3、Competitive pattern of the industry
In addition to the vertical pattern, there is also a horizontal pattern.
The horizontal pattern is the competition between companies.
The best indicator to measure the competitive pattern is the concentration, that is, the market share jointly occupied by the head players.
The sum of the market shares of the top five players is called CR5, and the sum of the shares of the top ten players is called CR10.
Industries with high threshold, standardized products and strong network effects tend to have higher concentration, such as heavy industry and the Internet.
The concentration is much lower in industries with low threshold and personalized products, such as restaurants, tutors and hairdressers.
In industries with high concentration, the head player will be very comfortable, first-mover advantage, the strongest is always strong, and subsequent players are difficult to subvert.
In industries with low concentration, the pressure to survive is great, and product quality and personalized services become the basis for survival, and investors need to be carefully selected at this time.
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