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Cpsp competitive analysis
This document discusses strategies for competitive analysis and creating strategic plans. It covers analyzing competition at the industry, firm, and competitor level. At the competitor level, it recommends gathering information on competitors' histories, leadership styles, growth strategies, and approaches to differentiation versus cost leadership. The document also provides templates for analyzing a firm's own competitive position and its direct competitors to help develop effective strategies.
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Cpsp competitive analysis
- 1. Creating and PresentingStrategic Plans Competitive Analysis and Strategies (B.2.4.)
- 2. Competition at 3Levels B.2.3. Competitive Analysis B.2.3.1.Industry Forces B.2.3.2.Firm Position B.2.3.3. Actual Competitors
- 3. Profit Levels forPharmaceutical Manufacturers in 2014 Fortune 500 List Company Codes: JNJ: Johnson and Johnson, PFE: Pfizer, MRK: Merch, LLY: Eli Lilly and Company, ABBV: AbbVie, AMBN: Amgen, BMY: Bristonl-Myers Squibb Company, GILD: Gilead Sciences, BIIB: Biogen Idec, MYL: Mylan, CELG: Celgene, AGN: Allergen Source: http://www.drugchannels.net/2014/06/profits-in-2014-fortune-500.html 0 30 60 90 120 JNJ PFE MRK LLY ABBV AMGN BMY GILD BIIB MYL CELG AGN 9 2.7 5 0.8 18.8 6.8 11.4 26.3 22.5 5.9 31.2 11.6 34.6 26.3 26.9 7.3 5.0 34.8 68.5 104.5 91.0 58.1 115.3 21.3 Annualized Return To Investors (2003 - 2013) (%) Total Return to Investors 2013 (%) (%)
- 4. Coincidence? Luck? Supply and demand? No Underlyingstructure Not just competitors, other forces Degree of Competition in Any Industry
- 5. Porter’s 5 CompetitiveForces Model Power of BuyersPower of Suppliers Threat of New Entrants Threat of Substitutes Degree of Rivalry
- 6. •Large purchases, especiallywhen fixed costs high •Unimportant to buyer •Standard products •Low switching costs •Buyer earns low profits •Threaten backward integration •No threat of forward integration •Buyer has full information Buyers Power is Strong When
- 7. Powerful Buyers: inUK UK Degree of Buyer Concentration Supermarkets (1) Tesco Asda Sainsbury Morrisons Total % Mkt Share 29 17 16 11 73 Banks (2) Lloyds RBS HSBC Barclays % Mkt Share 30 16 14 13 73 (1) Kam City, 21 October 2014 (2) OFT Supermarkets and Banks
- 8. •Suppliers highly concentrated •Governmentis a supplier •No substitutes •Buyer has high switching costs •Threatens forward integration •Not an important customer of supplier •Supplier product important •Supplier’s products differentiated Supplier Power (Mirror of Buyer) is Strong
- 9. Powerful Suppliers: inUK UK Energy Market Share (%) Electricity Gas Total British Gas 12 24 18 E.ON 19 17 18 ScottishPower 10 10 10 EDF Energy 12 10 10 RWE nPower 12 12 12 Scottish &Southern Energy 25 13 13 Totals 85 66 81 Source: http://www.academia.edu/555316/UK_Energy_Market_Overview Big Six Energy Suppliers in the UK
- 10. •Scale: Toyota •Differentiation: Apple •Capitalrequirements: Rolls Royce •Switching costs: Microsoft •Access to distribution channels: Coke •Non-scale advantages •Proprietary technology: Dolby •Favourable location: Norwegian electricity •Government help: Chinese industry •Experience: Oxford publishing •Reactions from incumbents: Predatory pricing 6 Major Barriers to Entry
- 11. •Other products/services which performthe same function •Place a ceiling on the price Product/Service Substitutes Movie Television, DVD, stage play Telephone call Letter, fax, email CD bought from retailer Download, Stream Ferry journey Aeroplane, tunnel plus car, rail tunnel Product catalogue CD, download from web Substitutes
- 12. •Slow industry growth:House Building Intensity of Rivalry •Numerous equally balanced competitors: Web Page Designers •High fixed costs: Rolls Royce •Lack of differentiation: Office Stationery •Large increments in capacity: Oil Refining •Diverse competitors: Recorded Music •High strategic stakes: Military •High exit barriers: Shipyards
- 13. •Actual market rivals Competition:All Five Forces •Potential entrants •Buyers •Suppliers •Substitutes
- 14. How? Appraise each force Then Competeusing a generic strategy Find a position in the industry where you can best defend yourself Goal of Competitive Strategy
- 15. •High volume lowcost (HVLC) •Differentiation •Focus The Generic Strategies
- 16. Loss for smallplayer High Low Volume Unit price & unit cost Low High Profits for largest player Generic 1: High Volume Low Cost (HVLC)
- 17. High Low Volume Unit price & unitcost Low High Profits for largest player Generic 2: Differentiation
- 18. Lever Effects Difficulty Price Lowerprofits, Disloyal buyers, No skill Retaliation Easy Promotion Expand overall market Difficult Distribution Maintain margins Difficult Innovation Higher and more sustained profits Difficult Service Price and cost advantage Difficult Quality Price and cost advantage Difficult Sources of Differentiation: The Marketing Levers Or why low price is a terrible weapon
- 19.
