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Industry & Competitive Analysis. Dominant economic features of industry Competitive forces in industry - strength of Industry drivers - impact of Which companies in strong/weakest position Key Success Factors of industry Industry attractiveness. Dominant Economic Features of Industry.

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industry competitive analysis

Industry & Competitive Analysis

Dominant economic features of industry

Competitive forces in industry - strength of

Industry drivers - impact of

Which companies in strong/weakest position

Key Success Factors of industry

Industry attractiveness

dominant economic features of industry

Dominant Economic Features of Industry

Mkt size

Geographic scope

Mkt growth rate - stage of growth cycle

No. & relative size of rivals

No. & relative size of buyers

Prevalence of forward/backward integration

Distribution channels used

Pace of technological change - process & product

dominant economic features of industry1

Dominant Economic Features of Industry

Pdt/service differentiation

Scope for economies of scale

Learning / experience curve effects

Importance of capacity utilisation

Resource requirements - ease of entry/exit

Industry profit potential/attractiveness

porter s 5 force model of competition

Porter’s 5 Force Model of Competition

Rivalry among competitors / sellers

Threat of substitution

Threat of new entrants

Bargaining power of suppliers

Bargaining power of buyers

rivalry among competitors

Rivalry among Competitors

increases when....

no. and size of competitors increase

product demand growing slower

tactics used to increase unit volume eg. price cuts

low switching costs

one or more competitor dissatisfied with position

exit costs are high

strong co.s outside industry acquire weak firms in ind.

threat of new entrants

Threat of New Entrants

Barriers to entry:

Economies of scale

Access to technology/expertise

Learning curve effects

Brand preference/customer loyalty

Resource requirements

Access to distribution channels

Regulatory policies

threat of substitution

Threat of Substitution

Eg. eyeglasses and contact lenses

sugar and artificial sweeteners

Depends on:

attractively priced substitutes being available

quality and performance of substitutes

ease of switching

The lower the price of subs., the higher their quality and

the lower the user’s switching costs the more intense the

threat of substitution.

power of suppliers

Power of Suppliers

Threat depends on:

significance of item they supply

size of the customer

no. of suppliers

whether switching costs high

potential for backward integration

power of buyers

Power of Buyers

High if...

switching costs are low

small no. of buyers

if threat of backward integration - eg own label

if buyers are large eg. tesco - shelf space

if prestige buyer

implications of 5 forces

Implications of 5 Forces...

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

However, even when industry is highly competitive (forces are strong) it can be profitable to those who are well positioned.

Successful strategists know what forces exist, the relative strength of each and understand the industry’s competitive structure as a whole.

driving forces

Driving Forces

The major underlying causes of change in industry and competitive conditions.

Driving Forces Analysis -

identify the driving forces

assess the impact they will have on the industry

Important to ensure strategies are as tightly matched to emerging conditions as possible.

examples of driving forces

Examples of Driving Forces

Technological change

Product innovation

Change in buyer demographics

Increasing globalisation

Changing societal concerns

key success factors of the industry

Key Success Factors - of the Industry

The things that most affect the ability of industry members to prosper in the marketplace.

eg. technology related KSFs; manufacturing related KSFs; distribution related KSFs; skills related KSFs.

Important to understand the industry well enough to know what is more important to competitive success and what is less important.