EXAM preparation - ILO Innovation - More
3 important questions on EXAM preparation - ILO Innovation - More
1. Threat of new entrants hospitality example:
Hotels - High barriers:
- High capital costs (buying/building property)
- Location is crucial (prime locations are scarce)
- Brand recognition important
- Alpine Balance Resort has advantage: prime location in Zell am See
- Little capital needed (use existing homes)
- No physical building needed
- Platform is easy to copy (BUT: network effects protect Airbnb
3. Bargaining power of buyers:
Question: How much power do customers have to push prices down?The higher the power of buyers → The lower the profitability
Buyers have HIGH power when:
Buyers have HIGH power when:
- Little differentiation - Products are identical
- Many alternatives - Lots of choice available
- Low switching costs - Easy to switch
- Price sensitive - Price is the main factor
- Perfect information - Customers can easily compare prices
- Backward integration possible - Customers can do it themselves
- Buyers purchase in large volumes - Greater bargaining power
- High differentiation
- Few alternatives
- High switching costs
- Strong brand loyalty
- Imperfect information
External environment exist of:
- Meso- environment
- all elements the company directly interacts (customers, competitors, suppliers)
- they impact each other
- macro- environment
- everything else, they can influence the company in some way but the company doesn't influence them
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