Understanding and analyzing competition
Download
1 / 16

Understanding and Analyzing Competition - PowerPoint PPT Presentation


  • 702 Views
  • Uploaded on

Understanding and Analyzing Competition. St. Francis Xavier University. “ Analysis is the critical starting point of strategic thinking ” Kenichi Ohmae. Objectives and Overview. Objectives To introduce the topic of competition and a tool for analyzing and understanding competition

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Understanding and Analyzing Competition' - Rita


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Understanding and analyzing competition l.jpg

Understanding and Analyzing Competition

St. Francis Xavier University

“Analysis is the critical starting point of strategic thinking” Kenichi Ohmae


Objectives and overview l.jpg
Objectives and Overview

  • Objectives

    • To introduce the topic of competition and a tool for analyzing and understanding competition

    • To develop your understanding of the strategy formulation process

  • Overview

    • Coverage of Porter’s Five Forces model

    • Sample industry

    • Application in test questions

St. Francis Xavier University


Review market forces l.jpg
Review: Market Forces

  • Supply

    • Supply is the markets ability and plan to satisfy demand.

    • Supply is influenced by:

      • Scarce resources

      • Competition and market segments (such as quality differentiation and price)

      • Price, cost of production, competitors prices, expected future prices

      • Volume of supply (number of domestic and foreign suppliers)

      • Regulations

St. Francis Xavier University


Competition l.jpg
Competition

  • What is competition?

    • “The vying among businesses in a particular market or industry to best satisfy consumer demands and earn profits” (18)

  • Competition is a driving factor in business

    • Facilitates choice for consumers (quality, cost, speed)

    • Promotes efficient and productive use of scarce resources

  • Competition and strategy

    • “An important part of industry and competitive analysis is to delve into the industry’s competitive process to discover the main sources of competitive pressure and how strong each competitive force is. This analytical step is essential because managers cannot devise a successful strategy without understanding the industry’s competitive character” from Industry and Competitive Analysis by Thompson and Strickland

St. Francis Xavier University


Competition5 l.jpg
Competition

  • Competition – succeeding in the market!

  • Firms compete by leveraging strengths and mitigating weaknesses to capitalize on opportunities and avoid threats

Broader Environment

Marketplace

St. Francis Xavier University

Organization


Competition6 l.jpg
Competition

  • Analyzing competition is central to a manager’s job

  • Michael Porter’s “5 Forces” conceptual framework is an effective analytic tool

St. Francis Xavier University


Competition7 l.jpg
Competition

  • Understand your position in the supply chain

St. Francis Xavier University


Porter s 5 forces l.jpg
Porter’s 5 Forces

Threat of Substitutes

Orient your perspective to the rivalry of producers between suppliers and buyers

Deconstruct competition into individual forces to understand the favourability of each

St. Francis Xavier University

Power of Suppliers

Power of Buyers

Rivalry

  • Industries change:

    • Action and reaction of rival producers

    • Give and take of advantage within supply chain

    • New entrants and substitute products

Determine the overall favourability of the sum of forces

Threat of New Entrants


Porter s 5 forces9 l.jpg
Porter’s 5 Forces

Low

Favourable

When competitive forces are not strong, the structure of an industry is attractive for earning profits

Threat of Substitutes

St. Francis Xavier University

Low

Low

Low

Power of Suppliers

Power of Buyers

Rivalry

Low

Threat of New Entrants


Porter s 5 forces10 l.jpg
Porter’s 5 Forces

High

Unfavourable

The stronger the collective impact of competitive forces, the lower the combined profitability of participant firms

Threat of Substitutes

St. Francis Xavier University

High

Intense

High

Power of Suppliers

Power of Buyers

Rivalry

High

Threat of New Entrants


Application l.jpg
Application

  • Atlantic Superstore offered a promotion of $20 coupon for purchases over $150. Shortly thereafter Sobeys offered a comparable promotion of $20 coupon for purchases over $100. These events represent which of Porter’s five forces in action?

    • Rivalry

    • Buyer Power

    • Supplier Power

    • Threat of New Entrants

    • Threat of Substitutes

St. Francis Xavier University


Application12 l.jpg
Application

  • In 2008, during the height of crude oil and gasoline prices, Wilson’s Fuels threatened to stop delivering gasoline to retail stations in remote rural areas, because it was too expensive. This event is an example of which of Porter’s five forces, pertaining to rural retail gas stations?

    • Rivalry

    • Buyer Power

    • Supplier Power

    • Threat of New Entrants

    • Threat of Substitutes

St. Francis Xavier University


Application13 l.jpg
Application

  • Due to increasing cell phone service charges Skype introduced a new WiFi phone, which allows for free calling over wireless networks. This is an example of which of Porter’s five forces pertaining to traditional cell phone companies?

    • Rivalry

    • Buyer Power

    • Supplier Power

    • Threat of New Entrants

    • Threat of Substitutes

St. Francis Xavier University


Competition14 l.jpg
Competition

Other forces shaping competition

Broader Environment

Marketplace

St. Francis Xavier University

Innovation and Technical Change

Government Regulation

TS

SP

R

BP

Labour supply

Provision of Finance

TNE


Porter s 5 forces15 l.jpg
Porter’s 5 Forces

  • 5 Forces works from the perspective of:

    • a manager in an existing firm in the industry

    • a manager thinking about entering an industry

  • Industries are typically composed of varying and changing forces

  • Favourability depends on composition of forces, and the strengths and weaknesses of the organization

  • To contend successfully against competitive forces, managers must:

    • Leverage strengths, mitigate weaknesses, capitalize on opportunities and avoid threats

St. Francis Xavier University


Admin l.jpg
Admin

  • Wednesday’s class – Scotia Aqua Farms case

    • Please prepare a written analysis of this company using Porter’s Five Forces. In your write-up include:

      • An overview of the case (Who, what, why, when)

      • Key issues

      • Porter’s Five Forces Analysis of the competition

      • Conclusions about the favourability

      • Recommendations

    • Submit during Wednesday’s class

  • Midterm Update

St. Francis Xavier University


ad