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STRATEGIC ANALYSIS  ,[object Object],[object Object],[object Object]
Strategic Analysis is the critical starting point of strategic thinking.  — Kenichi Ohmae
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],SEQUENCE
1. Strategic Analysis
What  Is  Strategic Analysis ? ,[object Object],[object Object],[object Object],[object Object]
Strategic  Analysis  Leads  to  Strategic  Choices Identify Strategic Options for the  Company  Select the Best Strategy for the  Company  1.  Industry’s dominant economic traits 2.  Nature of competition & strength of competitive forces 3.  Drivers of industry change 4.  Competitive position of rivals 5.  Strategic moves of rivals 6.  Key success factors 7.  Conclusions about industry attractiveness Assess Industry & Competitive Conditions 1.  Assessment of company’s present strategy 2.  Resource strengths and weaknesses, market opportunities, and external threats 3.  Company’s costs compared to rivals 4.  Strength of company’s competitive position 5.  Strategic issues that need to be addressed Assess  Company  Situation
2. Industry & Competitive Analysis Learning from the Strengths and Weaknesses of Others
External Environment Legislation and Regulation Societal Values and Lifestyles Population Demographics Technology The Economy at Large COMPANY Suppliers Substitutes Buyers New Entrants Rival Firms  IMMEDIATE INDUSTRY AND COMPETITIVE ENVIRONMENT
PORTER’S FIVE FORCES  MODEL OF COMPETITION Threat of New Entrants Threat of New Entrants
Threat of New Entrants Threat of New Entrants Porter’s Five Forces  Model of Competition Bargaining Power of Suppliers
Threat of New Entrants Threat of New Entrants Bargaining Power of Suppliers Porter’s Five Forces  Model of Competition Bargaining Power of Buyers
Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces  Model of Competition Threat of Substitute Products
Threat of Substitute Products Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces  Model of Competition Rivalry Among Competing Firms in Industry
Five-Forces Analysis ,[object Object],[object Object],[object Object]
COMPETITOR ANALYSIS The follow-up to Industry Analysis is effective analysis of a firm’s  Competitors Competitive Environment Industry Environment
COMPETITIVE ADVANTAGE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
WHAT IS COMPETITIVE ANALYSIS ? ,[object Object],[object Object],[object Object]
COMPETITOR ANALYSIS Assumptions What assumptions do our competitors hold about the future of industry and themselves? Current Strategy Does our current strategy support changes in the competitive environment? Future Objectives How do our goals compare to our competitors’ goals? Capabilities How do our capabilities compare to our competitors? Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition?
Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? What Drives the competitor? COMPETITOR ANALYSIS
What is the competitor doing? What can the competitor do? Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competitive structure? COMPETITOR ANALYSIS
What does the competitor believe about itself and the industry? Do we assume the future will be volatile? Are we assuming stable competitive conditions? What assumptions do our competitors hold about the industry and themselves? Assumptions COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure?
What are the competitor’s capabilities? What are my competitors’ strengths and weaknesses? How do our capabilities compare to our competitors? Capabilities COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure? Do we assume the future will be volatile? Are we operating under a status quo? What assumptions do our competitors hold about the industry and themselves? Assumptions
Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition? COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure? Do we assume the future will be volatile? Are we operating under a status quo? What assumptions do our competitors hold about the industry and themselves? Assumptions Capabilities What are my competitors’ strengths and weaknesses? How do our capabilities compare to our competitors?
3. Seven Questions
Industry and Competitive Analysis – Seven Questions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industry and Competitive Environment Industry’s  economic traits  Competitive forces and strength of each force Drivers of change in the industry Competitor analysis Key success factors Conclusions: Industry attractiveness
1. Industry’s Economic Traits
1.    What are the industry’s dominant  economic features? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Cost  Advantages  of Different  Experience  Curve  Effects $1 $1 .90 .80 .70 .81 .64 .49 .729 .512 .343 10% Cost Reduction 20% Cost Reduction 30% Cost Reduction 1 Million Units 2 Million Units 4 Million Units 8 Million Units Cost per Unit
Relevance  of Key  Economic  Features Economic Feature Market Size Market growth rate Capacity surpluses/shortages Industry profitability Entry/exit barriers Product is big-ticket item for buyers Standard products Rapid technological change Capital requirements Vertical integration Economies of scale Rapid product innovation Strategic Importance Small markets don’t tend to attract new firms; large markets attract firms looking to acquire rivals with established positions in attractive industries  Fast growth breeds new entry; slow growth spawns increased rivalry & shake-out of weak rivals Surpluses push prices & profit margins down; shortages pull them up High-profit industries attract new entrants; depressed conditions lead to exit High barriers protect positions and profits of existing firms; low barriers make existing firms vulnerable to entry More buyers will shop for lowest price Buyers have more power because it’s easier to switch from seller to seller Raises risk; investments in technology facilities/equipment may become obsolete before they wear out Big requirements make investment decisions critical; timing becomes important; creates a barrier to entry and exit Raises capital requirements; often creates competitive & cost differences among fully vs. partially vs. non-integrated firms Increases volume & market share needed to be cost competitive Shortens product life cycle; increases risk because of opportunities for leapfrogging
