The document presents Michael Porter's Five Forces framework that shapes industry competition. The five competitive forces are: the threat of new entrants, the power of suppliers, the power of buyers, the threat of substitute products or services, and the rivalry among existing competitors. The strongest of these forces determine an industry's profitability and become the most important aspects to understand industry structure and profitability potential. Co-opetition and industry clusters are also discussed.
This document summarizes Chip McClure's presentation at the Bear Stearns Global Transportation Conference on May 8, 2007. It provides highlights that Raytheon's 2007 EPS guidance is reduced but margins are improving. It is optimistic about 2008-2009 commercial vehicle volumes. The Performance Plus plan aims to add $150 million to EBITDA by 2009 through restructuring and cost reductions, with potential for more from growth initiatives. The presentation outlines restructuring expenses, benefits, and personnel reductions through 2009. It also describes plans to restore margins through collaborative efforts with customers and reductions in overhead, materials, and manufacturing costs.
The document discusses factors that influence external competitiveness in determining pay levels, including labor market factors, product market factors, and organizational factors. It outlines different pay policy alternatives for setting pay levels and pay mixes relative to competitors, and the potential consequences of those policies for controlling costs, attracting employees, and other objectives. The purpose is to help managers make conscious decisions about pay levels and mixes based on their competitive environment and objectives.
Erste Group Procurement (EGP) is the central procurement function of Erste Group, operating across multiple countries in Central and Eastern Europe. EGP has approximately 180 employees and is responsible for group-wide procurement processes and the management of all external spending by Erste Group entities. EGP owns warehouses and works closely with local procurement departments according to aligned principles to deliver the highest value and quality for Erste Group through strategic sourcing, contract management, and supplier relationship management.
This document discusses managing economic volatility and Kingfisher Airlines' financial troubles. It provides a cause and effect diagram showing factors that contributed to Kingfisher's debt of Rs. 7,000 crore and ongoing losses. These include high fuel prices, interest rates, cancellation fees, and declining passenger numbers. The document proposes actions like debt restructuring, allowing foreign direct investment, and negotiating with banks for lower interest investment to boost confidence and reduce Kingfisher's financial burden.
The document is Manpower Inc.'s 2001 annual report. It summarizes that in 2001:
- Systemwide sales decreased 5.3% to $11.8 billion due to a weaker global economy and strengthening US dollar.
- Revenues decreased 3.3% and operating profit declined 23.6% as revenue growth slowed but investments continued.
- Earnings per share decreased 27% to $1.62 primarily due to currency exchange impacts. The company remained focused on providing skilled employees and workforce solutions to customers during economic uncertainty.
This document summarizes the services of The Cockrell Group, a strategic investor relations firm. They provide analysis of a company's current shareholder base and valuation, develop an IR audit and message alignment plan, and execute a market-the-market strategy through non-deal roadshows and investor conferences to enhance company visibility and credibility with buy-side analysts and institutional investors. Their goal is to attract new long-term shareholders to reduce volatility and trading multiples suggest companies should see increased valuation from working with The Cockrell Group.
TXU's fundamental business strategy is to transform into an industrial energy company focused on delivering top quartile financial performance across its three structurally advantaged businesses: generation, transmission & distribution, and retail.
TXU has significant exposure to natural gas prices and heat rates due to its large baseload coal generation fleet, which produces power at a lower marginal cost than gas plants. However, the integration of its generation and retail businesses helps reduce volatility as the businesses' margins move in opposite directions with changing gas prices.
In the mid to long term, TXU aims to continue improving operational excellence across its businesses to enhance financial performance and total returns for shareholders.
The document discusses using high tunnels for crop production and marketing to maximize profits. It addresses the importance of pricing crops to capture premiums early in the season. The author emphasizes understanding customer perceptions and the total experience to influence the gap between perceived value and price paid. Charts are presented showing the effects of price changes over the season on revenue. The overall focus is on financial analysis and pricing strategies to improve profitability when using high tunnels.
This document summarizes Chip McClure's presentation at the Bear Stearns Global Transportation Conference on May 8, 2007. It provides highlights that Raytheon's 2007 EPS guidance is reduced but margins are improving. It is optimistic about 2008-2009 commercial vehicle volumes. The Performance Plus plan aims to add $150 million to EBITDA by 2009 through restructuring and cost reductions, with potential for more from growth initiatives. The presentation outlines restructuring expenses, benefits, and personnel reductions through 2009. It also describes plans to restore margins through collaborative efforts with customers and reductions in overhead, materials, and manufacturing costs.
The document discusses factors that influence external competitiveness in determining pay levels, including labor market factors, product market factors, and organizational factors. It outlines different pay policy alternatives for setting pay levels and pay mixes relative to competitors, and the potential consequences of those policies for controlling costs, attracting employees, and other objectives. The purpose is to help managers make conscious decisions about pay levels and mixes based on their competitive environment and objectives.
Erste Group Procurement (EGP) is the central procurement function of Erste Group, operating across multiple countries in Central and Eastern Europe. EGP has approximately 180 employees and is responsible for group-wide procurement processes and the management of all external spending by Erste Group entities. EGP owns warehouses and works closely with local procurement departments according to aligned principles to deliver the highest value and quality for Erste Group through strategic sourcing, contract management, and supplier relationship management.
This document discusses managing economic volatility and Kingfisher Airlines' financial troubles. It provides a cause and effect diagram showing factors that contributed to Kingfisher's debt of Rs. 7,000 crore and ongoing losses. These include high fuel prices, interest rates, cancellation fees, and declining passenger numbers. The document proposes actions like debt restructuring, allowing foreign direct investment, and negotiating with banks for lower interest investment to boost confidence and reduce Kingfisher's financial burden.
The document is Manpower Inc.'s 2001 annual report. It summarizes that in 2001:
- Systemwide sales decreased 5.3% to $11.8 billion due to a weaker global economy and strengthening US dollar.
- Revenues decreased 3.3% and operating profit declined 23.6% as revenue growth slowed but investments continued.
- Earnings per share decreased 27% to $1.62 primarily due to currency exchange impacts. The company remained focused on providing skilled employees and workforce solutions to customers during economic uncertainty.
This document summarizes the services of The Cockrell Group, a strategic investor relations firm. They provide analysis of a company's current shareholder base and valuation, develop an IR audit and message alignment plan, and execute a market-the-market strategy through non-deal roadshows and investor conferences to enhance company visibility and credibility with buy-side analysts and institutional investors. Their goal is to attract new long-term shareholders to reduce volatility and trading multiples suggest companies should see increased valuation from working with The Cockrell Group.
TXU's fundamental business strategy is to transform into an industrial energy company focused on delivering top quartile financial performance across its three structurally advantaged businesses: generation, transmission & distribution, and retail.
TXU has significant exposure to natural gas prices and heat rates due to its large baseload coal generation fleet, which produces power at a lower marginal cost than gas plants. However, the integration of its generation and retail businesses helps reduce volatility as the businesses' margins move in opposite directions with changing gas prices.
In the mid to long term, TXU aims to continue improving operational excellence across its businesses to enhance financial performance and total returns for shareholders.
The document discusses using high tunnels for crop production and marketing to maximize profits. It addresses the importance of pricing crops to capture premiums early in the season. The author emphasizes understanding customer perceptions and the total experience to influence the gap between perceived value and price paid. Charts are presented showing the effects of price changes over the season on revenue. The overall focus is on financial analysis and pricing strategies to improve profitability when using high tunnels.
The document discusses using high tunnels for crop production and the importance of profitability. It addresses pricing crops from high tunnels to capture price premiums for early season produce. The speaker emphasizes understanding customer perceptions of value and managing their experience to influence the gap between price paid and value received. Charts are presented on pricing decisions from the company and customer perspective, and how revenue can vary between determinate and indeterminate tomato crops depending on price changes through the season.
Introduction To The Financial Fence (Business)Andee Sellman
Many business owners wish they could see their whole business on one page and a set of numbers which made intuitive sense. The Financial Fence® does this and brings a financial overview of the whole business
This document discusses research, realities, and relationships for membership growth at the International Federation of Training and Development Organizations (IFTDO). It summarizes research conducted with current and past members to understand satisfaction levels and improvement opportunities. It also discusses collaborating with other societies to increase value for members through reciprocal memberships and shared resources. The document proposes actions like updating membership categories and benefits, as well as using global conferences to promote membership and transition concepts discussed into tangible actions.
IP Exploitation Strategies and Best Practices for the Current EconomyRick Nathan
The document discusses IP exploitation strategies and best practices for licensing intellectual property in the current economic climate. It addresses questions around aligning IP with business lines, establishing successful licensing campaigns, pursuing exploitation structures, impacts of political/regulatory changes, and valuation techniques. A case study is presented on a company holding patents related to lipid absorption technologies, and recommendations are made to pursue a joint venture for a medical nutrition application focused on cystic fibrosis.
The document discusses designing pay levels, structures, and surveys. It covers determining competitive pay levels and structures through defining relevant labor markets, designing and conducting salary surveys, analyzing survey data, and setting pay policies. The goal is to collect compensation data from competitors to determine appropriate pay levels and structures for matching jobs internally and staying competitive externally.
Top 10 best practices in procurement outsourcingEverest Group
After witnessing a vacillating adoption for over a decade, the Procurement Outsourcing (PO) market is finally coming of age with steadily increasing adoption in the last few years.
This research describes the top 10 best practices in PO that will help current and prospective PO buyers realize value from their PO engagements.
This document discusses production decisions for a Chinese company. It covers pricing strategies, equipment investment, production volume, research and development, and marketing. It provides examples on production strategy and product variety, as well as an example of Mercedes-Benz's AMG series. Key factors to consider include price, demand, supply, production efficiency, market share, and growth potential. The document also outlines MESE's six steps for pricing decisions.
The document provides an outlook on protecting capital and capturing alpha in today's investment environment. It discusses risks facing investors, including the Euro crisis, US fiscal cliff, and China slowdown. Traditional portfolios of stocks and bonds may struggle to meet objectives given low expected future returns. Increased volatility may be the new normal. The document suggests opportunities exist in buying credit default swaps on guarantors, shorting the Euro and European banks.
Alan Braithwaite, Professor Cranfield University School of Management - 5 Sup...Global Business Events
The document outlines 5 supply chain "maxims" for high performance in the coming decade: 1) build in customer service excellence, 2) reduce unprofitable complexity in customers and products, 3) design, plan, and execute for agility, 4) synchronize and integrate to eliminate waste, and 5) collaborate to leverage performance. It argues that structural flexibility, configuring supply chains through rules and engagement, end-to-end integration, and designing for resilience will be key capabilities. Adopting these maxims and capabilities can help companies manage complexity for profitability and align with customers and suppliers for co-created value.
grow profitably and sustainably with lessdavidexcell
How does your organisation manage the tension between growing the top line and containing costs? Many organisations struggle with the different approaches required for each. excell growth partners conducted research into best practices over the last few months, and the key insights and best practices are summarised in this brief presentation. Visit www.excellgrowth.com to explore further.
Moving Beyond Labor Arbitrage in BankingEverest Group
Robert Guatelli, VP and BFSI Practice Lead at Intelenet, and Peter Bendor-Samuel, CEO at Everest, will discuss key trends in the BPO market and highlight how companies can improve value capture through an end-to-end services approach.
public serviceenterprise group investor factsheet 08finance20
Public Service Enterprise Group (PSEG) is one of the largest electric companies in the US operating through three principal subsidiaries: PSEG Power is a major electric generation supplier in the Northeast and Mid-Atlantic markets; PSE&G is a regulated utility engaged in electricity and gas transmission and distribution in New Jersey; and PSEG Energy Holdings focuses on electric industry operating segments and energy industry investments. PSEG is well positioned to benefit from investments in critical infrastructure as policymakers focus on reducing environmental impacts. PSEG has paid dividends every year since 1907, maintaining one of the longest records of dividend payments among public companies.
IT Application Outsourcing (AO) in Capital Markets - Service Provider Profile...Everest Group
The BFSI industry continues to be the largest adopter of the IT Application Outsourcing (AO) services. However, the industry dynamics have changed significantly over the last 12 to 24 months. BFSI buyers are facing increasing pressure to drive top-line growth, manage complexity arising out of wide-scale regulatory reforms, and improve profitability by driving greater cost efficiencies.
Bryan Peña
VP, Contingent Workforce Strategies and Research Staffing Industry Analysts
During this session we will be reviewing what strategies and techniques you can use to maximize program success and ensure long term hiring manager satisfaction. In addition to savings strategies and performance ratios we will provide some up to the moment insight from our latest research initiatives.
This document provides a framework for conducting a strategic case analysis. It outlines performing an external analysis of the PEST factors, five forces, and industry attractiveness. An internal analysis includes examining the value chain and core competencies. Key steps are identifying the strategic issues facing the business, generating alternatives for the corporate and business level strategies, and selecting strategies that address the issues based on the external and internal analyses. The framework provides a comprehensive approach for strategic decision making.
This document discusses potential future revenue sources for telecommunications companies (telcos) in 2012. It identifies several key decision elements that will define the market, including customer preferences, macroeconomic conditions, regulation, and technology. These elements are interrelated and will influence revenue trends, with a focus shifting from network infrastructure to services at the network edge. The document also analyzes Cisco scenarios for 2012, with telcos focusing on reducing costs through measures like infrastructure sharing while pursuing new revenue from services enabled by technology improvements.
TXU's fundamental business strategy is to transform into an industrial energy company focused on delivering top quartile financial performance across its three structurally advantaged businesses: generation, transmission & distribution, and retail. TXU has significant exposure to natural gas prices and heat rates due to its large baseload coal generation fleet, but this exposure is partially offset by its integrated retail business. TXU sees opportunities for mid and long term growth by improving operational excellence, implementing performance management, and optimizing its risk/return profile.
IPsoft was founded in 1998 to optimize IT through automated expert systems that emulate engineers' skills. Their technology proactively resolves over half of issues without human intervention. Embracing automation provides a marketplace advantage according to Deloitte. Clients realize 20-45% cost reductions through IPsoft's outsourced management. IPsoft compares favorably to other MSPs by resolving issues autonomously at scale through their consolidated IT management platform IPcenter.
This document discusses the large potential for energy efficiency globally and identifies barriers that have prevented greater investment and implementation. It argues that massively scaling up energy efficiency requires expanding demand, supply, and finance for efficiency projects and services. New business models and technologies are needed to attract institutional investors and overcome issues like small project sizes and split incentives between parties. With the right approaches, energy efficiency could produce major emissions reductions and economic returns.
1. The document discusses frameworks for analyzing industries and competitors, including PESTEL, Porter's Five Forces, and game theory.
2. It covers topics like industry profitability, concentration, entry barriers, supplier/buyer power, rivalry, and substitution.
3. The purpose is to understand what determines industry profitability, how industries evolve, and how firms can formulate strategy based on this analysis.
The document summarizes a new social trading community called TroopTroupe targeted towards active military members. It introduces the founding team and their backgrounds. It then provides statistics on troop migration patterns and costs of moving. The document outlines TroopTroupe's plan to target specific military bases for user testing and partnering with local groups. It presents the current status of developing the site's functionality and user testing plans. Finally, it describes how TroopTroupe will generate revenue through a virtual currency called TradeCredit used for transactions on the site.
2009 Construction Industry Strategy Survey By FmiMike Purdy
Results of a 2009 survey of 230 general contractors, construction managers, large specialty trade and heavy civil contractors. Conducted by FMI Corportation - Management Consulting.
The document discusses using high tunnels for crop production and the importance of profitability. It addresses pricing crops from high tunnels to capture price premiums for early season produce. The speaker emphasizes understanding customer perceptions of value and managing their experience to influence the gap between price paid and value received. Charts are presented on pricing decisions from the company and customer perspective, and how revenue can vary between determinate and indeterminate tomato crops depending on price changes through the season.
Introduction To The Financial Fence (Business)Andee Sellman
Many business owners wish they could see their whole business on one page and a set of numbers which made intuitive sense. The Financial Fence® does this and brings a financial overview of the whole business
This document discusses research, realities, and relationships for membership growth at the International Federation of Training and Development Organizations (IFTDO). It summarizes research conducted with current and past members to understand satisfaction levels and improvement opportunities. It also discusses collaborating with other societies to increase value for members through reciprocal memberships and shared resources. The document proposes actions like updating membership categories and benefits, as well as using global conferences to promote membership and transition concepts discussed into tangible actions.
IP Exploitation Strategies and Best Practices for the Current EconomyRick Nathan
The document discusses IP exploitation strategies and best practices for licensing intellectual property in the current economic climate. It addresses questions around aligning IP with business lines, establishing successful licensing campaigns, pursuing exploitation structures, impacts of political/regulatory changes, and valuation techniques. A case study is presented on a company holding patents related to lipid absorption technologies, and recommendations are made to pursue a joint venture for a medical nutrition application focused on cystic fibrosis.
The document discusses designing pay levels, structures, and surveys. It covers determining competitive pay levels and structures through defining relevant labor markets, designing and conducting salary surveys, analyzing survey data, and setting pay policies. The goal is to collect compensation data from competitors to determine appropriate pay levels and structures for matching jobs internally and staying competitive externally.
Top 10 best practices in procurement outsourcingEverest Group
After witnessing a vacillating adoption for over a decade, the Procurement Outsourcing (PO) market is finally coming of age with steadily increasing adoption in the last few years.
This research describes the top 10 best practices in PO that will help current and prospective PO buyers realize value from their PO engagements.
This document discusses production decisions for a Chinese company. It covers pricing strategies, equipment investment, production volume, research and development, and marketing. It provides examples on production strategy and product variety, as well as an example of Mercedes-Benz's AMG series. Key factors to consider include price, demand, supply, production efficiency, market share, and growth potential. The document also outlines MESE's six steps for pricing decisions.
The document provides an outlook on protecting capital and capturing alpha in today's investment environment. It discusses risks facing investors, including the Euro crisis, US fiscal cliff, and China slowdown. Traditional portfolios of stocks and bonds may struggle to meet objectives given low expected future returns. Increased volatility may be the new normal. The document suggests opportunities exist in buying credit default swaps on guarantors, shorting the Euro and European banks.
Alan Braithwaite, Professor Cranfield University School of Management - 5 Sup...Global Business Events
The document outlines 5 supply chain "maxims" for high performance in the coming decade: 1) build in customer service excellence, 2) reduce unprofitable complexity in customers and products, 3) design, plan, and execute for agility, 4) synchronize and integrate to eliminate waste, and 5) collaborate to leverage performance. It argues that structural flexibility, configuring supply chains through rules and engagement, end-to-end integration, and designing for resilience will be key capabilities. Adopting these maxims and capabilities can help companies manage complexity for profitability and align with customers and suppliers for co-created value.
grow profitably and sustainably with lessdavidexcell
How does your organisation manage the tension between growing the top line and containing costs? Many organisations struggle with the different approaches required for each. excell growth partners conducted research into best practices over the last few months, and the key insights and best practices are summarised in this brief presentation. Visit www.excellgrowth.com to explore further.
Moving Beyond Labor Arbitrage in BankingEverest Group
Robert Guatelli, VP and BFSI Practice Lead at Intelenet, and Peter Bendor-Samuel, CEO at Everest, will discuss key trends in the BPO market and highlight how companies can improve value capture through an end-to-end services approach.
public serviceenterprise group investor factsheet 08finance20
Public Service Enterprise Group (PSEG) is one of the largest electric companies in the US operating through three principal subsidiaries: PSEG Power is a major electric generation supplier in the Northeast and Mid-Atlantic markets; PSE&G is a regulated utility engaged in electricity and gas transmission and distribution in New Jersey; and PSEG Energy Holdings focuses on electric industry operating segments and energy industry investments. PSEG is well positioned to benefit from investments in critical infrastructure as policymakers focus on reducing environmental impacts. PSEG has paid dividends every year since 1907, maintaining one of the longest records of dividend payments among public companies.
