Competition

Competition

Five Forces Model to Technology Industry

Rivalry

The level of rivalry in the competitive environment of Life Technologies can be considered as high. Life Technologies competitors are even harder hitting in coming with new products in order to increase their sales and their market share. Furthermore, various companies were also planning to target similar market segments, increasing the level of rivalry to its peak (Mulcaster, 2009). While some players have technology as their core business, others offer as part of a diverse range of technological services. The convergence between telecommunications, technology, media and the consumer electronics market, is causing lateral competition', as competition extends into converging markets which gives the opportunity for growth and at the same time competitive threats in the business market. Exit barriers are not insurmountable for a well-diversified technological company, as it could exit the technology market easily. Going forward, as the market approaches higher saturation, rivalry, which is assessed as moderate overall, is expected to become more intense.

Entrants

The threat of new companies entering the market depends highly on factors such as barriers of entry. Barriers to entry can decrease or increase the chances of new business proposing products and services that were produced by the existing companies. There are numerous examples of barrier to entry. These factors include restrictions on trade, government policies and the inaccessibility of key distribution channels.

There are various reasons that the threat of entry is low. Firstly, there is a considerate demand in capital by operating businesses. A huge amount of capital will not only be required for pulling up the businesses but also in acquiring best technology and professionals for the development of product along with its marketing. Furthermore, ample time is required for the company to flourish and enhance. It spent number of operational years before becoming a multi-billion dollar organization. Besides, time and capital, entering into the same market and competing with Life Technologies is very difficult because of its strong brand preference and customer loyalty (www.lifetechnologies.com).

Economies of scale serve as a critical barrier to entry: firstly, new entrants must install facilities such as putting up poles and digging trenches, which has high associated fixed capital and construction costs. Secondly, the fixed cost of setting up billing and operational support systems; thirdly, the cost of advertising and marketing campaigns in specific geographical regions, all of which make entry difficult. As a small number of large incumbent firms exist in ...