COM-425 Week 5

Demon-Tweeks is currently the largest company in the UK to supply products for the car modification market.  However, there has always been a threat from other companies who supply similar products.  This is mainly because these products can be bought at a similar price.  Few products are unique to Demon-Tweeks so the company should always be aware of the threat from other companies who supply similar products.

There is always a threat of new competitors entering the car modification market.  To avoid the erosion of the market share, this must be closely monitored by companies currently in the market.  However, entrance of new firms to the market will face high barriers before entry.  For example, Demon-Tweeks will have a huge budget to spend on advertising in the market.  They will also have a high number of suppliers as they are very well established.  A new company will not have the budget to advertise on the same scale as Demon-Tweeks therefore making it hard for the company to be recognised and will not have the same number of suppliers because they are new to the market.

The intensity of competitive rivalry could impact Demon-Tweeks in many ways.  Many companies that deal with car modification products are now creating websites as they have seen how successful Demon-Tweeks and POTN have been.  This has led to a large industry growth.  This could lead to the company having to reduce prices to compete within the market as well as compete when marketing their products.  If the company lose any customers to their rivals, they could also face a rise in the cost per unit of products being bought, therefore could face profit margins decreasing or having to raise the price of a particular item.

The bargaining of the companies customers doesn’t have much on an impact on Demon-Tweeks.  Customers can put some pressure on the business if they see a product cheaper elsewhere, but quite often prices are almost similar in the market.  Demon-Tweeks should have a team in place to deal with price comparison.  But as a customer, Demon-Tweeks can put its suppliers under pressure.  An example of this would be if the company buy particular products in high volume from one supplier, see these products cheaper elsewhere, pressure can then be put on the supplier to reduce the price of the items.

Another impact that could have an impact on Demon-Tweeks is the ‘Bargaining power of suppliers’.  The suppliers of products to the company can have a degree of power.  For example, if a supplier knows that they are the only company who supply a unique product to Demon-Tweeks, they have the power to charge excessively high prices for that particular item.  This will only be the case with suppliers who supply unique products.