Porter's Five Forces－a Model for Industry Analysis-2porter's Five Forces－a Model for Industry Analysis-2

The role of antitrust laws has been the subject of numerous publications that have attempted to provide a precise set of reasons and inspirations for their creation. However, there are still many schools of thought on the subject and much debate over the effectiveness and legitimate implementation of these laws. This paper analyzes the three main antitrust laws that the federal branch of the United States government uses to try to restrict monopolies. This paper also looks at antitrust laws in the modern business environment, and attempts to relay the information in a manner that a newcomer to the subject will understand the concept as it relates to modern technology and business practices. The findings of this paper indicate that the topic of antitrust laws is more complex than many believe and, depending on the position of the person affected by monopolies, the sentiment ranges widely.

Q. Using suitable examples define barriers to entry. Explain how barriers to entry affect our firm’s profits. Before a firm can compete in a market, it has to be able to enter it. Many markets have at least some impediments that make it more difficult for a firm to enter a market. A debate over how to define the term “barriers to entry” began decades ago, however, and it has yet to be won. Some scholars have argued, for example, that an obstacle is not an entry barrier if incumbent firms faced it when they entered the market. Others contend that an entry barrier is anything that hinders entry and has the effect of reducing or limiting competition. A number of other definitions have been proposed, but none of them has emerged as a clear

2a) Barriers to entry are at time in place to prevent other firms from joining monopoly or oligopoly markets. An example of a barrier entry for Monsanto in forming their market power is through government-created monopoly. As a result of the US government patenting and establishing legislation, Monsanto has the ability to “license” its product and other companies are unable to produce a product identical to it unless granted to. This leads to Monsanto gaining market power, as it is the only legal entity that is able to supply these patented seeds for a period of time.

The natural monopolies have been subject to price controls by the government. The general aim of price regulation has been to protect consumers and ensure adequate output. For instance, in the case of a monopoly supplier of natural gas, once the pipes have been laid in an area, the marginal cost of adding an additional user is very low. With no regulation, the monopolist would produce where marginal revenue equals marginal cost. This is very inefficient, as the marginal cost will be less than price at the profit maximizing level of output. This implies that not enough service will be supplied and the price will be too high for some consumers to afford. Moreover, due to high economies of scale, it is hard to encourage competition.

If one market has strong and tough barriers to entry, then the company can safeguard a favorable position and take fair advantage of it. If one market has weak barriers and only cost a little in time or money, then new competitors can quickly enter the market and weaken your position. For example, the barriers are government, economies of scales, consumer switching cost, capital requirement and others.   The following is a Five Forces analysis of The Macdonald Company in relationship to its own brand.

With respect to the relationship with suppliers, organizations function as buyers and thus prefer to increase their own buyer power with suppliers (and create competitive advantage). In this situation, organizations want to work with a large pool of suppliers to potentially supply the desired good or service.

The supplier power is how much pressure suppliers can place on the business. The fresh food industry requires raw materials and suppliers. Suppliers, if powerful, can exert an influence on the industry, such as selling raw materials at a higher price to capture some of the industry's profit. In our industry, bigger the firms are, more they can negotiate prices with their suppliers. So, it depends on the firm' size but also on its experience and the brand reputation. Moreover, suppliers are not very concentrated. Firms need many different raw materials like vegetables, fruits, cheeses and meats. They do not have just one supplier. In this sense, suppliers are not powerful but it tends to reduce volumes.

The Depends threat of entry of new competitors depends on the high barriers and the extent of its power, Entrants New Have the desire to control on the market share, so should every organization to address these new competitors potential identified and deterred by placing barriers that prevent them from entering, the

Examining an industry through the lens of Porter’s Five Forces model provides potential investors with key factors to consider for the overall industry (Porter, 2008):

In our chosen industry, which is the food industry, it is not shocking for new entrants to try to be at par or beat the existing business. Profitability does not require economies of scale in this industry, since this is a restaurant type; production of food is somehow made to order and not made in large amount. Products are definitely undifferentiated because we can get raw materials or ingredients anywhere. For the capital, any food business really do shell out a huge amount of money for the location, equipments, the food itself since it is perishable you have to buy more frequent and be cautious of its expiration, etc. The threat of new entrants to the industry to compete is high.

There are various levels of bank regulation in the United States directed at the government and state levels. Banks can decide to work under a state sanction or a national contract, keeping in mind the contrasts between the two are sometimes imperative, or even detectable, to ordinary clients, it has a noteworthy effect on the regulation of the bank.

The first and main link of the supply chain allows raw materials flow from suppliers and their “upstream” suppliers at all levels. This allows manufactures to receive information from suppliers as well as raw materials. The suppliers of information contribute an important role in this link since they ensure that manufacturers do not lack raw materials and information to develop the needed products for customers (Ivanov, & Sokolov, 2010). Companies, who receive information from suppliers, will generally hire an external researching company that will in return carry out research on the market as well as gather information from consumers. A company can also employ an internal team to also gather information that will help the production department to meet the needs of the consumers. In addition to

The easier it is for new companies to enter the industry, the more cut-throat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:

The bargaining power of suppliers: The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. • Supplier switching costs relative to firm switching costs • Degree of differentiation of inputs • Impact of inputs on cost or differentiation • Presence of substitute inputs • Supplier concentration to firm concentration ratio • Employee solidarity (e.g. labor unions)

The existence of high start-up costs or other obstacles that prevent new competitors from easily enter an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors.