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22 Cards in this Set
- Front
- Back
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External Environment: Analysis Tools |
Macro Environment 1) PESTEL Analysis Immediate Industry & Competitive Environment Analysis 2) 5 Forces Model 3) Driving Forces Analysis 4) Strategic Group Map 5) Framework of Competition Analysis 6) Key Success Factors (KSF's) |
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Macro-Environment |
Political Factors Economic Conditions Sociocultural Forces Technological Factors Environmental Forces Legal / Regulatory Factors |
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Immediate Industry & Competitive Environment |
Suppliers Substitute Products Buyers New Entrants Rival Firms
Even if these are all strong, if one of the macro-environment segments are strong then the company could be flattened. |
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Buyer's Pressure |
Competitive pressures stemming from buyer bargaining power
Individual vs Group of buys compared to the company
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Potential New Entrants Pressure |
Competitive pressures coming from the threat of entry of new rivals
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Suppliers Pressures |
Competitive pressures stemming from supplier bargaining power
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Firms in Other Industries Offering Substitue Products |
Competitive pressures coming from the producers of substitute products |
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3 Steps When Applying The Five-Forces Model |
1) For each of the five forces, identify the different parties involved, and the specific factors the that bring about competitive pressures. 2) Evaluate how strong the pressures stemming from each of the 5 forces are (strong, moderate, or weak). 3) Determine whether the collective strenth of all 5 competitive forces is conducive to earning attractive profits in the industry. |
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Weapons to Counter: Frivals, New Entrants & Counter Substitutes |
Lower Costs (C) Increase Value (V) Lower Price (P) |
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Weapons to Counter: Buyer Pressure |
Increase switching cost Integrate forward Increase Value (V) Reduce Price (P) |
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Weapons to Counter: Suppliers Pressure |
Reduce switching costs Integrate backwards Reduce dependence |
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Strategic Group |
Consists of those industry rivals with similar competitive approaches and positions in the market: - Having comparable product-line breadth - Emphasizing the same distribution channels - Depending on identical technological approches - Offering the same product attributes to buyers - Offering similar services and technical assistance |
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Strategic Group Mapping |
technique for displaying the different market or competitive positions that rival firms occupy in the industry - asking: Is the company strongly positioned in the market place? |
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Analysis of Common Drivers of Industry Change |
1. Changes in the LT industry growth rate 2. Increasing globalization 3. Emerging new internet capabilities and applications 4. Changes in who buys the product and how they use it 5. Technological change & manufacturing process innovation 6. Product and market innovation 7. Entry or exit of major firms 8. Diffusion of technical know-how 9. Changes in cost and efficiency 10. reductions in uncertainty and busn risk 11. Regulatory influences & gov't policy changes 12. Changing societal concerns, attitudes & lifestyle |
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What Does A Strategic Group Map? |
It is a visual technique for displaying which companies have the biggest market share and who the industry leader really is. |
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Steps for constructing a Strategic Group Map |
a. Identify the competitive characteristics that differentiate firms in the industry b. Plot the firms on a two-variable map using pairs of these differentiating characteristics c. Assign firms that fall in about the same strategy space of the same strategic group d. Draw circles around each strategic group, making the circles proportional to the size of the group's respective share of total industry sales revenue |
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Competitive Characteristics |
- Price/ quality range (high, med, low) - Geographic coverage (local, regional, national, global) - Product-line breadth (wide, narrow) - Degree of service offered (no frills, limited, full) - Distribution channels (retail, wholesale, Internet, multiple) - Degree of vertical integration (none, partial, full) - Degree of diversification into other industries (none, some, considerable) |
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4 Things which lead into Strategic Moves (actions & reactions) and Outcomes |
Current Strategy - How the company is competing currently Capabilities - Key strengths & weaknesses Assumptions - Held about itself & the industry Objectives - Strategic & performance objectives |
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USEFUL QUESTIONS TO HELP PREDICT THE LIKELY ACTIONS OF IMPORTANT RIVALS |
• Which competitors’ strategies are achieving good results? • Which competitors are losing in the marketplace or badly need to increase their unit sales and market share? • Which rivals are likely make major moves to enter new geographic markets or to increase sales and market share in a particular geographic region? • Which rivals can expand product offerings to enter new product segments where they do not have a presence? • Which rivals can be acquired? Which rivals are financially able and looking to make an acquisition? |
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Key Success Factors (KSFs) |
The strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that have the greatest impact on competitive success in the marketplace. |
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Identifying KSF’s |
1. On what basis do buyers of the industry’s product choose between the competing brands of sellers? That is, what product attributes and service characteristics are crucial to competitive success? 2. Given the nature of competitive rivalry prevailing in the marketplace, what resources and competitive capabilities must a firm have to be competitively successful? 3. What shortcomings are almost certain to put a firm at a significant competitive disadvantage? |
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Industry Environment is fundamentally attractive if: |
-there is good opportunity for above-average profitability. -company has the resources & capabilities to successfully compete. -prevailing driving forces are favorably affecting company. -industry’s growth potential is expected. -competitive forces seem likely to not intensify and squeeze industry profitability to subpar levels, or if company should be able to earn good profits despite the expected strength of competitive forces. -company is strongly positioned on the industry’s strategic group map. -company’s strategy, product offering, and capabilities stack up well against industry KSFs. |