IT Application Outsourcing (AO) in Capital Markets - Service Provider Profile...Everest Group
The BFSI industry continues to be the largest adopter of the IT Application Outsourcing (AO) services. However, the industry dynamics have changed significantly over the last 12 to 24 months. BFSI buyers are facing increasing pressure to drive top-line growth, manage complexity arising out of wide-scale regulatory reforms, and improve profitability by driving greater cost efficiencies.
Bryan Peña
VP, Contingent Workforce Strategies and Research Staffing Industry Analysts
During this session we will be reviewing what strategies and techniques you can use to maximize program success and ensure long term hiring manager satisfaction. In addition to savings strategies and performance ratios we will provide some up to the moment insight from our latest research initiatives.
This document provides a framework for conducting a strategic case analysis. It outlines performing an external analysis of the PEST factors, five forces, and industry attractiveness. An internal analysis includes examining the value chain and core competencies. Key steps are identifying the strategic issues facing the business, generating alternatives for the corporate and business level strategies, and selecting strategies that address the issues based on the external and internal analyses. The framework provides a comprehensive approach for strategic decision making.
This document discusses potential future revenue sources for telecommunications companies (telcos) in 2012. It identifies several key decision elements that will define the market, including customer preferences, macroeconomic conditions, regulation, and technology. These elements are interrelated and will influence revenue trends, with a focus shifting from network infrastructure to services at the network edge. The document also analyzes Cisco scenarios for 2012, with telcos focusing on reducing costs through measures like infrastructure sharing while pursuing new revenue from services enabled by technology improvements.
TXU's fundamental business strategy is to transform into an industrial energy company focused on delivering top quartile financial performance across its three structurally advantaged businesses: generation, transmission & distribution, and retail. TXU has significant exposure to natural gas prices and heat rates due to its large baseload coal generation fleet, but this exposure is partially offset by its integrated retail business. TXU sees opportunities for mid and long term growth by improving operational excellence, implementing performance management, and optimizing its risk/return profile.
IPsoft was founded in 1998 to optimize IT through automated expert systems that emulate engineers' skills. Their technology proactively resolves over half of issues without human intervention. Embracing automation provides a marketplace advantage according to Deloitte. Clients realize 20-45% cost reductions through IPsoft's outsourced management. IPsoft compares favorably to other MSPs by resolving issues autonomously at scale through their consolidated IT management platform IPcenter.
This document discusses the large potential for energy efficiency globally and identifies barriers that have prevented greater investment and implementation. It argues that massively scaling up energy efficiency requires expanding demand, supply, and finance for efficiency projects and services. New business models and technologies are needed to attract institutional investors and overcome issues like small project sizes and split incentives between parties. With the right approaches, energy efficiency could produce major emissions reductions and economic returns.
1. The document discusses frameworks for analyzing industries and competitors, including PESTEL, Porter's Five Forces, and game theory.
2. It covers topics like industry profitability, concentration, entry barriers, supplier/buyer power, rivalry, and substitution.
3. The purpose is to understand what determines industry profitability, how industries evolve, and how firms can formulate strategy based on this analysis.
The document summarizes a new social trading community called TroopTroupe targeted towards active military members. It introduces the founding team and their backgrounds. It then provides statistics on troop migration patterns and costs of moving. The document outlines TroopTroupe's plan to target specific military bases for user testing and partnering with local groups. It presents the current status of developing the site's functionality and user testing plans. Finally, it describes how TroopTroupe will generate revenue through a virtual currency called TradeCredit used for transactions on the site.
2009 Construction Industry Strategy Survey By FmiMike Purdy
Results of a 2009 survey of 230 general contractors, construction managers, large specialty trade and heavy civil contractors. Conducted by FMI Corportation - Management Consulting.
The document discusses characteristics that enable manufacturing capabilities for change-proficient enterprises. It introduces the STARGAME concept, which stands for eight characteristics: Scalability, Transparency, Adaptability, Robustness, Genericy, Agility, Modularity, and Economic Efficiency. Each characteristic is defined and examples are provided. The major finding is that STARGAME is a useful concept for innovators, technicians, and decision makers to develop technologies and manage technology development for creating change-proficient enterprises.
This document outlines steps for refreshing an enterprise performance management (EPM) roadmap. It discusses defining EPM and prioritizing initiatives based on business value. The roadmap focuses on connecting people, processes, and technology around key performance areas like customers, costs, and employees. High-value initiatives include upgrading systems, integrating business intelligence, and improving workflows. The goal is to create an interactive EPM system that connects strategic planning to operational reporting and analytics to drive better decision-making.
EnerNOC is a leading demand response company that works with large commercial and industrial customers to reduce energy consumption during peak periods in exchange for payments. While the company's revenues have doubled each year since 2006, it is still unprofitable due to high costs associated with rapid growth. EnerNOC faces little competition currently but demand response is an emerging industry that could experience more entrants. The company has potential for continued growth and profitability in the future as energy demand increases and grid infrastructure fails to keep pace. Consider investing in EnerNOC after its third quarter results to see if it achieves profitability as projected.
