e commerce. More and more people turn to online shopping from high street just simply because the lower price it offers and the “pick and click” way of purchasing. Figures from IMRG, the internet shopping trade association, showed that 25 million people are now shopping online. James Roper, the chief executive of IMRG, said that the increased choice and comvenience of shopping online had temped many people away from the high street(Rosie Murray-West Business Correspondent, High street struggles as shoppers buy from home,5/1/07). All of those clear information showed above which have conveyed a strong view to us is that the threat of substitutes is low for Next Directory.
3. Power of buyers: How easy is it for buyers to drive prices down? Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. According to Gregory Mankiw’s Ten Principles of Economics: Because people make decisions by comparing costs and benefits ,their behaviour may change when the costs or benefits change. This, people respond to incentives(Microeconomics, 3rd edition, 2004, N. GREGORY MANKIW). So it is assumed that if consumers find that other shops offer a lower price for the same quality product, one will easily switch their notice to the other online shops. Burt on the contrary, there are certain groups of consumers are regarded as the loyalty buyers. No英语论文网 【http://www.51lunwen.org】 matter how expensive the products are they will keep consuming the same brand which they highly accept. After all, the threat of Power of Buyers is concluded medium for Next Directory.
4. Power of Suppliers: The power of suppliers are determined by serveral factors, suppliers are powerful if:
1.Credible forward integration threat by suppliers
2. Suppliers concentrated
3. Significant cost to switch suppliers
4. Customers Powerful
Suppliers are weak if:
1. Many competitive suppliers-product is standardized
2. Credible backward integration threat by purchaser
3. Concentrated purchasers
4. Customers Weak
Due to the attributes of online retailer of Next Directory, the power of suppliers is weak,so the level of threat is low.
5. Competitive rivalry: This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. Competition between existing players is likely to be high when
· There are many players of about the same size,
· Players have similar strategies
· There is not much differentiation between players and their products, hence, there is much price competition
· Low market growth rates (growth of a particular company is possible only at the expense of a competitor),
· Barriers for exit are high
(© Dagmar Recklies, 2001, Recklies Mana
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