STRAMA

Why competitive advantage is more likely to spring from intangible rather than tangible resources?

1. Example: Google’s Company Culture

Google is a great example. The company has a culture that encourages creativity and teamwork. They
allow employees to spend part of their time on personal projects, so called 20% time policy which has
led to popular products like Gmail and Google Maps.

This culture helps Google attract top talent and keeps employees happy, driving innovation that
competitors find hard to match. While having good technology and resources is important, it’s often
the unique aspects like company culture that give Google its lasting edge in the market.

2. Knowledge

Apple invests heavily in R&D (research and development) resulting in cutting-edge technology (e.g.,
M1 chip, advanced camera systems). Consumers perceive these innovations as valuable, justifying the
higher price point

3. Brand equity is the value a brand adds to a product based on how people perceive it. It includes
factors like customer loyalty, the perceived quality of the product, brand recognition, and positive
feelings associated with the brand

The emotional connections and memories tied to the brand—like sharing a Coke during special
moments—further enhance its appeal.

4. Reputation

Johnson & Johnson is a prime example of how reputation serves as a competitive advantage. The
company has built a strong reputation for quality and safety, particularly in its consumer health
products. This reputation was notably tested during the 1982 Tylenol tampering crisis.

5. Intellectual rights

### 1. **Patents**: **Pharmaceutical Companies**

Pharmaceutical companies like **Pfizer** benefit significantly from patents. For example, Pfizer’s
patent on Viagra provided exclusivity for years, allowing the company to dominate the market and
recoup its research and development costs. This competitive edge was rooted in the protection of its
innovative product.

### 2. **Design**: **Nike**

Nike's innovative designs and patented technologies in footwear (like the Nike Air technology) set it
apart in the sportswear market. Their unique designs not only enhance performance but also resonate
with consumers aesthetically, reinforcing brand loyalty and market position.

### 3. **Copyrights**: **Disney**

Disney leverages copyrights extensively to protect its characters, movies, and stories. The copyright
on beloved characters like Mickey Mouse ensures that Disney maintains exclusive rights to produce
related merchandise and media, generating substantial revenue and enhancing brand value.

### 4. **Trademarks**: **McDonald's**

The golden arches of McDonald's are one of the most recognized trademarks worldwide. This
trademark protects the brand’s identity and contributes to its competitive advantage by ensuring
brand consistency and recognition, which helps attract and retain customers globally.

### 5. **Trade Secrets**: **Coca-Cola**

Coca-Cola’s secret formula is one of the most famous trade secrets in business. The company's ability
to keep this recipe confidential gives it a unique product that competitors cannot replicate, allowing it
to maintain its market dominance and brand loyalty.

SW(internal) OT (external)

### Strengths

**Definition**: Strengths are internal attributes and resources that a company possesses, which give
it an advantage in the marketplace.

**Examples**:

1. **Brand Reputation**:

- **Example**: **Nike** has a strong brand reputation for quality and performance in athletic
wear, which attracts customers and builds loyalty.

2. **Skilled Workforce**:
 - **Example**: **Microsoft** benefits from a highly skilled workforce in software development,
enabling it to innovate and maintain a competitive edge.

3. **Financial Resources**:

- **Example**: **Apple** has significant financial reserves that allow it to invest in research,
development, and marketing.

### Opportunities

**Definition**: Opportunities are external factors or trends in the environment that a company can
leverage to achieve growth or improve its competitive position.

**Examples**:

1. **Market Trends**:

- **Example**: The rise in health consciousness has created opportunities for companies like
**Beyond Meat**, which offers plant-based protein alternatives.

2. **Technological Advancements**:

- **Example**: **Tesla** capitalized on advancements in battery technology to enhance electric

vehicle performance and attract eco-conscious consumers.

3. **Emerging Markets**:

- **Example**: **Starbucks** saw opportunities for growth in international markets, particularly in

Asia, leading to the expansion of its stores in countries like China.

ChatGPT 4o mini

Weaknesses

Weaknesses are internal factors that hinder an organization's performance. These are areas where
the organization lacks resources or capabilities compared to competitors.
Example: A small local bakery may have limited marketing skills and poor online presence. This
internal weakness restricts its ability to attract new customers compared to larger, more tech-savvy
competitors.

Threats

Threats are external factors that could negatively impact the organization. These are often challenges
posed by the market, competition, or changes in the environment.

