DF Company, a relatively new company, is in the business of designing and building farm equipment and machinery. Whilst it has been winning in its first few years of operation, sales are now in decline as competition in the industry has intensified and there is greater rivalry among competitor organisations.
A review undertaken by consultants has recommended that, in order to gain sustained competitive advantage, the company requires to establish the basis on which it can compete more effectively against its rivals in the future.
Describe the factors that can make competitive rivalry between organisations.
Competitor rivals are organisations with same products/services aimed at the similar customer group (Johnson et al 2011). The more competitive the rivalry, the worse it is for those operating in the industry. Low barriers to entry can increase the number of rivals within an industry.
There are a number of factors that can make competitive rivalry among an organisation and its immediate competitors in an industry. With reference to Porter's Five Forces model these contain:
- The rate of growth in an industry. If this is low, in other words the market is not expanding, then there is likely to be enhanced competition due to any growth is probably going to be at the expense of a rival.