Supply Chain, Interrupted: Safeguard Your Bottom Line from DisruptionSPS Commerce
The supply chain has always had a direct impact on business performance, and its influence on the bottom line is undeniable. Yet most companies fail to protect this incredibly important asset. Uncover six ways to bulletproof your supply chain from costly (and avoidable) disruptions.
Skolfield d takingtostreet-aug2003-ir-updateNuuko, Inc.
This document provides a 6-step strategy for investor relations professionals to effectively communicate their company's story to Wall Street analysts and investors. The steps include: 1) Understanding analysts' focus on financial metrics and multiples; 2) Preparing a 2-page research report with key financial data; 3) Calculating common stock valuation multiples; 4) Explaining the relevance of multiples for the company; 5) Discussing cash flow metrics important to investors; 6) Distributing the report directly to targeted analysts and portfolio managers. The overall aim is to tell the investment story in the language of numbers that Wall Street understands.
Validation of Business Proposition: confirmation we are building the right business. The document discusses the 7 stages of establishing, growing, and maintaining a competitive advantage:
1. Establishing potential advantage by validating the business proposition and market opportunity.
2. Creating advantage by verifying the business model and securing early customers.
3. Proving advantage with paying customers, references, and market entry.
4. Protecting the advantage by securing growth, market share, and customer loyalty.
5. Leveraging assets and relationships to scale the business and extend its reach.
6. Continuous innovation to create and acquire new advantages through opportunity management and technology changes.
The 7 stages provide a framework for developing,
Similar to Five Forces, Clusters And Co Opetition As Mindmaps (14)
Five Forces, Clusters And Co Opetition As Mindmaps
1. Competition and Collaboration:
A Mind Map Presentation
Five Competitive
Clusters Co-opetition
Forces
perative
ompetit
ion” ive and Coo &
Strategy
”,
omics o
fC ompetit ebuff
Shape w Econ c. 1998. o-pet ition: C rategies”, Nal Leadership
es That
rc nd the N
e
-De “Co s St
Busines urger, Strategy
&
titive Fo lusters a ter, HBR Nov.
ve Compe y 2008). “C
l Por Brande
nb
“The Fi R (Januar Michae
HB
Porter,
4. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
5. High if:
urope. But to under-
- Supply
ition and profitabil- sid
The Five Forces That Shape Deman e e Competition
- Industryconomies
d o
ree cases, Five must
one Competitive - Custo -side benefits f scale
m o
s underlying struc- - Capita er switching c f scale
Forces l os
- Incum requierements ts
e forces. (See the ex- ba
Threat - unequ ncy advantage
al s
That Shape Industry of New- restric access to dist independent o
tive gov ri f
Entrants ernmen bution channe size
t policy ls
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
6. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
7. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargainingou
Gr p is
es, many companies po
Power of Existing - p chas werful if:
Power of ur
ry structure drives Suppliers Buyers st es large v
Competitors - andardise olum e
ability, not whether - few swit d produc s
ching cos ts
product or service, is - threat o ts
f backwar
ds integra
gh tech or low tech, tion
also impo
ed. While a myriad rtant: pric
e senstivi
ty
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
8. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
9. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services ff
petitive forces, sets -o
c e trade
n the medium and eat if: erfo rman
h thr e price-p s
Hig ctiv Co-opetition
ibit “Differences in ost
- attra itching c
sw
- low
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
10. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
11. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
Gro
ability, not whetherp is pu
- mo
re co owerful
product or service, is nce
sells ntra if:
- n tech,
gh tech or low ot de to ted t
pend han
- hig indu
ed. While a- myriadit ent on
h sw stry
diffe c it
rent hing cos one indu
ndustry profitabilityiate
- no
subs d pr ts stry Threat of
uding the tweatherutes oducts
- hr
eat o it
t Substitute
f fo
– industry structure,rward Products or
integ Services
petitive forces, sets ratio
n
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
12. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
13. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex- sity if:
High inten tition
That Shape Industry to perfect compe Threat
ustry close
- ind of New
th
- slow grow low entry barriers Entrants
and ther
ense, as they are in - high exit rity w ith one ano
ck of familia e wars
nes, textiles, and ho- - la
entiat ion and pric
y earns attractive re- - low differ
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
14. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex- sity if:
High inten tition
That Shape Industry to perfect compe Threat
ustry close
- ind of New
th
- slow grow low entry barriers Entrants
and ther
ense, as they are in - high exit rity w ith one ano
ck of familia e wars
nes, textiles, and ho- - la
entiat ion and pric
y earns attractive re- - low differ
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
15. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
16. urope. But to under-
ition and profitabil-
The Five Forces That Shape Industry Competition
ree cases, Five must
one Competitive
s underlying struc-
Forces
e forces. (See the ex-
Threat
That Shape Industry of New
Entrants
ense, as they are in
nes, textiles, and ho-
y earns attractive re-
he forces are benign,
Rivalry
es such as software,
Bargaining Among Bargaining
es, many companies Power of Existing Power of
ry structure drives Suppliers Competitors Buyers
ability, not whether
product or service, is
gh tech or low tech,
ed. While a myriad
ndustry profitability Threat of
uding the weather Substitute
– industry structure, Products or
Services
petitive forces, sets
n the medium and
ibit “Differences in Co-opetition
ompetitive forces, and their under- The strongest competitive force or forces determine the
main
roots of an industry’s current profit- Clusters
profitability of an industry and become the most important
17. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.