Example: The same bakery might face threats from large supermarket chains that offer cheaper baked
goods or from new health regulations that could increase operating costs.

Focus on the Strengths–Opportunities quadrant (top left)

Example:

- Coca-Cola has an extensive global distribution network, a key strength. When the health beverage
trend emerged, Coca-Cola used this network to quickly launch and distribute healthier beverage
options, like flavored waters and reduced-sugar drinks

Focus on the Strengths–Threats quadrant (top right)

Strengths: Strong global brand recognition, extensive distribution network, and a diverse product
range.

Threats: Increasing health consciousness among consumers and competition from healthier beverage
options.

ST Strategy: Coca-Cola diversifies its product line by introducing low-sugar and healthier beverage
options, using its strong brand to promote these new products.

Focus on the Weaknesses–Threats quadrant (bottom right)

IBM – Workforce Skills Development: In response to the threat of digital transformation, IBM faced
challenges due to outdated employee skills. The company implemented its “Skills Academy” program,
focusing on reskilling employees in areas like cloud computing and artificial intelligence. This
proactive approach not only filled internal skill gaps but also positioned IBM as a leader in tech
innovation
Focus on the Weaknesses–Opportunities quadrant (bottom left)

Coca-Cola – Innovation and Product Diversification: Coca-Cola faced stagnation due to its over-
reliance on carbonated beverages. Recognizing the growing health-conscious trend, the company
addressed internal weaknesses in product innovation by acquiring brands like Honest Tea and
launching new beverages like Coca-Cola Zero Sugar. This diversification allowed Coca-Cola to tap into
external opportunities in the health and wellness market

Strategic position (narrow or broad - competitive scope)

Cost leadership (broad)

- Cost leadership is a business strategy where a company aims to become the lowest-cost producer in
its industry. By doing so, it can offer products or services at lower prices than competitors while
maintaining profitability

Example: Fast Food Chains (e.g., Wendy's, Burger King)

Other fast food chains like Wendy's and Burger King have also used cost leadership by offering low-
priced fast food with standardized menus. These companies focus on efficiency in operations,
economies of scale, and bulk purchasing to maintain a low-cost structure while still competing with
other fast food giants

(Cost Leadership: Aims at being the lowest-cost provider across the whole market.)

Focused Cost Leadership: Aims at being the lowest-cost provider in a specific market segment or niche

Example:

Cost Leadership Example:

SM Supermalls is an example of cost leadership. It offers a wide range of affordable products, from
retail to groceries, across its many locations. The company leverages its scale to maintain low prices
for a broad customer base.

Focused Cost Leadership Example:

AirAsia Philippines exemplifies focused cost leadership. It targets budget travelers within specific
routes and regions, offering low-cost, no-frills flights, primarily within Southeast Asia, focusing on
customers looking for affordable air travel

Differentiation

### Key Differences:

1. **Target Market**:
 - **Differentiation**: Broad market.

- **Focused Differentiation**: Niche or specific segment.

2. **Scope**:

- **Differentiation**: The company seeks to stand out to a large audience across various
demographics.

- **Focused Differentiation**: The company concentrates on a small segment with specific needs or
preferences.

3. **Examples**:

- **Differentiation**: Coca-Cola (with its broad appeal and distinct brand).

- **Focused Differentiation**: Lululemon (which focuses on high-end, fashion-forward athletic wear

for a specific demographic of health-conscious individuals).

In summary, differentiation serves to set a company apart in a broad market, while focused
differentiation targets a specific segment with specialized offerings.

Being stuck in the middle of different strategic positions is a recipe for inferior performance and
competitive disadvantage – “you cannot be everything to everybody”.

The idea behind this statement is that a company should choose a clear and focused strategy—either
to offer something unique to a broad market (differentiation), to target a specific niche (focused
differentiation), or to offer products at a lower cost (cost leadership). If a company tries to do all of
these things at once, it often ends up doing none of them very well, and as a result, it struggles to
stand out and perform well in the market.

### In simpler terms:

- **"Stuck in the middle"** means trying to balance different strategies (like being both cheap and
high-quality at the same time) and ending up failing at both because the company doesn't fully
commit to one clear direction.

