External Environment

sandwichtumtumΒιοτεχνολογία

16 Δεκ 2012 (πριν από 4 χρόνια και 8 μήνες)

210 εμφανίσεις

CHAPTER 3

EVALUATING A COMPANY’S

EXTERNAL ENVIRONMENT

3

2

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

1.
Gain command of the basic concepts and analytical tools
widely used to diagnose the competitive conditions in a
company’s industry.

2.
Learn how to diagnose the factors shaping industry dynamics
and to forecast their effects on future industry profitability.

3.
Become adept at mapping the market positions of key groups
of industry rivals.

4.
Understand why in
-
depth evaluation of a business’s strengths
and weaknesses in relation to the specific industry conditions
it confronts is an essential prerequisite to crafting a strategy
that is well
-
matched to its external situation.

3

3

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.1

From Thinking Strategically about the Company’s Situation
to Choosing a Strategy

Thinking

strategically

about a firm’s

external

environment

Thinking

strategically

about a firm’s

internal

environment

Forming a

strategic

vision of

where the

firm needs

to head

Identifying

promising

strategic

options

for the firm

Selecting the

best strategy

and business

model for

the firm

Chapter 3

Chapter 4

3

4

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

The External Environment


The Macro
-
Environment


Is the broad environmental context in
which a firm’s industry is situated.


Includes strategically relevant components
over which the firm has no direct control.


General economic conditions


Immediate industry and competitive
environment

3

5

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.2

The Components of a Company’s Macro
-
Environment

3

6

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.1

The Seven Components of the Macro
-
Environment

Component

Description

Demographics

The size, growth rate, and age distribution of different sectors of the population. It
includes the geographic distribution of the population, the distribution of income
across the population, and trends in these factors.

Social forces

Societal values, attitudes, cultural factors, and lifestyles that impact businesses.
Social forces vary by locale and change over time.

Political, legal,
and regulatory
factors

Political policies and processes, as well as the regulations and laws with which
companies must comply

labor laws, antitrust laws, tax policy, regulatory policies,
the political climate, and the strength of institutions such as the court system.

Natural
environment

Ecological and environmental forces such as weather, climate, climate change, and
associated factors like water shortages.

Technological

factors

The pace of technological change and technical developments that have the
potential for wide
-
ranging effects on society, such as genetic engineering, the rise of
the Internet, changes in communication technologies, and knowledge and
controlling the use of technology,

Global forces

Conditions and changes in global markets, including political events and policies
toward international trade, sociocultural practices and the institutional environment
in which global markets operate.

General
economic

conditions

Rates of economic growth, unemployment, inflation, interest, trade deficits or
surpluses, savings, per capita domestic product, and conditions in the markets for
stocks and bonds affecting consumer confidence and discretionary income.

3

7

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

THINKING STRATEGICALLY ABOUT A COMPANY’S
INDUSTRY AND COMPETITIVE ENVIRONMENT

1.
Does the industry offer attractive opportunities for growth?

2.
What kinds of competitive forces are industry members facing,
and how strong is each force?

3.
What factors are driving changes in the industry, and what
impact will these changes have on competitive intensity and
industry profitability?

4.
What market positions do industry rivals occupy

who is
strongly positioned and who is not?

5.
What strategic moves are rivals likely to make next?

6.
What are the key factors for competitive success in the
industry?

7.
Does the industry offer good prospects for attractive profits?

3

8

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 1: DOES THE INDUSTRY OFFER

ATTRACTIVE OPPORTUNITIES FOR GROWTH?


Defining Growth:


What is the current market size in units or sales?


What is the past, current and expected rate of
growth for the market
\
industry?


Considerations:


Different sectors
\
regions of a market grow at
different rates.


Growth varies with the industry’s life cycle stage

emergence, rapid growth, maturity, and decline.


Growth does not guarantee profitability.

3

9

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 2: WHAT KINDS OF COMPETITIVE
FORCES ARE INDUSTRY MEMBERS FACING,

AND HOW STRONG ARE THEY?


The Five Competitive Forces:


Competition from rival sellers


Competition from potential new entrants


Competition from substitute products
producers


Supplier bargaining power


Customer bargaining power

3

10

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.3

The Five
-
Forces Model
of Competition: A Key
Analytical Tool

3

11

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Using the Five
-
Forces Model of Competition

Step 1

For each of the five forces, identify the different
parties involved, and the specific factors that
bring about competitive pressures.

Step 2

Evaluate how strong the pressures stemming
from each of the five forces are (strong,
moderate to normal, or weak).

Step 3

Determine whether the strength of the five
competitive forces, overall, is conducive to
earning attractive profits in the industry.

