There are various reasons why there are rivalries in steel industries as compared to pharmaceutical industries. In the first place, the threats to entry are very low and hence the competing firms are few. Each steel firm wants to be the leader in the market. This is what increases the rivalry between steel industries as they struggle to be ahead of each other hence achieving some market power. On the other hand, there is potential of entry in pharmaceutical industries. Therefore, the existing firms have fewer rivalries.
The firms in steel industry produce close substitute. On the other hand, the goods produced by pharmaceutical firms are not close substitute. As a result, steel firms struggle to ensure that their goods sell best in the market and therefore rivalries exist.
The demand for goods produced by steel industries is elastic as opposed to the goods produced by pharmaceuticals. The steel firms can therefore use price rivalries to compete as opposed to pharmaceutical products that will be demanded whether there are price adjustments or not.
Economies of scale. Economies of scale are what have made the manufacturer to be able to produce cheap furniture. This results from long periods of operations.
Experience. The experience of the workers may be the cause of production of quality and cheap furniture. Workers have done the job for a long time hence gaining the skills.
Talents. The talents in the organization may be the cause of production of quality furniture. Talents are God given.
Raw materials. The organization may be accessing quality raw materials cheaply hence being able to produce its furniture at low costs.
Resources. The stores and machines owned and necessary in the making of furniture may be expensive such that other organizations cannot acquire.
In the first place, the competitors already have customer loyalty since they are known worldwide. Secondly, these competitors have more resources that enable them reach and serve more customers cheaply. These competitors also enjoy economies of scale since they deal with other goods hence enabling them incur less costs in their operations.
There are several reasons why differentiation is important. In the first place, differentiation will enable KIA to target all the potential markets hence increase its sales. Secondly, differentiation will enable the company have some market power hence can influence price and gain more profits.
First, differentiation could target customers with different incomes. In this case, the employees already have the experience of making vehicles hence there will be no problems in producing the new brands. The other differentiation could be engaging in production of higher quality vehicles. This will target people who wish to show off and distinguish themselves from other members of the society. Finally, KIA can differentiate vehicles basing on colors. Some people prefer certain color of vehicles. By producing vehicles with different colors, customers will have the freedom to choose a color of their choice hence increasing sales without changes in technology use.
Sticksoft diversification into hotel business does not relate to the current business. The two businesses are totally different since the employees cannot even work in the new industry since they lack specialization in the new area. The technology currently in the company cannot be used in hotel business.
It is not advisable to use the available funds to invest in hotel business since it will involve high costs considering that the two fields are not related. Operating in a new line of production requires a lot of investments. It is important to consider that there are threats also in the new industry.
Engaging in real estate business is a related business for stick soft company. This is because some of the products produced by stick soft will be raw materials in the new investment. The employees can also work in the new industry.
The installed base of a technology makes the people using the technology spread the information about the technology to other people hence such a technology easily becomes dominant. On the other hand, compliments make people decide whether they are to adopt a technology or not. If there are no compliments, many people will avoid using that technology. However, if there are compliments, people will prefer using the technology leading to its dominance.
A new inventor should ensure massive advertisements to ensure that people have information about new technology that is available. The adverts should show why the new technology is advantageous as opposed to the existing one. This will lead to massive purchase of that technological device.
Selling at low prices can be another strategy of increasing installation base. When the product becomes known to many people, the normal price can then be charged. Low prices will encourage many to use the new product hence making the product to be dominant in the market.