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Industry analysis 4

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  • 1. INDUSTRY ANALYSIS IV
  • 2. Toolkit
    • Determinants of industry attractiveness
      • #1. Scope of Competition
      • #2. Economic Traits
      • #3. Competitive Forces
      • #4. Key Success Factors
      • #5. Likely Moves by Rivals
  • 3. #1. Scope of Competition
    • Market Size
    • Scope of Competition
    • - Local Regional
    • - National Global
    • Industry Growth Cycle
    • - Early Takeoff
    • - Mature Stagnant
    • - Decline
  • 4. Scope
    • Prevalence of Backward and Forward Linkage
    • Pace of Technological Change
    • Learning Curve Effect
    • Capital Requirement
    • Profitability (above/below par)
  • 5. #2. Dominant Economic Traits
    • Market Size
    • Scope of Competition (Local, Regional, National, Global)
    • Industry Growth Cycle (Early, Takeoff, Mature, Stagnant, Decline)
    • Number of Rivals and their relative sizes
    • Number of Buyers and their relative sizes
    • Prevalence of Backward and Forward Linkage
    • Ease of Entry and Exit
    • Pace of Technological Change
    • Learning Curve Effect
    • Capital Requirement
    • Profitability (above/below par)
  • 6. #2 Porter’s Five Forces Substitute Products (of firms in other industries) Suppliers of Key Inputs Buyers Potential New Entrants Rivalry Among Competing Sellers
  • 7. Bargaining Power of Buyers
    • - Many small companies and few buyers, Large buyers
    • - Buyers can switch orders between suppliers enabling them to play one supplier against another
    • - Vertical integration is a feasible option
  • 8. Suppliers
    • - Product has few substitutes and are important to the buyers
    • - Products are differentiated to the extent that buyers cannot easily switch
    • - Threat of vertical integration
    • - Buying companies cannot threaten with backward integration
  • 9. Rivalry
    • - Demand conditions : growing/declining
    • - Exit barriers : high/low
    • - Competitive structure : fragmented, consolidated
  • 10. Substitutes
    • - Products serving similar consumer needs
    • sugar vs artificial sweetener
    • taxi vs bus
    • private vs public university
  • 11. Threat of Entry
    • - Brand loyalty
    • - Economies of scale
    • - Entry barriers
    • - Govt. regulation
  • 12. #4. Key Success Factors
    • Technology:
      • Product Innovation Capability
    • Production Process Innovation Capability
    • Expertise in given technology
    • Manufacturing :
        • Scale economy
        • Experience curve effect
    • High Labour Productivity
    • Flexibility to manufacture a range of products
  • 13. KSF
    • Distribution:
    • Low distribution cost
    • Company-owned retail outlets
    • Fast delivery
    • Marketing:
      • Well-trained sales force
    • Dependable service and technical assistance
    • Attractive styling/packaging
  • 14. KSF
    • Skills:
    • Quality control know how
    • Design expertise
    • Expertise in particular technology
    • Organization:
    • Superior Information System
    • Managerial know-how
    • Ability for quicker response to market
  • 15. KSF
    • Others:
      • Convenient Location
    • Courteous Employees
    • Patent Protection
  • 16. #5. Likely Strategic Moves by Rivals
    • Strategic Intent:
    • Be dominant leader
    • Move into top 5
    • Maintain position
    • Market Objective:
    • Getting stronger, on the move
    • Well-entrenched, able to maintain position
    • All things to everybody
  • 17. Moves by Rivals
    • Strategic Posture:
    • Mostly offensive
    • Mostly defensive
    • Aggressive risk taker
    • Competitive Strategy:
    • Striving for low cost leadership
    • Mostly focusing on market niche
    • Pursuing differentiation