In such a situation, coping with the substitute product be-
Forces That Shape Competition comes the number one strategic priority.
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between technical characteristics that determine the strength of
dominant producers Airbus and Boeing and the bargain- each competitive force. We will examine these drivers in the
ing power of the airlines that place huge orders for aircraft pages that follow, taking the perspective of an incumbent,
are strong, while the threat of entry, the threat of substi- or a company already present in the industry. The analysis
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms a potential entrant.
of entertainment and the power of the movie producers THREAT OF ENTRY. New entrants to an industry bring
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
fessor at Harvard University, based at Harvard Business School in ing capabilities and cash flows to shake up competition, as
Boston. He is a six-time McKinsey Award winner, including for his Pepsi did when it entered the bottled water industry, Micro-
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
Mark R. Kramer (December 2006). did when it entered the music distribution business.
Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 80 12/5/07 5:34:13 PM
main Clusters
18. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.
industry growth rate
In such a situation, coping with the substitute product be-
Forces That Shape Competition comes the number one strategic priority.
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between
dominant producers Airbus and Boeing and the bargain-
technical characteristics that determine the strength of
each competitive force. We will examine these drivers in the but: also technology and innovation
ing power of the airlines that place huge orders for aircraft
are strong, while the threat of entry, the threat of substi-
pages that follow, taking the perspective of an incumbent,
or a company already present in the industry. The analysis affected by other factors government
(not forces)
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers
a potential entrant.
THREAT OF ENTRY. New entrants to an industry bring
complementary products
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
fessor at Harvard University, based at Harvard Business School in ing capabilities and cash flows to shake up competition, as
Boston. He is a six-time McKinsey Award winner, including for his Pepsi did when it entered the bottled water industry, Micro-
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
Mark R. Kramer (December 2006). did when it entered the music distribution business.
Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 80 12/5/07 5:34:13 PM
main Clusters
19. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.
industry growth rate
In such a situation, coping with the substitute product be-
Forces That Shape Competition comes the number one strategic priority.
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between
dominant producers Airbus and Boeing and the bargain-
technical characteristics that determine the strength of
each competitive force. We will examine these drivers in the but: also technology and innovation
ing power of the airlines that place huge orders for aircraft
are strong, while the threat of entry, the threat of substi-
pages that follow, taking the perspective of an incumbent,
or a company already present in the industry. The analysis affected by other factors government
(not forces)
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers
a potential entrant.
THREAT OF ENTRY. New entrants to an industry bring
complementary products
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
fessor at Harvard University, based at Harvard Business School in ing capabilities and cash flows to shake up competition, as
Boston. He is a six-time McKinsey Award winner, including for his Pepsi did when it entered the bottled water industry, Micro-
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
Mark R. Kramer (December 2006). did when it entered the music distribution business.
Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 80 12/5/07 5:34:13 PM
main Clusters
20. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
are crucial to strategy.
also important:
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
graphic film, learned with the advent of digital photography.
dynamism and change of
Forces That Shape Competition
In such a situation, coping with the substitute product be-
comes the number one strategic priority. industry growth rate
forces
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between
dominant producers Airbus and Boeing and the bargain-
technical characteristics that determine the strength of
each competitive force. We will examine these drivers in the but: also technology and innovation
ing power of the airlines that place huge orders for aircraft
are strong, while the threat of entry, the threat of substi-
pages that follow, taking the perspective of an incumbent,
or a company already present in the industry. The analysis affected by other factors government
(not forces)
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers
a potential entrant.
THREAT OF ENTRY. New entrants to an industry bring
complementary products
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
fessor at Harvard University, based at Harvard Business School in ing capabilities and cash flows to shake up competition, as
Boston. He is a six-time McKinsey Award winner, including for his Pepsi did when it entered the bottled water industry, Micro-
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
Mark R. Kramer (December 2006). did when it entered the music distribution business.
Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 80 12/5/07 5:34:13 PM
main Clusters
21. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
are crucial to strategy.
also important:
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
graphic film, learned with the advent of digital photography.
dynamism and change of
Forces That Shape Competition
In such a situation, coping with the substitute product be-
comes the number one strategic priority. industry growth rate
forces
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between
dominant producers Airbus and Boeing and the bargain-
technical characteristics that determine the strength of
each competitive force. We will examine these drivers in the but: also technology and innovation
ing power of the airlines that place huge orders for aircraft
are strong, while the threat of entry, the threat of substi-
pages that follow, taking the perspective of an incumbent,
or a company already present in the industry. The analysis affected by other factors government
(not forces)
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers
a potential entrant.