- 20. Major Global AdvertisingSpend : A Paradox? Samsung: World’s biggest advertising spend 2014 Yet its Phone profits declined 78% in Q4 Apple: Lowest % advertising spend Yet its profits soar Microsoft spend 8.0% of sales Apple spend 0.7% of sales 8.0% 0.7% x 11 times Why?
- 21. The Reason One isselling a product The other is marketing a brand Product Brand Product Price Advertising Product + Associated Services Promotion Design Warranty Quality Customer service Innovation Distribution Uniqueness
- 22. The World’s TopBrands 2014
- 23. The World’s MostInnovative Companies
- 24. Cultures which PromoteInnovation
- 25. Source: Forbes 0 20 40 60 80 Revenue Growth EBITDAGrth Mkt Cap Growth Top 10 Innovators Top 10 Spenders Top 10 innovators outperform their peers in 3 key financial metrics (5 years CAGR) Real Innovation Pays
- 26. Lever Effects Difficulty Price Lowerprofits, Disloyal buyers, No skill Retaliation Easy Promotion Expand overall market Difficult Distribution Maintain margins Difficult Innovation Higher and more sustained profits Difficult Service Price and cost advantage Difficult Quality Price and cost advantage Difficult The Marketing Levers Reminder
- 27. •Buyer power reduced– alternatives denied Differentiation •Price premiums + loyal buyers give margins to deal with supplier power •Brand loyalty protects
- 28.
- 29. You really mustpick one •Structures etc. •Resources •Styles, Each generic requires different Which Generic?
- 30. ROCE RMS HighLow High Low HVLCDifferentiated Stuckin the middle The U-Shaped Curve
- 31. •More important thanever •Generic strategies vital – the basis of much successful e-business The big changes: •Switching costs reduced •Fantastic opportunities to resolutely pursue a generic Competitive Forces in the Internet Ear
- 32. Force Threats Ourstrategy Power of Buyers Power of Suppliers Threat of New Entrants Threat of substitutes Degree of rivalry Our generic strategy: Practical Application
- 33. Creating and PresentingStrategic Plans Competitive Analysis and Strategies (B.2.4.) Firm Competitive Position
- 34. Characteristic Comment Sales (£)The larger the better Market share (%) The larger the better RMS The larger the better RPQ The larger the better Price rel to comp (%) The larger the better New prod/sales (%) *The larger the better R&D/Sales (%) The larger the better Degree of Competition The more benign the better Determinants of Firm Competitive Position * Assuming firm is already No. 1 in RPQ Which is best?
- 35. Firm Competitive Position:Discussion •Political •Economic •Social •Technological •Environmental •Other influences •Legal •Barons • Insurgent s •Serfs
- 36. Product Sales ($) MktSh. (%) RMS RPQ RP NP/Sales R&D/Sal es Competition Comments Current Competitive Position Template
- 37. Creating and PresentingStrategic Plans Competitive Analysis and Strategies (B.2.4.) Actual Competitors
- 38.
- 39. •Predictions Actual Competitors: Widediscussion •History: •Leader/Follower •Growth •Focus on Leaders - past behaviours •Focus on Insurgents and Barons •HVLC versus Diff. versus Focus •Organic versus Acquisition Existing •New diverse entrants or threatsNew
- 40. Competitor name Main person Growthrate Leader/Follo wer Strategy: HVLC/Diff/F ocus Strategy: Org/Acq Our strategy 1 2 3 4 5 6 Comments Actual Competitor Analysis
- 41.