The document provides an overview of further topics in industry and competitive analysis, including whether industry matters, dynamic competition, game theory, competitor analysis, segmentation analysis, and strategic group analysis. It discusses research showing that a significant percentage of firm performance can be explained by industry effects. It also outlines frameworks for analyzing competitors, segments, and strategic groups within an industry.

2. Does Industry Matter? Percentage of variance in firms’ return on assets explained by: Industry effects Firm-specific effects Unexplained variance Schmalensee (1985) 19.6% 0.6% 80.4% Rumelt (1991) 4.0% 44.2% 44.8% McGahan & Porter 1997) 18.7% 31.7% 48.4% Hawawini et al (2003) 8.1% 35.8% 52.0%

3. The Value Net COMPANY CUSTOMERS SUPPLIERS COMPLEMENTORS COMPETITORS

4. SUPPLIERS POTENTIAL ENTRANTS SUBSTITUTES BUYERS INDUSTRY COMPETITORS Rivalry among existing firms Bargaining power of suppliers Bargaining power of buyers Threat of new entrants Threat of substitutes COMPLEMENTS The suppliers of complements create value for the industry and can exercise bargaining power Five Forces or Six? —Introducing Complements

10. Opportunities for Differentiation Characteristics of the Buyers Characteristics of the Product Industrial buyers Household buyers Distribution channel Geographical location *Size *Technical sophistication *OEM/replacement *Demographics *Lifestyle *Purchase occasion *Size *Distributor/broker *Exclusive/ nonexclusive *General/special list *Physical size *Price level *Product features *Technology design *Inputs used (e.g. raw materials) *Performance characteristics *Pre-sales & post-sales services

11. Segmenting the European Metal Can Industry

12. Segmenting the World Automobile Market US& Canada W.Europe E.Europe Asia Lat America Australia Africa Luxury cars Full-size cars Mid-size cars Small cars Station wagons Passenger vans Sports cars Sport-utility Pick-up trucks

13. 0 5 0 10 15 20 25% 100% Share of industry revenue Auto loans Leasing Warranty Gasoline Auto insurance Aftermarket parts Auto rental Operating margin Auto manufacturing New car dealers Used car dealers Service & repair Vertical Segmentation & Industry Profit Pools — The US Auto Industry

14. Segmentation and Key Success Factors in the U.S. Bicycle Industry SEGMENT Low price bicycles sold primarily through department and discount stores, mainly under the retailer’s own brand (e.g. Sears’ “Free Spirit”); KEY SUCCESS FACTORS * Low-costs through global sourcing of components & low-wage assembly. * Supply contract with major retailer. Leading competitors: Taiwanese & Chinese assemblers, some U.S manufacturers, e.g. Murray Ohio, Huffy Medium-priced bicycles sold primarily under manufacturer’s brand name and distributed mainly through specialist bicycles stores; *Cost efficiency through large scale operation and either low wages or automated manufacturing. *Reputation for quality (durability, reliability) through effective marketing to dealers and/or consumers. * International marketing & distribution. Leading competitors: Raleigh, Giant, Peugeot, Fuji *Quality of components and assembly, Innovation in design (e.g. minimizing weight and wind resistance). *Reputation (e.g. through success in racing, through effective brand management). *Strong dealer relations. Similar to low-price bicycle segment. High-priced bicycles for enthusiasts. Children’s bicycles (and tricycles) sold primarily through toy retailers (discount toy stores, department stores, and specialist toy stores).

16. Strategic Groups in the World Automobile Industry Broad PRODUCT RANGE Narrow National GEOGRAPHICAL SCOPE Global NATIONALLY- FOCUSED, SMALL, SPECIALIST PRODUCERS e.g., Bristol (U.K.), Classic Roadsters (U.S.), Morgan (U.K.) NATIONALLY FOCUSED, INTERMEDIATE LINE PRODUCERS e.g. Tofas, Proton, Maruti First Auto Works (China) REGIONALLY-FOCUSED BROAD-LINE PRODUCERS e.g. Fiat, PSA, Renault, Kia, PERFORMANCE CAR PRODUCERS e.g., Porsche, Ferrari (owned by Fiat) Maserati, Lotus LUXURY CAR MANUFACTURERS e.g., Aston Martin, BMW, Rolls Royce (owned by VW) GLOBAL SUPPLIERS OF NARROW MODEL RANGE e.g., Subaru, Isuzu, Suzuki, Saab, Hyundai, Daihatsu GLOBAL, BROAD-LINE PRODUCERS e.g., GM, Ford, Toyota, Nissan, Honda, VW, DaimlerChrysler