To analyze the competitive
environment of any company, it is important to identify industry’s dominant
traits. It provides the snapshot of the overall industry. This tool will help
to the company to be aware of the all the strategic moves that different
industry member employ. Here are the dominant traits of Pharmaceutical industry
of USA.
Market size and growth rate
Total $26
billion industry in 1991 accounted for 18.2 percent of unit volume in super
markets and 13.7 percent of total supermarket revenue, showing 15.3% increase
in units and 11.3% increase in dollars from 1988 to 1991, which indicates
overall good industry growth.
Number of rivals
The store brand
industry is highly fragmented along product and geographic lines. Nearly 200
manufacturers vied with one another to supply retailers.
Scope of competitive rivalry
Scope of
competition is domestic. Industry’s products are primarily sold to retail drug
stores, supermarket, mass merchandise chains and major wholesalers and to
industry brokers for sale to small retailers within the country.
Economies of Scale
Low economies of
scale in the industry as major Player like Perrigo is operating at about 86% of
their capacity.
Learning and experience curve effect
Significant
learning and experience curve because of the performance based compensation.
Buyer’s needs and requirements
Good quality,
better customer service and lower price are basic buyers’ needs.
Degree of product differentiation
Products are
less differentiated in the industry but some companies like Perrigo are trying
to differentiate themselves on the basis of good customer service.
Product innovation:
No research and
development for new products in the industry. Firms in the industry formulates
products equivalent to national brands.
Pace of
technological change is low. Better plants and equipments can be used to reduce
cost and increase efficiency.
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