Saturday, December 24, 2011

What factors lead rivalry among the firms?

Rivalry among existing firms

The competition among firms is a free economy syndrome it may be highly competitive or may be rival in nature. Following factors may have lead to high competition or rivalry among firms.
  • Equally balanced competitors,
    • Product capacity,
    • Size of the firm
  • Slow industry growth, that is demand growth is slow,
  • High fixed cost,
  • Lack of differentiated products and low or no switching cost,
  • High strategic stacks,
  • Large increase in manufacturing capacity,
  • High exit barriers,
    • Economic strategy and emotion,
  • Diversity of competitors intensified competition,
  • Merger or holding company has already been done in the industry.
So the above mentioned factors may lead the firms to form a rivalry among themselves.

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