- The risk of being stuck in the middle is that you don't appeal to any specific group of customers well
enough, and you end up with weaker performance compared to companies that specialize.
### Example:

- **Example 1: J.C. Penney (a past case)** – At one point, J.C. Penney tried to combine being a low-
cost store while also offering premium products. They switched pricing strategies often, confusing
customers. As a result, they lost both budget shoppers (who didn’t trust the prices) and premium
shoppers (who didn’t find the high-end options appealing). This confusion led to poor sales and
customer dissatisfaction.

- **Example 2: Blackberry** – At one time, Blackberry tried to be both a business-focused phone

(with email and security) and a consumer phone (with entertainment features). They didn’t fully
commit to either segment, while competitors like Apple and Android phones focused on specific
strengths (Apple on design and apps, Android on a range of affordable options). Blackberry's inability
to focus led to its decline.

In short, trying to be everything to everyone usually means being nothing special to anyone. To
succeed, companies need to pick a clear strategy and stick to it.

Core competencies are what make a company good at what it does and give it an edge in the
marketplace. These competencies are often hard to replicate by others.

Example:

Nike - Brand and Marketing: Nike’s core competency is its ability to create and maintain a strong
brand through powerful marketing, sponsorships, and partnerships with athletes. Their marketing
prowess drives consumer loyalty and boosts sales.

In simple words, **resources** are anything that a company can use to help it make and carry out its
plans. These can include physical things like buildings or machines, money, and even skills or
knowledge that people in the company have.

### Real-life examples:

1. **Money (Financial Resources)**: A company might have savings or loans that they can use to
invest in new projects or hire more employees.
2. **Employees (Human Resources)**: The skills, experience, and creativity of employees can be a
valuable resource. For example, a tech company relies on its skilled engineers to create new software.

3. **Buildings and Equipment (Physical Resources)**: A manufacturing company has factories,

machinery, and materials that they can use to make products.

4. **Brand Reputation (Intangible Resources)**: A strong brand, like Apple or Nike, is a valuable
resource. It helps attract customers without spending a lot on advertising.

5. **Information or Data (Knowledge Resources)**: A company might have access to market research,
customer feedback, or proprietary technology that gives it an advantage.

In short, resources are the tools a company can use to succeed in its business goals.

"Capabilities" in this context refer to the skills and abilities someone needs to manage and use various
resources (like people, money, time, and equipment) effectively to achieve goals. It’s about being able
to organize, plan, and guide a team or project in the best way possible.

Real-life examples:

Project Manager in a Construction Company: A project manager needs organizational skills to manage
workers, materials, budgets, and deadlines. They need to ensure the right resources are available at
the right time and make adjustments when things don't go as planned

Activities: These are the tasks or actions that a business carries out, like designing a product,
assembling parts, or delivering a service.

Distinct and fine-grained: This means that these activities are clear and specific. Each activity is
important and can be broken down into smaller tasks that contribute to the final result.
Business processes: These are the steps or procedures that a business follows to create products or
services. It’s the whole system of activities working together.

Example:

Activity: Assembling car parts, painting the car, testing the engine.

Distinct & fine-grained: Each task, such as installing tires or checking brakes, is a specific activity.

Business process: The raw materials (metal, rubber, etc.) are turned into a car, with each activity
improving its quality

Guidelines for Effective Strategic Management

TABLE 1-3 Seventeen Guidelines for the Strategic-Planning

1. It should be a people process more than a paper process.

Focus on engaging people, not just filling out forms.

- It means that a company should encourage employees to use their imagination and problem-solving
skills when developing strategies, rather than just focusing on filling out forms or following rigid, pre-
made plans (implementing marketing strategy that was already used before)

2. It should be a learning process for all managers and employees.

Everyone involved should learn and grow through the process

- This means that during strategy planning, managers should create an environment where employees
feel comfortable sharing ideas and asking questions. This helps everyone learn more about the
company, its goals, and challenges. By encouraging open discussions, employees can gain new
insights, contribute their unique perspectives, and feel more engaged in the decision-making process.

3. It should be words supported by numbers rather than numbers supported by words.

For example, instead of just saying "sales increased by 10%," explain why the increase happened—
maybe due to a successful marketing campaign or a new product launch. This makes the data more
meaningful and actionable

4. It should be simple and nonroutine.

Keep things straightforward and avoid making the process boring or repetitive.

Example: A company could hold brainstorming sessions instead of using the same old planning
template every year.
5. It should vary assignments, team memberships, meeting formats, and even the planning calendar.

