Contemporary Strategy Analysis
This chapter focus onunderstanding how the competitive structure og an industry determines its profitability. * Business strategy – concerned with establishing competitive advantage. Identify general sources of competitive advantage: Key success factors. From environmental analysis to industry analysis * Business environment consists of al external influences that affect its decisions and performance. * Prerequiite for effective environmental analysis is to distinguish the vital from the merely important.
The core of the firms business environsment is formed by the relationships with: customers, suppliers and competitors – this is the industry environment. * Macro-level factors still importat – the key issue is how these more general environmental factors affect the firms industry environment. Fig 3. 1 The determinants of Industry Profit: Demand and competition * Starting point is simple: What determines the level of profit in an industry. * The prerequisite for profit is the creation of value for customers. Surplus distributed depending on the forces of competition. * Firms profit determined by 3 factors. * The value of the product to customers * The intensity of competition
Contemporary Strategy Analysis Essay Example
The bargaining power of producers relative to their suppliers and buyers * The joys of niche markets * Perfect competition / monopoly / barriers -> table 3. 2 * Porters Five Forces Figure 3. 2 p. 69 + 3. 3 s. 70 * Suppliers * Same as in buyers box * Substitutes * Buyer propensity to subtitutes * Relative pries and performance of substitutes * Buyers * Price sensititity Cost of product relative to total cost * Product differentiation * Competition between buyers * Bargaining power * Size and concentration of buyers relative to producers *
Buyers switching costs * Buyers information * Buers ability to backward integrate * Potential entrants * Capital requirements * Economic of scale * Absolute cost advantages * Product differentiation * Acces to distribution channels * Gorvernment and legal barriers * Retaliation by established producers Analyzing industry attractiveness Applying Industry Analysis