2. Industry’s Competitive Forces
2.  What is competition like and how strong are each of the five competitive forces? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Five  Forces Model  of  Competition Substitute Products (of firms in other industries) Suppliers of Key Inputs Buyers Potential New Entrants Rivalry Among Competing Sellers
1.  Competitive Rivalry ,[object Object],[object Object],[object Object]
2.  Potential New Entrants ,[object Object],[object Object],[object Object],[object Object],[object Object]
3.  Substitute Products ,[object Object],[object Object],[object Object],[object Object],[object Object]
4.  Bargaining Power of Suppliers ,[object Object],[object Object],[object Object],[object Object]
4.  Bargaining Power of Buyers ,[object Object],[object Object],[object Object]
3. Drivers of Industry Change
3.  What is causing the industry’s competitive structure and business environment to change? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Environmental  Scanning ,[object Object],Definition
Environmental  Scanning ,[object Object],[object Object],[object Object],[object Object]
4. Competitive Positions of Rivals
4.  Which companies are in the  strongest/ weakest positions? ,[object Object],[object Object]
Strategic  Group  Mapping ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
5. Competitive Moves of Rivals
5.    What strategic moves are rivals  likely to make next? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategies  of  Competitors Competitive Scope Strategic Intent Market Share Objective Competitive Position Strategic Posture Competitive Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
6. Industry’s Key Success Factors
6.    What are the key factors for  competitive success ? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industry’s Key  Success  Factors ,[object Object],[object Object],[object Object],[object Object],[object Object]
Types  of Key  Success  Factors Distribution-related Marketing-related Skills-related Organizational capability Other types Technology-related Manufacturing-related Scientific research expertise; Product innovation capability; Expertise in a given technology; Capability to use Internet to conduct various business activities Low-cost production efficiency; Quality of manufacture; High use of fixed assets; Low-cost plant locations; High labor productivity; Low-cost product design; Flexibility to make a range of products Strong network of wholesale distributors/dealers; Gaining ample space on retailer shelves; Having company-owned retail outlets; Low distribution costs; Fast delivery Fast, accurate technical assistance; Courteous customer service; Accurate filling of orders; Breadth of product line; Merchandising skills; Attractive styling; Customer guarantees; Clever advertising Superior workforce talent; Quality control know-how; Design expertise; Expertise in a particular technology; Ability to develop innovative products; Ability to get new products to market quickly Superior information systems; Ability to respond quickly to shifting market conditions; Superior ability to employ Internet to conduct business; More experience & managerial know-how Favorable image/reputation with buyers; Overall low-cost; Convenient locations; Pleasant, courteous employees; Access to financial capital; Patent protection
Strategic  Management  Principle ,[object Object]
7. Conclusions:  Overall Industry Attractiveness
7.    Is the industry attractive and what are its prospects for above-average profitability? ,[object Object],[object Object],[object Object]
Assessing  Industry  Attractiveness ,[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object]
CONCLUSION ,[object Object],[object Object],[object Object]
THANK YOU

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5th Lecture Industry & Competitive Analysis Mahmood Ahmed

  • 1.
  • 2. Strategic Analysis is the critical starting point of strategic thinking. — Kenichi Ohmae
  • 3.
  • 5.
  • 6. Strategic Analysis Leads to Strategic Choices Identify Strategic Options for the Company Select the Best Strategy for the Company 1. Industry’s dominant economic traits 2. Nature of competition & strength of competitive forces 3. Drivers of industry change 4. Competitive position of rivals 5. Strategic moves of rivals 6. Key success factors 7. Conclusions about industry attractiveness Assess Industry & Competitive Conditions 1. Assessment of company’s present strategy 2. Resource strengths and weaknesses, market opportunities, and external threats 3. Company’s costs compared to rivals 4. Strength of company’s competitive position 5. Strategic issues that need to be addressed Assess Company Situation
  • 7. 2. Industry & Competitive Analysis Learning from the Strengths and Weaknesses of Others
  • 8. External Environment Legislation and Regulation Societal Values and Lifestyles Population Demographics Technology The Economy at Large COMPANY Suppliers Substitutes Buyers New Entrants Rival Firms  IMMEDIATE INDUSTRY AND COMPETITIVE ENVIRONMENT
  • 9. PORTER’S FIVE FORCES MODEL OF COMPETITION Threat of New Entrants Threat of New Entrants
  • 10. Threat of New Entrants Threat of New Entrants Porter’s Five Forces Model of Competition Bargaining Power of Suppliers
  • 11. Threat of New Entrants Threat of New Entrants Bargaining Power of Suppliers Porter’s Five Forces Model of Competition Bargaining Power of Buyers
  • 12. Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces Model of Competition Threat of Substitute Products
  • 13. Threat of Substitute Products Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces Model of Competition Rivalry Among Competing Firms in Industry
  • 14.
