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Further Topics in Industry and Competitive Analysis PowerPoint Presentation
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Further Topics in Industry and Competitive Analysis

Further Topics in Industry and Competitive Analysis

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Further Topics in Industry and Competitive Analysis

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    Slide 1:Further Topics in Industry and Competitive Analysis

    Extending 5-forces analysis Does industry matter? Complements Dynamic competition Game Theory Competitor Analysis Segmentation Strategic Groups OUTLINE

    Slide 2:Does Industry Matter?

    The Value Net COMPANY CUSTOMERS SUPPLIERS COMPLEMENTORS COMPETITORS SUPPLIERS POTENTIAL ENTRANTS SUBSTITUTES BUYERS INDUSTRY COMPETITORS Rivalry among existing firms Bargaining power of suppliers Bargaining power of buyers Threat of new entrants Threat of substitutes COMPLEMENTS The suppliers of complements create value for the industry and can exercise bargaining power Five Forces or Six? Introducing Complements

    Slide 5:Dynamic Competition

    Porter framework assumes: industry structure drives competitive behavior Industry structure is (fairly) stable. But, competition also changes industry structure: Schumpeterian Competition: A perennial gale of creative destruction where firm strategies continually transforms industry structure innovation overthrows established market leaders Hypercompetition: intense and rapid competitive moves.creating disequilibrium through continuously creating new competitive advantages and destroying, obsolescing or neutralizing opponents competitive advantages Implication: Under dynamic competition, 5-forces framework is less usefulCompetitive behavior and industry structure jointly determined by underlying conditions of technology, demand & costs

    The Contribution of Game Theory to Competitive Analysis Main value: Framing strategic decisions as interactions between competitors Predicting outcomes of competitive situations involving a few, evenly-matched players Some key concepts: Competition and CooperationGame theory can show conditions where cooperation more advantageous than competition Deterrencechanging the payoffs in the game in order to deter a competitor from certain actions Commitmentirrevocable deployments of resources that give creditability to threats Signalingcommunication to influence a competitor's decision Problems of game theory: Useful in explaining past competitive behaviorweak in predicting future competitive behavior. Whats the problem? Multitude of models, outcomes highly sensitive to small changes in assumptions PREDICTIONS What strategy changes will the competitor initiate? How will the competitor respond to our strategic initiatives? OBJECTIVES What are competitors current goals? Is performance meeting there goals? How are its goals likely to change? STRATEGY How is the firm competing? ASSUMPTIONS What assumptions does the competitor hold about the industry and itself? RESOURCES & CAPABILITIES What are the competitors key strengths and weaknesses?

    Slide 7: A Framework for Competitor Analysis

    Slide 8:Segmentation Analysis: The Principal Stages

    Identify key variables and categories. Construct a segmentation matrix Analyze segment attractiveness Identify KSFs in each segment Analyze benefits of broad vs. narrow scope. Identify segmentation variables Reduce to 2 or 3 variables Identify discrete categories for each variable Potential for economies of scope across segments Similarity of KSFs Product differentiation benefits of segment focus

    Opportunities for Differentiation Characteristics of the Buyers Characteristics of the Product Industrial buyers Household buyers Distribution channel Geographical location Size Technical sophistication OEM/replacement Demographics Lifestyle Purchase occasion Size Distributor/broker Exclusive/ nonexclusive General/special list Physical size Price level Product features Technology design Inputs used (e.g. raw materials) Performance characteristics Pre-sales & post-sales services

    Slide 9: The Basis for Segmentation: Customer and Product Characteristics

    Opportunities for Differentiation Characteristics of the Buyers Characteristics of the Product Industrial buyers Household buyers Distribution channel Geographical location *Size *Technical sophistication *OEM/replacement *Demographics *Lifestyle *Purchase occasion *Size *Distributor/broker *Exclusive/ nonexclusive *General/special list *Physical size *Price level *Product features *Technology design *Inputs used (e.g. raw materials) *Performance characteristics *Pre-sales & post-sales services

