Chapter 3

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Chapter 3

  1. 1. INDUSTRY AND COMPETITIVE ANALYSIS CHAPTER -3 Mohammad Mizenur Rahaman Ph.D Researcher Assistant Professor Shahjalal University of Science & Technology, Sylhet Published by Lecturesheet.iiuc28a9.com
  2. 2. Q-1: Categorizing the Objectives and Strategies of Competitors <ul><li>Local </li></ul><ul><li>Be dominant leader </li></ul><ul><li>Aggressive expansion via acquisition & internal growth </li></ul><ul><li>Getting stronger; on the move </li></ul><ul><li>Mostly offensive </li></ul><ul><li>Regional </li></ul><ul><li>Overtake industry leader </li></ul><ul><li>Well-entrenched </li></ul><ul><li>Mostly defensive </li></ul><ul><li>National </li></ul><ul><li>Be among industry leaders </li></ul><ul><li>Expansion via internal growth </li></ul><ul><li>Stuck in the middle of the pack </li></ul><ul><li>Combination of offensive & defensive </li></ul><ul><li>Multicountry </li></ul><ul><li>Move into top 10 </li></ul><ul><li>Expansion via acquisition </li></ul><ul><li>Going after a different position </li></ul><ul><li>Aggressive risk-taker </li></ul><ul><li>Global </li></ul><ul><li>Move up a notch in rankings </li></ul><ul><li>Hold on to present share </li></ul><ul><li>Struggling; losing ground </li></ul><ul><li>Conservative follower </li></ul><ul><li>Maintain current position </li></ul><ul><li>Give up present share to achieve short-term profits </li></ul><ul><li>Retrenching to a position that can be defended </li></ul><ul><li>Just survive </li></ul><ul><li>Striving for low-cost leadership </li></ul><ul><li>Mostly focusing on a market niche </li></ul><ul><li>Pursuing differentiation based on </li></ul><ul><li>Quality </li></ul><ul><li>Service </li></ul><ul><li>Technology superiority </li></ul><ul><li>Breadth of product line </li></ul><ul><li>Image & reputation </li></ul><ul><li>More value for the money </li></ul><ul><li>Other attributes </li></ul>Competitive Scope Strategic Intent Market Share Objective Competitive Position Strategic Posture Competitive Strategy
  3. 3. Question 2: What Are the Key Factors for Competitive Success? <ul><li>KSFs are competitive elements that most affect every industry member’s ability to prosper in the marketplace </li></ul><ul><ul><li>Specific strategy elements </li></ul></ul><ul><ul><li>Product attributes </li></ul></ul><ul><ul><li>Resources </li></ul></ul><ul><ul><li>Competencies </li></ul></ul><ul><ul><li>Competitive capabilities </li></ul></ul><ul><li>KSFs spell difference between </li></ul><ul><ul><li>Profit and loss </li></ul></ul><ul><ul><li>Competitive success or failure </li></ul></ul>
  4. 4. Identifying Industry Key Success Factors <ul><li>Answers to three questions pinpoint KSFs </li></ul><ul><ul><li>On what basis do customers choose between competing brands of sellers? </li></ul></ul><ul><ul><li>What must a seller do to be competitively successful -- what resources and competitive capabilities does it need? </li></ul></ul><ul><ul><li>What does it take for sellers to achieve a sustainable competitive advantage? </li></ul></ul><ul><li>KSFs consist of the 3 - 5 really major determinants of financial and competitive success in an industry </li></ul>
  5. 5. Example: KSFs for Apparel Manufacturing Industry <ul><li>Fashion design -- to create buyer appeal </li></ul><ul><li>Low-cost manufacturing efficiency -- to keep selling prices competitive </li></ul>
  6. 6. Example: KSFs for Tin and Aluminum Can Industry <ul><li>Locating plants close to end-use customers -- to keep costs of shipping empty cans low </li></ul><ul><li>Ability to market plant output within economical shipping distances </li></ul>
  7. 7. Strategic Management Principle <ul><li>A sound strategy incorporates efforts to be competent on all industry key success factors and to excel on at least one factor! </li></ul>
  8. 8. Question 3: Is the Industry Attractive or Unattractive and Why? <ul><li>Develop conclusions about whether the industry and competitive environment is attractive or unattractive, both near- and long-term, for earning good profits </li></ul>Objective Principle A firm uniquely well-suited in an otherwise unattractive industry can, under certain circumstances, still earn unusually good profits
  9. 9. Things to Consider in Assessing Industry Attractiveness <ul><li>Industry’s market size and growth potential </li></ul><ul><li>Whether competitive conditions are conducive to rising/falling industry profitability </li></ul><ul><li>Will competitive forces become stronger or weaker </li></ul><ul><li>Whether industry will be favorably or unfavorably impacted by driving forces </li></ul><ul><li>Potential for entry/exit of major firms </li></ul><ul><li>Stability/dependability of demand </li></ul><ul><li>Severity of problems facing industry </li></ul><ul><li>Degree of risk and uncertainty in industry’s future </li></ul>
  10. 10. Conducting an Industry and Competitive Situation Analysis <ul><li>Two things to keep in mind: </li></ul><ul><ul><li>1. Evaluating industry and competitive conditions cannot be reduced to a formula-like exercise-- thoughtful analysis is essential </li></ul></ul><ul><ul><li>2. Sweeping industry and competitive analyses need to done every 1 to 3 years </li></ul></ul>

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