3

12

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.2

Common “Weapons” for Competing with Rivals

Competitive Weapons

Primary Effects

Price discounting, clearance sales,
“blowout” sales

Lowers price (P), acts to boost total sales volume and market share,
lowers profit margins per unit sold when price cuts are big and/or
increases in sales volume are relatively small

Couponing, advertising items on sale

Acts to increase unit sales volume and total revenues, lowers price (P),
increases unit costs (C), may lower profit margins per unit sold (P


C)

Advertising product or service

characteristics, using ads to enhance

a company’s image or reputation

Boosts buyer demand, increases product differentiation and perceived
value (V), acts to increase total sales volume and market share, may
increase unit costs (C) and/or lower profit margins per unit sold

Innovating to improve product

performance and quality

Acts to increase product differentiation and value (V), boosts buyer
demand, acts to boost total sales volume, likely to increase unit costs (C)

Introducing new or improved features,
increasing the number of styles or
models to provide greater product
selection

Acts to increase product differentiation and value (V), strengthens buyer
demand, acts to boost total sales volume and market share, likely to
increase unit costs (C)

Increasing customization of product or
service

Acts to increase product differentiation and value (V), increases
switching costs, acts to boost total sales volume, often increases unit
costs (C)

Building a bigger, better dealer network

Broadens access to buyers, acts to boost total sales volume and market
share, may increase unit costs (C)

Improving warranties, offering low
-
interest financing

Acts to increase product differentiation and value (V), increases unit
costs (C), increases buyer costs to switch brands, acts to boost total
sales volume and market share

3

13

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Competitive Pressures That Act to Increase the
Rivalry among Competing Sellers


Buyer demand is growing slowly or declining.


It is becoming less costly for buyers to switch brands.


Industry products are becoming more alike.


There is unused production capacity, and
\
or products
have high fixed costs or high storage costs.


The number of competitors is increasing and
\
or they are
becoming more equal in size and competitive strength.


The diversity of competitors is increasing.


High exit barriers stop firms from exiting the industry.

3

14

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.4

Factors Affecting the
Strength of Rivalry

3

15

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Competitive Pressures Associated

with the Threat of New Entrants


Entry Threat Considerations:


Strength of barriers to entry


Expected reaction of incumbent firms


Attractiveness of a particular market’s growth in
demand and profit potential


Capabilities and resources of potential entrants


Entry of existing competitors into market segments
in which they have no current presence

3

16

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Market Entry Barriers Facing New Entrants


Economies of scale in production, distribution,
advertising, or other areas of operation


Experience and learning curve effects


Unique cost advantages of industry incumbents


Strong brand preferences and customer loyalty


Strong “network effects” in customer demand


High capital requirements


Building a network of distributors or dealers and
securing adequate space on retailers’ shelves


Restrictive government policies

3

17

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.5

Factors Affecting
the Threat of Entry

3

18

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Competitive Pressures from the Sellers

of Substitute Products


Substitute Products Considerations:


Ready availability of substitutes


Pricing, quality, performance, and other relevant
attributes of substitutes


Switching costs that buyers incur


Indicators of Substitutes’ Competitive Strength:


Increasing rate of growth in sales of substitutes


Substitute producers adding output capacity


Increasing profitability of substitute producers

3

19

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.6

Factors Affecting
Competition from
Substitute Products

3

20

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Competitive Pressures Stemming from
Supplier Bargaining Power


Supplier Bargaining Power Considerations:


Ready availability of supplier products


Criticality of supplier products as industry inputs


Number of suppliers of standard
\
commodity items


Buyers’ costs for switching among suppliers


Availability of substitutes for suppliers’ products


Fraction of supplier sales due to industry demand


Ratio of suppliers relative to industry buyers


Backward integration into suppliers’ industry

3

21

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.7

Factors Affecting
the Bargaining
Power of Suppliers

3

22

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Competitive Pressures Stemming from Buyer

Bargaining Power and Price Sensitivity


Buyer Bargaining Power Considerations:


Buyer costs for switching to competing sellers


Degree to which industry products are commoditized


Number and size of buyers relative to sellers


Strength of buyer demand for sellers’ products


Buyer knowledge of products, costs and pricing


Backward integration of buyers into sellers’ industry


Buyer discretion in delaying purchases


Buyer price sensitivity due to low profits, size of
purchase, and consequences of purchase

3

23

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.8

Factors Affecting
the Bargaining
Power of Buyers

3

24

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Is the Collective Strength of the Five Competitive
Forces Conducive to Good Profitability?


Is the state of competition in the industry
stronger than “normal”?


Can industry firms expect to earn decent profits
given prevailing competitive forces?


Are some of the competitive forces sufficiently
powerful to undermine industry profitability?

3

25

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Matching Strategy to Competitive Conditions

1.
Pursuing avenues that shield the firm from as
many competitive pressures as possible.

2.
Initiating actions calculated to shift competitive
forces in the firm’s favor by altering underlying
factors driving the five forces.

3.
Spotting attractive arenas for expansion, where
competitive pressures in the industry are
somewhat weaker.

3

26

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 3: WHAT FACTORS ARE DRIVING
INDUSTRY CHANGE, AND WHAT IMPACTS
WILL THEY HAVE?


Strategic Analysis of Industry Dynamics:

1.
Identifying the drivers of change.

2.
Assessing whether the drivers of change
are, individually or collectively, acting to
make the industry more or less attractive.