    Slide 11:Segmenting the European Metal Can Industry

    Slide 12:Segmenting the World Automobile Market

    US& Canada W.Europe E.Europe Asia Lat America Australia Africa Luxury cars Full-size cars Mid-size cars Small cars Station wagons Passenger vans Sports cars Sport-utility Pick-up trucks

    0 5 0 10 15 20 25% 100% Share of industry revenue Auto loans Leasing Warranty Gasoline Auto insurance Aftermarket parts Auto rental Operating margin Auto manufacturing New car dealers Used car dealers Service & repair Vertical Segmentation & Industry Profit Pools The US Auto Industry SEGMENT Low price bicycles sold primarily through department and discount stores, mainly under the retailers own brand (e.g. Sears Free Spirit); KEY SUCCESS FACTORS * Low-costs through global sourcing of components & low-wage assembly. * Supply contract with major retailer. Leading competitors: Taiwanese & Chinese assemblers, some U.S manufacturers, e.g. Murray Ohio, Huffy Medium-priced bicycles sold primarily under manufacturers brand name and distributed mainly through specialist bicycles stores; *Cost efficiency through large scale operation and either low wages or automated manufacturing. *Reputation for quality (durability, reliability) through effective marketing to dealers and/or consumers. * International marketing & distribution. Leading competitors: Raleigh, Giant, Peugeot, Fuji *Quality of components and assembly, Innovation in design (e.g. minimizing weight and wind resistance). *Reputation (e.g. through success in racing, through effective brand management). *Strong dealer relations. Similar to low-price bicycle segment. High-priced bicycles for enthusiasts. Childrens bicycles (and tricycles) sold primarily through toy retailers (discount toy stores, department stores, and specialist toy stores).

    Slide 14: Segmentation and Key Success Factors in the U.S. Bicycle Industry

    Slide 15:Strategic Group Analysis

    A strategic group is a group of firms in an industry that follow the same or similar strategies Identifying strategic groups: Identify principal strategic variables which distinguish firms. Position each firm in relation to these variables. Identify clusters.

    Broad PRODUCT RANGE Narrow National GEOGRAPHICAL SCOPE Global NATIONALLY- FOCUSED, SMALL, SPECIALIST PRODUCERS e.g., Bristol (U.K.), Classic Roadsters (U.S.), Morgan (U.K.) NATIONALLY FOCUSED, INTERMEDIATE LINE PRODUCERS e.g. Tofas, Proton, Maruti First Auto Works (China) REGIONALLY-FOCUSED BROAD-LINE PRODUCERS e.g. Fiat, PSA, Renault, Kia, PERFORMANCE CAR PRODUCERS e.g., Porsche, Ferrari (owned by Fiat) Maserati, Lotus LUXURY CAR MANUFACTURERS e.g., Aston Martin, BMW, Rolls Royce (owned by VW) GLOBAL SUPPLIERS OF NARROW MODEL RANGE e.g., Subaru, Isuzu, Suzuki, Saab, Hyundai, Daihatsu GLOBAL, BROAD-LINE PRODUCERS e.g., GM, Ford, Toyota, Nissan, Honda, VW, DaimlerChrysler

    Slide 16: Strategic Groups in the World Automobile Industry

    Geographical Scope 0 10 20 30 40 50 60 70 80 Vertical Balance 0 0.5 1.0 1.5 2.0 NATIONAL PRODUCTION COMPANIES THE SUPER MAJORS NATIONALLY-FOCUSED DOWNSTREAM COMPANIES INTEGRATED DOMESTIC OIL COMPANIES Royal Dutch Shell Exxon -Mobil Statoil PDVSA Kuwait Petroleum Petronas Petrobras Repsol Nippon Sunoco BP Chevron Phillips Pemex Indian Oil ENI INTEGRATED OIL MAJORS INTERNATIONAL UPSTREAM, REGIONALLY FOCUSED DOWNSTREAM Iran NOC Neste Ashland Conoco Phillips ENI Elf-Fina-Total Repsol YPF INTERNATIONAL DOWNSTREAM OIL COMPANIES INTERNATIONAL UPSTREAM COMPANIES Adanarko Premier Oil PetroChina Lukoil Apache Valero

    Slide 17: Strategic Groups Within the World Petroleum Industry