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Business strategy chapter (3)

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  • 1. CHAPTER -3 INDUSTRY AND COMPETITIVE ANALYSIS Mohammad Mizenur Rahaman Ph.D Researcher Assistant Professor Shahjalal University of Science & Technology, Sylhet 1Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 2. Q-1: Categorizing the Objectives and Strategies of Competitors Competitive Strategic Market Share Competitive Strategic Competitive Scope Intent Objective Position Posture Strategy • Aggressive •Getting •Striving for • Be dominant •Mostly• Local expansion via stronger; on low-cost leader offensive acquisition & the move leadership • Overtake internal •Mostly growth •Well- •Mostly• Regional industry focusing on a entrenched defensive leader market niche • Be among • Expansion •Stuck in the •Combination •Pursuing• National industry via internal middle of the of offensive & differentiation leaders growth pack defensive based on •Going after a – Quality • Move into • Expansion •Aggressive – Service• Multicountry different top 10 via acquisition position risk-taker – Technology superiority • Move up a – Breadth of • Hold on to •Struggling; •Conservative• Global notch in product line present share losing ground follower rankings – Image & • Maintain •Give up reputation current present share – More value •Retrenching position to achieve for the money to a position short-term – Other that can be profits attributes • Just survive defended 2Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 3. Question 2: What Are the Key Factors for Competitive Success?l KSFs are competitive elements that most affect every industry member’s ability to prosper in the marketplace 4 Specific strategy elements 4 Product attributes 4 Resources 4 Competencies 4 Competitive capabilitiesl KSFs spell difference between 4 Profit and loss 4 Competitive success or failure 3Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 4. Identifying Industry Key Success Factorsl Answers to three questions pinpoint KSFs 4 On what basis do customers choose between competing brands of sellers? 4 What must a seller do to be competitively successful -- what resources and competitive capabilities does it need? 4 What does it take for sellers to achieve a sustainable competitive advantage?l KSFs consist of the 3 - 5 really major determinants of financial and competitive success in an industry 4Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 5. Example: KSFs for Apparel Manufacturing Industry l Fashion design -- to create buyer appeal l Low-cost manufacturing efficiency -- to keep selling prices competitive 5Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 6. Example: KSFs for Tin and Aluminum Can Industryl Locating plants close to end-use customers -- to keep costs of shipping empty cans lowl Ability to market plant output within economical shipping distances 6Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 7. Strategic Management Principle A sound strategy incorporates efforts to be competent on all industry key success factors and to excel on at least one factor! 7Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 8. Question 3: Is the Industry Attractive or Unattractive and Why? Objective Develop conclusions about whether the industry and competitive environment is attractive or unattractive, both near- and long-term, for earning good profits Principle A firm uniquely well-suited in an otherwise unattractive industry can, under certain circumstances, still earn unusually good profits 8Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 9. Things to Consider in Assessing Industry Attractivenessl Industry’s market size and growth potentiall Whether competitive conditions are conducive to rising/falling industry profitabilityl Will competitive forces become stronger or weakerl Whether industry will be favorably or unfavorably impacted by driving forcesl Potential for entry/exit of major firmsl Stability/dependability of demandl Severity of problems facing industryl Degree of risk and uncertainty in industry’s future 9Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998
  • 10. Conducting an Industry and Competitive Situation Analysisl Two things to keep in mind: 1. Evaluating industry and competitive conditions cannot be reduced to a formula-like exercise--thoughtful analysis is essential 2. Sweeping industry and competitive analyses need to done every 1 to 3 years 10Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998