Change things up to keep people engaged and bring in fresh ideas.

Example: Rotate team members for each project or hold strategy meetings in different locations to
inspire creativity.

6. It should challenge the assumptions underlying the current corporate strategy.

Question what’s always been done to see if it still works.

Example: A company might question if their old marketing approach is still effective in today’s digital
world.

7. It should welcome bad news.

Don’t ignore problems; face them head-on.

Example: If a product is failing, the team should discuss the issue openly rather than hiding it

8. It should welcome open-mindedness and a spirit of inquiry and learning.

Encourage everyone to ask questions and be open to new ideas.

Example: In meetings, managers should listen to suggestions from all levels of employees, not just the
senior staff

9. It should not be a bureaucratic mechanism

### Example:

Imagine a company’s strategy planning involves a strict process where, before any decisions are
made, each department must complete a detailed report, submit it for approval, and then wait for
feedback from several levels of management. This can become an exhausting cycle of reviews, edits,
and approvals that makes the planning process feel like a burden rather than a creative exercise. The
emphasis would be on **formality**, not on **creativity** or on **solving real business problems**.

### What it should look like instead:

The strategic planning process should feel like a **dynamic, collaborative effort**. It should be about
**discussing ideas, challenging assumptions, and finding innovative solutions**, not about following a
set list of procedures. For example, instead of spending hours filling out pre-determined forms,
employees and managers could engage in more open-ended brainstorming sessions, workshops, or
scenario planning, where the goal is to generate ideas and think outside the box.

10.It should not become ritualistic, stilted, or orchestrated.

Ritualistic implies a repetitive or ceremonial quality, often tied to traditions or customs.

Stilted suggests awkwardness or unnaturalness in movement or speech.

Orchestrated indicates something that is carefully planned or controlled, as though directed like a
performance

Example:

Opening remarks by the CEO

Review of last year’s goals

Presentation of financial data

Department heads report on progress

Closing summary

If each meeting feels the same year after year, employees may start to disengage. They know what to
expect, and they may stop paying attention because it feels like a routine they’ve done before,
without any real change. Employees might even stop offering new ideas because they know that
nothing will change, and the decisions have already been made behind the scenes or are dictated by
higher-ups.

As a result, employees might stop bringing creative solutions, and the company’s strategy becomes
stale. The process lacks energy and excitement, making it difficult to address new challenges or
capture opportunities in the market

11. **It should not be too formal, predictable, or rigid.**

Rigid -strict

Don’t let the planning process become too stiff or structured.

*Example: Sometimes, companies need to adapt quickly to changes in the market, and a rigid
planning process won’t allow that.*

12. **It should not contain jargon or arcane planning language.**

Use clear, simple language that everyone can understand.

 *Example: Instead of using complicated terms like "synergy" or "KPIs," just say "how we can work
better together" or "key goals."*

13. **It should not be a formal system for control.**

Don’t let strategy planning be just a tool for bossing people around.

*Example: The planning process should focus on improving the company, not just enforcing rules on
employees.*

14. **It should not disregard qualitative information.**

Don’t just look at numbers—people’s opinions and ideas matter too.

*Example: Customer feedback or employee ideas can be just as valuable as financial reports in
shaping a strategy.*

15. **It should not be controlled by "technicians."**

Strategy planning should involve people from different parts of the business, not just experts or data
analysts.

*Example: Engineers shouldn’t be the only ones making decisions about product development—
marketing, sales, and customer service need a voice too.*

16. **Do not pursue too many strategies at once.**

Focus on a few key strategies, rather than trying to do everything at once.

*Example: A small business might focus on improving one product rather than launching multiple
new products at the same time.*

17. **Continually strengthen the "good ethics is good business" policy.**

Always make decisions that align with strong ethical values, because good ethics lead to long-term
success.

*Example: A company that treats employees and customers fairly will build trust and loyalty, leading
to better business results in the long run.*
These guidelines are meant to make strategic planning more effective, creative, and adaptable, while
making sure everyone is engaged in the process and that the strategy is both practical and ethical.

All firms have a strategy, even if it is informal, unstructured, and sporadic. All organizations are
heading somewhere, but unfortunately some organizations do not know where they are going. The
old saying “If you do not know where you are going, then any road will lead you there!”

