INDUSTRY ANALYSIS IV
Toolkit <ul><li>Determinants of  industry attractiveness  </li></ul><ul><ul><li>#1. Scope of Competition </li></ul></ul><u...
#1. Scope of Competition <ul><li>Market Size </li></ul><ul><li>Scope of Competition </li></ul><ul><li>- Local  Regional </...
Scope <ul><li>Prevalence of Backward and Forward Linkage </li></ul><ul><li>Pace of Technological Change </li></ul><ul><li>...
#2. Dominant Economic Traits <ul><li>Market Size </li></ul><ul><li>Scope of Competition (Local, Regional, National, Global...
#3.  Porter’s Five  Forces Substitute Products (of firms in other industries) Suppliers of Key Inputs Buyers Potential New...
Bargaining Power of Buyers <ul><li>- Many small companies and few buyers,  Large buyers </li></ul><ul><li>- Buyers can swi...
Suppliers <ul><li>- Product has few substitutes and are important to the buyers </li></ul><ul><li>- Products are different...
Rivalry <ul><li>- Demand conditions  : growing/declining </li></ul><ul><li>- Exit barriers : high/low </li></ul><ul><li>- ...
Substitutes <ul><li>- Products serving similar consumer needs </li></ul><ul><li>  sugar vs artificial sweetener </li></ul>...
Threat of Entry <ul><li>- Brand loyalty </li></ul><ul><li>- Economies of scale </li></ul><ul><li>- Entry barriers </li></u...
#4. Key Success Factors <ul><li>Technology: </li></ul><ul><ul><li>Product  Innovation Capability </li></ul></ul><ul><li>Pr...
KSF <ul><li>Distribution: </li></ul><ul><li>Low distribution cost </li></ul><ul><li>Company-owned retail outlets </li></ul...
KSF <ul><li>Skills: </li></ul><ul><li>Quality control know how </li></ul><ul><li>Design expertise </li></ul><ul><li>Expert...
KSF <ul><li>Others: </li></ul><ul><ul><li>Convenient Location </li></ul></ul><ul><li>Courteous Employees </li></ul><ul><li...
#5. Likely Strategic Moves by Rivals <ul><li>Strategic Intent: </li></ul><ul><li>Be dominant leader </li></ul><ul><li>Move...
Moves by Rivals <ul><li>Strategic Posture: </li></ul><ul><li>Mostly offensive </li></ul><ul><li>Mostly defensive </li></ul...
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Industry analysis 4

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Industry analysis 4

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