Question

What are the critical competitive factors of these smart home players: Johnson Controls International (Ireland), United Technologies Corporation (US), Schneider Electric (France), Honeywell International, Inc. (US), and Siemens AG (Germany).

Answer 1

In the question, critical competitive factors are asked for the following companies:

1) Johnson Controls International (Ireland)

2) United Technologies Corporation (US)

3) Schneider Electric (France)

4) Honeywell International Inc.(US)

5) Siemens AG (Germany)

These companies are smart home players and their products are quite similar, So it's obvious that there will be a competition in between the companies. Let's discuss the factors affecting the competition for the companies. We can include following factors:

1) Features of product: We can include following points:

a) Given companies are smart home players, so, the products will be similar or homogenous. This situation leads to a heavy competition.

b) From customers' point of view, products or services provided by the given companies are indistinguishable i.e. it is hard to differentiate product features. This situation leads to heavy competition.

c) If products or services are unique in features then there is no competition in the market, this situation is called monopoly. Given companies offer homogenous products or services in features so there is no monopoly but a hard cut throat competition exists.

So, this is how product features as a factor affects the competition for the given companies.

2) Sellers in the market: Sellers in the market or the number of sellers in the market is a critical factor affecting the competition like:

a) Products or services offered by the given companies are undifferentiated i.e. there are number of sellers in the market. This situation leads to high competition.

b) More number of sellers in the market leads to more number of alternatives for the consumer. This high availability of alternatives leads to high competition.

c) If the number of sellers in the market is low then competition will also be less, this leads to less competition.

d) If there is only one seller of a product or service then there will be no competition.

So, in this way number of sellers as a factor affects the competition.

3) Barriers to entry: Market is always open for companies. So, there is always a threat of new entrants in the market, which affects the competition also. So, we can include following points:

a) Products or services offered by the given companies require high capital investment, which prevents the new companies to enter the market. So, this situation makes higher barrier for the new entrants, thus leading less competition for the existing companies.

b) Sometimes, products or services needs heavy regulations to operate. Here products or services offered by the given companies needs heavy regulations. This situation leads to the better level of protection to the existing companies from the new entrants. This situation leads to less competition for the companies.

c) Barriers to entry also affects the number of sellers in the market as high barriers leads to less number of sellers and low barriers leads to more number of sellers.

d) Less number of sellers means less competition and more number of sellers means high competition.

e) Here, for the smart home products, entry barriers are high thus leading to the less competition for the given companies due to less number of new entrants.

So, this is how barriers to entry acts like a factor affecting the competition in the market.

4) Availability of information: Availability of information also affects the competition as:

a) If information about products or services is available accurately and efficiently for the consumers then it becomes tough for the companies to attract the consumer easily. This leads to higher competition. Same case with the given companies.

b) If we talk about the price information of the products or services offered by the given companies, They are accurately and efficiently available for the consumers. So, it becomes a bit tough for the given companies to set the prices in order to get the competitive advantage. So, competition is high.

c) Due to the availability of information, companies have to offer lucrative discounts or schemes for the consumers in order to attract them. This leads to cut throat competition.

d) Given companies have to play on price and service quality for the products in order to get the competitive advantage.

This is how availability of Information acts as a factor for the given companies in competition.

These are some critical competitive factors for the given companies which highly influences the competition. Besides these factors we can include location as a factor also as a good location leads to good business thus high competition will be there. Rituals and cultures of different locations or different countries also affects the competition for the given companies.

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