Competition in the Bookselling Industry essay
The competition in the bookselling industry depicted in the film reveals features of the monopolistic market, where a large company, Fox Books, tends to dominate the market, while smaller rivals are losing their position in the market fast being unable to compete with Fox Books.
Joe Fox and Kathleen Kelly tend to use the low price strategy to force smaller rivals out of the market. They attempt to attract customers by low prices, while they sell the same or similar books that their smaller rivals do. As a result, customers prefer Fox Books to smaller rivals due to the lower price.
At the same time, Fox Books could use other, non-pricing strategies. The company could expand its business and its distribution network to reach a larger customer group. The company could also offer online services and sales along with shipping of books to customers. In addition, the company could enhance its brand and promote its brand to take a competitive advantage, because customers often make their choices on the ground of the brand recognition.
The industry view on the sustainable competitive advantage implies that the company should take a strategic advantage over rivals through expanding its market share and gaining more customers. In contrast, the resource view on the sustainable competitive advantage implies that the competitive advantage is achieved through the access to the resources required for the production of a particular product or item. Therefore, the industry view implies the primary role of customers and their buying power, while the resource view implies the priority of suppliers as determinant factors contributing to the competitive advantage of the company.
Porter Five Forces model explains clearly the industry view on the sustainable competitive advantage. Porter Five Forces model involves five key forces that determine the competitive position of the company, including the bargain power of buyers, the bargain power of suppliers, the risk of substitutes, the rivalry in the industry, and the risk of new entrants. Changes of either of the five forces affect the competitive position of the company in the industry.
The Resource Based Model implies the priority of the availability of resources and supplies as the determinant factor that influences the competitive position of the company. The ability of the company to take control over resources and suppliers of the required resources determine the competitive position of the company in the industry.
Porter Five Forces model is more applicable to the case of the bookselling industry described in the movie because Fox Books attempts to take the monopolistic position in the industry using not only suppliers and resources but also manipulating with the customer behavior by means of low pricing strategy, for example.
There are different options to generate superior market position. The first strategy is the monopolization of the market through cutting prices and setting the lowest price in the industry to attract customers and encourage their loyalty to the brand. The second strategy is the accumulation of resources and setting control over suppliers to gain the full control over the industry and deprive rivals of key resources. The third strategy involves the intensive market expansion that leads to the growing brand recognition and popularity that helps the company to replace steadily its major rivals and push them out of the industry. The first strategy was used effectively by Fox Books.
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