  • 15. COMPETITOR ANALYSIS The follow-up to Industry Analysis is effective analysis of a firm’s Competitors Competitive Environment Industry Environment
  • 16.
  • 17.
  • 18. COMPETITOR ANALYSIS Assumptions What assumptions do our competitors hold about the future of industry and themselves? Current Strategy Does our current strategy support changes in the competitive environment? Future Objectives How do our goals compare to our competitors’ goals? Capabilities How do our capabilities compare to our competitors? Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition?
  • 19. Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? What Drives the competitor? COMPETITOR ANALYSIS
  • 20. What is the competitor doing? What can the competitor do? Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competitive structure? COMPETITOR ANALYSIS
  • 21. What does the competitor believe about itself and the industry? Do we assume the future will be volatile? Are we assuming stable competitive conditions? What assumptions do our competitors hold about the industry and themselves? Assumptions COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure?
  • 22. What are the competitor’s capabilities? What are my competitors’ strengths and weaknesses? How do our capabilities compare to our competitors? Capabilities COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure? Do we assume the future will be volatile? Are we operating under a status quo? What assumptions do our competitors hold about the industry and themselves? Assumptions
  • 23. Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition? COMPETITOR ANALYSIS Future Objectives How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? Current Strategy How are we currently competing? Does this strategy support changes in the competition structure? Do we assume the future will be volatile? Are we operating under a status quo? What assumptions do our competitors hold about the industry and themselves? Assumptions Capabilities What are my competitors’ strengths and weaknesses? How do our capabilities compare to our competitors?
  • 25.
  • 26. Industry and Competitive Environment Industry’s economic traits Competitive forces and strength of each force Drivers of change in the industry Competitor analysis Key success factors Conclusions: Industry attractiveness
  • 28.
  • 29. Cost Advantages of Different Experience Curve Effects $1 $1 .90 .80 .70 .81 .64 .49 .729 .512 .343 10% Cost Reduction 20% Cost Reduction 30% Cost Reduction 1 Million Units 2 Million Units 4 Million Units 8 Million Units Cost per Unit
  • 30. Relevance of Key Economic Features Economic Feature Market Size Market growth rate Capacity surpluses/shortages Industry profitability Entry/exit barriers Product is big-ticket item for buyers Standard products Rapid technological change Capital requirements Vertical integration Economies of scale Rapid product innovation Strategic Importance Small markets don’t tend to attract new firms; large markets attract firms looking to acquire rivals with established positions in attractive industries Fast growth breeds new entry; slow growth spawns increased rivalry & shake-out of weak rivals Surpluses push prices & profit margins down; shortages pull them up High-profit industries attract new entrants; depressed conditions lead to exit High barriers protect positions and profits of existing firms; low barriers make existing firms vulnerable to entry More buyers will shop for lowest price Buyers have more power because it’s easier to switch from seller to seller Raises risk; investments in technology facilities/equipment may become obsolete before they wear out Big requirements make investment decisions critical; timing becomes important; creates a barrier to entry and exit Raises capital requirements; often creates competitive & cost differences among fully vs. partially vs. non-integrated firms Increases volume & market share needed to be cost competitive Shortens product life cycle; increases risk because of opportunities for leapfrogging
  • 32.
  • 33. Five Forces Model of Competition Substitute Products (of firms in other industries) Suppliers of Key Inputs Buyers Potential New Entrants Rivalry Among Competing Sellers
  • 34.
  • 35.
  • 36.
  • 37.
  • 38.
  • 39. 3. Drivers of Industry Change
  • 40.
  • 41.
  • 42.
  • 44.
  • 45.
  • 46. 5. Competitive Moves of Rivals
  • 47.
  • 48.
  • 49. 6. Industry’s Key Success Factors
  • 50.
  • 51.
  • 52. Types of Key Success Factors Distribution-related Marketing-related Skills-related Organizational capability Other types Technology-related Manufacturing-related Scientific research expertise; Product innovation capability; Expertise in a given technology; Capability to use Internet to conduct various business activities Low-cost production efficiency; Quality of manufacture; High use of fixed assets; Low-cost plant locations; High labor productivity; Low-cost product design; Flexibility to make a range of products Strong network of wholesale distributors/dealers; Gaining ample space on retailer shelves; Having company-owned retail outlets; Low distribution costs; Fast delivery Fast, accurate technical assistance; Courteous customer service; Accurate filling of orders; Breadth of product line; Merchandising skills; Attractive styling; Customer guarantees; Clever advertising Superior workforce talent; Quality control know-how; Design expertise; Expertise in a particular technology; Ability to develop innovative products; Ability to get new products to market quickly Superior information systems; Ability to respond quickly to shifting market conditions; Superior ability to employ Internet to conduct business; More experience & managerial know-how Favorable image/reputation with buyers; Overall low-cost; Convenient locations; Pleasant, courteous employees; Access to financial capital; Patent protection
  • 53.
  • 54. 7. Conclusions: Overall Industry Attractiveness
  • 55.
  • 56.
  • 57.
  • 58.

Notas do Editor

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  6. 33
  7. 38
  8. 34
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  10. 36
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