3.
Determining what strategy changes are
needed to prepare for the impacts of the
anticipated change.

3

27

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3.3

The Most Common Drivers of Industry Change

1.
Changes in the long
-
term industry growth rate

2.
Increasing globalization

3.
Changes in who buys the product and how they use it

4.
Technological change

5.
Emerging new Internet capabilities and applications

6.
Product and marketing innovation

7.
Entry or exit of major firms

8.
Diffusion of technical know
-
how across companies and
countries

9.
Improvements in efficiency in adjacent markets

10.
Reductions in uncertainty and business risk

11.
Regulatory influences and government policy changes

12.
Changing societal concerns, attitudes, and lifestyles

3

28

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Assessing the Impact of the Factors

Driving Industry Change

1.
Overall, are the factors driving change causing
demand for the industry’s product to increase
or decrease?

2.
Is the collective impact of the drivers of change
making competition more or less intense?

3.
Will the
combined impacts

of the change
drivers lead to higher or lower industry
profitability?

3

29

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Developing a Strategy That Takes the Changes

in Industry Conditions into Account


What strategy adjustments will be needed

to deal with the impacts of the changes in
industry conditions?


What adjustments must be made immediately?


What actions must we not take or should we cease
to do now?


What can we do now to prepare for adjustments
we anticipate making in the future?

3

30

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 4: HOW ARE INDUSTRY RIVALS

POSITIONED

WHO IS STRONGLY POSITIONED

AND WHO IS NOT?


A Strategic Group


Is a cluster of industry rivals that have similar
competitive approaches and market positions:


Have comparable product
-
line breadth


Sell in the same price/quality range


Emphasize the same distribution channels


Use the same product attributes to buyers


Depend on identical technological approaches


Offer similar services and technical assistance

3

31

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Using Strategic Group Maps to Assess

the Market Positions of Key Competitors


Constructing a strategic group map:


Identify the competitive characteristics that
differentiate firms in the industry.


Plot the firms on a two
-
variable map using pairs
of differentiating competitive characteristics.


Assign firms occupying about the same map
location to the same strategic group.


Draw circles around each strategic group, making
the circles proportional to the size of the group’s
share of total industry sales revenues.

3

32

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Typical Variables for Differentiating the Market
Positions of Key Competitors on Group Maps


Price/quality range (high, medium, 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).

3

33

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Choosing Variables for Group Maps


Variables selected as map axes:


Must
not

be highly correlated.


Must reflect key approaches to customer
value and expose sizable differences in the
marketplace positions of rivals.


May be quantitative, continuous, discrete
and
\
or defined in terms of distinct classes
and combinations.

3

34

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Guidelines for Constructing Group Maps


Draw map circles proportional to the combined
sales of firms in each strategic group to reflect
the relative sizes of each group to the total size
of the industry.


Use different variable sets to show different
views of relationships among competitive
positions in the industry’s structure

there is no
one best map for portraying how competing
firms are positioned.

3

35

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

3

36

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Follow
-
up


Which strategic group is located in the least
favorable market position? Which group is in
the most favorable position?


Which strategic group is likely to experience
increased intragroup competition?


Which groups are most threatened by the
likely strategic moves of members of nearby
strategic groups?

3

37

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

What Can Be Learned from Strategic Group Maps?


Maps are useful in identifying which industry
members are close rivals and which are
distant rivals.


Not all map positions are equally attractive.

1.
Prevailing competitive pressures in the industry
and drivers of change favor some strategic
groups and hurt others.

2.
Profit prospects vary from strategic group to
strategic group.

3

38

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 5: WHAT STRATEGIC MOVES
ARE RIVALS LIKELY TO MAKE NEXT?


Competitive Intelligence


Information about rivals that is useful in anticipating
their next strategic moves.


Signals of the Likelihood of Strategic Moves:


Rivals under pressure to improve financial
performance


Rivals seeking to increase market standing


Public statements of rivals’ intentions


Profiles developed by competitive intelligence units


3

39

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

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?

3

40

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 6: WHAT ARE THE KEY FACTORS
FOR FUTURE COMPETITIVE SUCCESS?


Key Success Factors


Are the strategy elements, product and
service attributes, operational approaches,
resources, and competitive capabilities that
are necessary for competitive success by
any and all firms

in an industry.


Vary from industry to industry, and over time
within the same industry, as drivers of
change and competitive conditions change.

3

41

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Identification of Key Success Factors

1.
What product attributes and service features
buyers strongly affect buyers when choosing
between the competing brands of sellers?

2.
What resources and competitive capabilities
are required for a firm to execute a successful
strategy in the marketplace?

3.
What shortcomings will put a firm at a
significant competitive disadvantage?

3

42

Copyright © 2011 by The McGraw
-
Hill Companies, Inc. All rights reserved.

QUESTION 7: DOES THE INDUSTRY OFFER
GOOD PROSPECTS FOR ATTRACTIVE
PROFITS?


Industry Profitability Considerations:


The industry’s overall growth potential


Effects of strong competitive forces


Effects of prevailing drivers of change in the industry


Competitive strength of the firm: its market position
relative to its rivals, its capability to withstand
competitive forces, and whether its position will
change in the course of competitive interactions


The success of the firm’s strategy in delivering on
the industry’s key success factors