we were asked to outline Porter’s five forces model and answer how the barriers to entry are relevant to global marketing. Porter’s five forces model was developed by Michael E. Porter, and the five forces are: the Threat of New Entrants, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitute Products or Services, and Competitive Rivalry. The threat of new entrants refers to the level of difficulty for new competition to enter the market. If the entry barriers are

low, then the threat of new entrants is going to be high. The bargaining power of suppliers shows how much power a business’s supplier has. For example, if the supplies they need are more unique, or there are not many suppliers for it, then they can typically dictate the terms. On the other hand, the bargaining power of buyers shows how much power the consumer has on pricing. For instance, if there are a lot of the same products on the market, then they can typically get lower prices. The threat of substitute products or services refers to the possibility of customers switching to alternative products that do the same thing as your product. Finally, competitive rivalry shows the level of competition in the marketplace. If there is high competition, then you might have to lower prices, which may lead to reduced profits. These forces are still important when it comes to global marketing. For example, the threat of new entrants could be higher in global markets if they can get into the market easily. Also, the bargaining power of suppliers could also be different if there are global suppliers. It has been great getting to know all of you throughout this course. Good luck to everyone in all your future endeavors! Response: Jeremy, Porter's five forces model is used to analyze industry competition. Barriers to entry, which can include high capital requirements, economies of scale, strong brand loyalty, and government regulations, play a crucial role in determining the threat of new entrants. In global marketing, barriers to entry become even more relevant as they can vary across different countries and regions. In this week’s reading we see how, “Marketing used to rely largely on the asymmetry of information between brands and consumers” (Whitler, 2017). That being said marketing is far

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more dynamic today and there are many nuances involved. Cultural differences, legal restrictions, and trade barriers can pose challenges for companies expanding globally. The bargaining power of buyers and suppliers also impacts industry competition. Fleishmen points out that, “Improving the entire consumer experience is an excellent way to beat the competition” (Fleishman, 2023). Buyers with significant power can demand lower prices or better quality, while suppliers with strong power can raise prices or limit key inputs. In global marketing, the bargaining power of buyers and suppliers can differ based on cultural preferences, supply chain complexities, or local market dynamics. The availability of substitute products or services affects the industry by limiting pricing power and increasing competition. The presence and acceptance of substitutes can vary across markets in global marketing, influenced by cultural preferences and local conditions. The intensity of competitive rivalry is influenced by the number of competitors, market share, and product differentiation. In global marketing, competitive rivalry may vary due to differences in market structure, the competitive landscape, and consumer preferences. This week’s reading pointed out that Porters Five Forces ultimately identified, “the main sources of competition in your industry or sector” (Mind Tools Content Team, n.d.). This tool is critical to global expansion. Response:

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