"Sporadic" means occurring irregularly or occasionally, rather than happening consistently or

continuously

- This means that every business or organization has some kind of plan or direction, even if it's not
clearly thought out or organized. However, some businesses don’t have a clear idea of where they
want to end up, which can cause them to waste time and effort on things that don’t help them reach a
goal.

For example, imagine a small coffee shop that just opens and starts selling coffee without any clear
goals. They may not know if they want to expand, focus on quality, or offer a unique experience.
Without a strategy, they might just take any action that comes to mind (like changing the menu
frequently or randomly advertising), which could lead them in different directions, making it harder to
succeed.

On the other hand, a coffee shop with a clear strategy (like focusing on offering high-quality, organic
coffee with great customer service) knows exactly what they are trying to achieve, and everything
they do will support that goal.

Competitive Analysis: Porter’s Five-Forces Model of Competition

1. Rivalry among competing firms

Conditions That Cause High Rivalry Among Competing Firms

### 1. **High Number of Competing Firms**

- When there are many businesses selling similar products, competition increases.

- **Example**: In the smartphone market, with companies like Apple, Samsung, Xiaomi, and others,
there's a lot of competition, pushing companies to innovate and lower prices.
### 2. **Similar Size of Firms Competing**

- When companies are roughly the same size, they can easily compete head-to-head, making rivalry
intense.

- **Example**: In the fast-food industry, McDonald's and Burger King often have similar market
share and resources, leading to direct competition.

### 3. **Similar Capability of Firms Competing**

- If firms have similar technology, staff skills, and resources, it makes competition more direct.

- **Example**: In the electric car industry, Tesla, Rivian, and Lucid Motors are all trying to make
high-quality electric cars, leading to intense rivalry.

### 4. **Falling Demand for the Industry's Products**

- When fewer people want a product, companies must fight harder for the remaining customers.

- **Example**: The print newspaper industry has seen a drop in readers, so companies like The New
York Times and Washington Post compete fiercely for the smaller audience.

### 5. **Falling Product/Service Prices in the Industry**

- If prices drop, firms often compete by lowering their prices further to attract customers.

- **Example**: The airline industry often has price wars, where competing airlines cut ticket prices
to attract more passengers.

### 6. **When Consumers Can Switch Brands Easily**

- When customers can easily switch between brands or products, firms must compete aggressively
to keep their business.

- **Example**: In the bottled water market, switching between brands like Evian, Nestlé, or Dasani
is easy for consumers, so each brand competes on price and quality.
### 7. **When Barriers to Leaving the Market Are High**

- If it's difficult for firms to exit the market (e.g., due to sunk costs or investments), they may keep
competing even when it's not profitable.

- **Example**: Large factories in heavy industries like steel production may face high costs if they
try to leave the market, forcing them to continue competing despite declining profits.

### 8. **When Barriers to Entering the Market Are Low**

- If new firms can easily enter an industry and start competing, this increases rivalry.

- **Example**: In the online retail space, platforms like Shopify make it easy for new businesses to
start selling products, increasing competition for existing companies like Amazon or eBay.

### 9. **When Fixed Costs Are High Among Firms Competing**

- When companies have to spend a lot on equipment, factories, or infrastructure, they may cut
prices to cover those costs, increasing competition.

- **Example**: In the airline industry, airlines have high fixed costs (airplanes, airports), so they
compete by lowering ticket prices to fill seats.

### 10. **When the Product Is Perishable**

- Products that have a short lifespan or need to be sold quickly lead to more competition as
companies try to sell them before they spoil or lose value.

- **Example**: In the food industry, supermarkets compete to sell fresh produce before it spoils.

### 11. **When Rivals Have Excess Capacity**

- If companies have more resources than they need (e.g., extra production capacity), they may
compete by lowering prices to use up that excess.

- **Example**: Car manufacturers may lower prices when they have excess factory space or unsold
inventory.

### 12. **When Consumer Demand Is Falling**

 - If people are buying less of a product, companies must fight harder for the remaining demand,
increasing competition.

- **Example**: The video rental industry (like Blockbuster) faced intense competition as demand
dropped with the rise of streaming services.

### 13. **When Rivals Have Excess Inventory**

- If competitors have unsold stock, they may offer discounts or promotions, which leads to more
rivalry.

- **Example**: During end-of-season sales, clothing stores may lower prices on leftover inventory to
clear it out, intensifying competition.