THREAT OF ENTRY. New entrants to an industry bring
complementary products
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
fessor at Harvard University, based at Harvard Business School in ing capabilities and cash flows to shake up competition, as
Boston. He is a six-time McKinsey Award winner, including for his Pepsi did when it entered the bottled water industry, Micro-
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
Mark R. Kramer (December 2006). did when it entered the music distribution business.
Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 80 12/5/07 5:34:13 PM
main Clusters
22. LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
Five Competitive
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
hibit “The Five Forces That Shape Industry
Threat
Forces
of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, and toiletries, many companies
Bargaining
Power of
Rivalry
Among
Existing
Bargaining
Power of
determines industry‘s
long-run profit potential
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
long run. (See the exhibit “Differences in
Industry Profitability.”)
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
are crucial to strategy.
also important:
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
graphic film, learned with the advent of digital photography.
dynamism and change of
Forces That Shape Competition
In such a situation, coping with the substitute product be-
comes the number one strategic priority. industry growth rate
forces
The configuration of the five forces differs by industry. In Industry structure grows out of a set of economic and
the market for commercial aircraft, fierce rivalry between
dominant producers Airbus and Boeing and the bargain-
technical characteristics that determine the strength of
each competitive force. We will examine these drivers in the but: also technology and innovation
ing power of the airlines that place huge orders for aircraft
are strong, while the threat of entry, the threat of substi-
pages that follow, taking the perspective of an incumbent,
or a company already present in the industry. The analysis affected by other factors government
(not forces)
tutes, and the power of suppliers are more benign. In the can be readily extended to understand the challenges facing
movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers
a potential entrant.
THREAT OF ENTRY. New entrants to an industry bring
complementary products
and distributors who supply movies, the critical input, are new capacity and a desire to gain market share that puts
important. pressure on prices, costs, and the rate of investment nec-
essary to compete. Particularly when new entrants are
Michael E. Porter is the Bishop William Lawrence University Pro- diversifying from other markets, they can leverage exist-
Implications positio
fessor at Harvard University, based at Harvard Business School in
Boston. He is a six-time McKinsey Award winner, including for his
ing capabilities and cash flows to shake up competition, as
Pepsi did when it entered the bottled water industry, Micro-
ning o
most recent HBR article, “Strategy and Society,” coauthored with soft did when it began to offer internet browsers, and Apple
for strategy explo f
iting in company
Mark R. Kramer (December 2006). did when it entered the music distribution business.
dustry Co-opetition
80 Harvard Business Review | January 2008 | hbr.org
shapin c
definin g industry hange
1808 Porter.indd 80
g indu struct 12/5/07 5:34:13 PM
stry ure
main Clusters
25. Co-opetition
Clusters
Five Competitive
main Forces
26. Co-opetition
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
Threat
hibit “The Five Forces That Shape Industry of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
Rivalry
as they are in industries such as software,
Bargaining Among Bargaining
Clusters
soft drinks, and toiletries, many companies Power of Existing Power of
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
Competition
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
Five Competitive
long run. (See the exhibit “Differences in
Industry Profitability.”)
main
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
Forces
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.
27. Co-opetition
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
Threat
hibit “The Five Forces That Shape Industry of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
Rivalry
as they are in industries such as software,
Bargaining Among Bargaining
Clusters
soft drinks, and toiletries, many companies Power of Existing Power of
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
Cooperation Competition
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
Five Competitive
long run. (See the exhibit “Differences in
Industry Profitability.”)
main
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
Forces
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.
28. Co-opetition
es is?
Synth
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
delivery industry in Europe. But to under-
stand industry competition and profitabil-
The Five Forces That Shape Industry Competition
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the five forces. (See the ex-
Threat
hibit “The Five Forces That Shape Industry of New
Competition.”) Entrants
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
Rivalry
as they are in industries such as software,
Bargaining Among Bargaining
Clusters
soft drinks, and toiletries, many companies Power of Existing Power of
are profitable. Industry structure drives Suppliers Competitors Buyers
competition and profitability, not whether
an industry produces a product or service, is
emerging or mature, high tech or low tech,
Cooperation Competition
regulated or unregulated. While a myriad
of factors can affect industry profitability Threat of
in the short run – including the weather Substitute
and the business cycle – industry structure, Products or
Services
manifested in the competitive forces, sets
industry profitability in the medium and
Five Competitive
long run. (See the exhibit “Differences in
Industry Profitability.”)
main
Understanding the competitive forces, and their under- The strongest competitive force or forces determine the
lying causes, reveals the roots of an industry’s current profit- profitability of an industry and become the most important
ability while providing a framework for anticipating and to strategy formulation. The most salient force, however, is
Forces
influencing competition (and profitability) over time. A not always obvious.
healthy industry structure should be as much a competitive For example, even though rivalry is often fierce in com-
concern to strategists as their company’s own position. Un- modity industries, it may not be the factor limiting profit-
derstanding industry structure is also essential to effective ability. Low returns in the photographic film industry, for
strategic positioning. As we will see, defending against the instance, are the result of a superior substitute product – as
competitive forces and shaping them in a company’s favor Kodak and Fuji, the world’s leading producers of photo-
are crucial to strategy. graphic film, learned with the advent of digital photography.