Industry Definition
Before conducting an industry analysis, it is necessary to define the industries that Linde and Praxair are competing in. While both companies are generally known as industrial gas companies, this description offers little insight into the product offerings of each company and the differences between the two companies. The first industry both companies compete in is industrial gas production; each company produces hydrogen, oxygen, nitrogen, and many other gases with industrial use cases. However, both Praxair and Linde also serve consumers directly with some products, including oxygen tanks for breathing or welding. In fact, Praxair has two retail locations in Kingston. This customer-facing portion of the business has
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Further, even capital investment alone is not sufficient, as specialized technical expertise is required to be successful in this industry. New entrants may find it difficult to attract top talent from a larger, more established firm. Finally, the regulatory burdens imposed on this industry make compliance relatively more expensive for new entrants. As a result, little attention is paid to new entrants in this industry, as firms focus instead on rivalry among existing firms.
Threat of Substitutes
The threat of substitutes in industrial gases is moderately low, but is highly dependent to the specific product. For example, hydrogen is often used in petroleum refining to remove sulfur. More recently, however, researchers have found a way to use oxygen and ionic salts to remove sulfur more efficiently, eliminating the need for hydrogen. In contrast, liquid nitrogen, often used to clean sensitive equipment, has no practical substitutes, as it quickly eliminates all bacteria and other contaminants due to its extremely cold temperature. Finally, oxygen, often used for medical purposes, has no available substitutes due to human biology. Overall, while new technologies are creating opportunities for new substitutes, most products that exist in this industry will never has practical substitutes.
Bargaining Power of Customers
The bargaining power of customers in this industry is moderate.
Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:
In order to stay competitive in an industry with an increasing number of players, companies have to be
Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.
Factors that can limit the threat of new entrants are known as barriers to entry. In this case barriers to entry are low because: there is no government intervention to prevent businesses from entering the industry, resources are abundant, and customers’ switching costs are low as well as fixed costs to start this type of business.
In that case, Sailed Air would perform in a safe zone with well-known products and respect its culture of innovative products manufacturer. However, we found that this strategy would not acknowledge the reality of the change in the market, which is the strong demand of cheaper product and the growing presence of GAFCEL. Eventually, Sealed Air could compromise its leadership by allowing GAFCEL to develop and expand to become a significant market player.
Threat of Substitutes: Few substitutes such as bars for hard liquor, restaurant for food, etc. The threat is low because product sold depends upon customers taste and preference and there is minimal product differentiation.
The purpose of the report is how good BlackBerry run in the radio and television broadcasting and wireless communications equipment manufacturing industry in Canada in terms of revenues, market share, and the corporation’s Strength and weakness. Also, the report will analyze the BlackBerry’s three corresponding competitors’ market share in the hope of predicting the firm’s future performance.
In my opinion the threat to new entry into this industry is low. I say it is low because it will require a high amount of capital in order to get established in the industry. Furthermore it takes a lot of resources, innovation, financing and marketing in order to maintain your company so it cab be able to compete with the juggernauts of the industry. The knowledge of this would deter many companies from trying to enter the industry. Thus diminishing
New entrants in the industry that are battling to have a share of the market
The threat of new entrants refers to the threat posed by new competitors within an industry. If it is easy for new firms to enter the industry barriers to entry are low and the threat of new entrants is high. A profitable industry attracts more competitors. Economies of scale, learning curve effects and other macro factors impact the nature of an industry 's
Another quality of perfect competition that may be overlooked, but is vital to this industry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopolies are concerned. There are numerous barriers to entry into monopolistic market structures, capital being one of the most prominent barriers.
The Clorox Company does business within the industry of Nondurable Goods; especially relevant to the product of Disinfecting Wipes, the company is associated with the sub-industry of Household Products. Two significant forces should be considered when examining the industry and individual companies within this industry: innovation and competition.
-The costs which can be borne, and the investment required to compete in the industry.
Barriers to entry- there can either be high barriers to entry which makes the market unattractive and hard for new entrants or there can be low barriers to enter which make it easy for new entrants in the market.
But even though the entry for small players could be easy, the entry for a large firm is not that easy. A high technical expertise is must for a new entry. The brand image of the large players who are most like acquire and retain customers also act as a barrier.