### 14. **When Rivals Sell Similar Products/Services**

- If products are very similar, companies compete mostly on price, quality, or branding to attract
customers.

- **Example**: In the soda market, Coca-Cola and Pepsi sell similar products, so they compete
heavily on advertising and promotions.

### 15. **When Mergers Are Common in the Industry**

- When companies frequently merge or consolidate, it might increase competition in the short term
as firms fight for market share before the merge.

- **Example**: In the telecommunications industry, mergers like those between AT&T and DirecTV
can lead to intense competition as companies try to gain an advantage before consolidation.

### 1. **Potential Entry of New Competitors**

- **What it means:** If new businesses can easily join an industry, competition increases among the
companies already there.

- **Example:** Imagine a new coffee shop opens in your neighborhood where there are already five
coffee shops. Now, the existing coffee shops will have to compete harder to keep their customers by
offering better deals or more variety.
 - **Barriers to entry:** These are things that make it harder for new businesses to enter a market.
For example:

- **Economies of scale**: Larger businesses can produce things cheaper than smaller ones, so new
competitors have to grow big fast.

- **Technology & Know-How**: Some industries need special knowledge or equipment that new
firms might not have.

- **Strong customer loyalty or brand preferences**: If customers love an existing brand, it’s hard
for new firms to convince them to switch.

- **Capital requirements**: Some businesses need a lot of money to start, like building factories or
stores.

- **Regulations and patents**: Some industries are tightly controlled by government rules or
protected by patents (legal rights to an invention).

- **Example of barriers in real life:** It's hard for a small business to compete with giants like Apple
or Tesla because of brand loyalty and the high cost of research and development.

- **Counteraction by existing firms:** When new competitors threaten to enter, companies might
lower prices or offer deals to keep customers. For example, if a new pizza place opens, existing pizza
shops may offer discounts or special deals to keep their customers loyal.

### 2. **Potential Development of Substitute Products**

- **What it means:** Substitute products are other products that can replace the ones offered by a
company. Competition from substitutes can limit how much a business can charge for its product.

- **Example:** If you're selling regular bottled water, competition might come from bottled flavored
water or even sodas. If the price of flavored water goes down, some people might switch from regular
water to flavored water.

- **Impact of substitutes:** If a substitute product becomes cheaper or easier to use, consumers

may switch to it, which limits how much you can charge for your own product. For example, if a new
streaming service is much cheaper than cable TV, more people might choose it, reducing the cable
company’s ability to raise prices.

---
### 3. **Bargaining Power of Suppliers** (increasing the price because there are no competitors)

- **What it means:** Suppliers are the companies that provide raw materials or services that
businesses need to create their products. If there are only a few suppliers or the supplies are unique,
those suppliers can demand higher prices.

- **Example:** If a car company relies on a specific supplier for a rare part, and there’s only one
supplier of that part, the supplier can demand higher prices, giving them more "bargaining power."

- **Impact:** If a business has many suppliers to choose from, the suppliers have less bargaining
power. But if there are only a few suppliers, they can increase prices, making things more expensive
for the business.

- **Example in real life:** Think of a small restaurant that buys bread from only one local bakery. If
the bakery decides to increase the price of the bread, the restaurant has to pay more, which could
increase its prices, affecting competition with other restaurants.

- **Cooperation for mutual benefit:** Often, businesses and suppliers work together to keep prices
reasonable and quality high. For example, if a factory and its raw material supplier cooperate on
delivery schedules, both can save money.

The "Bargaining Power of Consumers" means how much influence customers have on businesses.
When many customers buy in bulk or are very large, they can demand lower prices or better deals.
Additionally, when products are similar or not unique, consumers can easily switch between brands,
which increases their power.

**Real-life examples:**

1. **Big retailers like Walmart:** Since they buy products in huge quantities, they can negotiate lower
prices from suppliers.

2. **Generic medicines:** Since generic drugs are the same as brand-name drugs, consumers can
choose the cheaper option, giving them more bargaining power over pharmaceutical companies.

In summary:
- **New competitors** can increase competition, and firms may react by improving products or
lowering prices.

- **Substitute products** act as competition too, limiting how much you can charge for your product.

- **Bargaining power of suppliers** can affect costs, and suppliers can sometimes dictate higher
prices if there are few alternatives.