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External Analysis (Dynamic Industry Analysis (common errors (not keeping…

- - - - co-opetition
        
        simultaneously cooperate and compete with compliment producers
      - value adding compliments can increase industry profits
- - - - EX: restaurant industry (McDonald’s etc.)
      - EX: Automobile industry (family sedans minivans or SUVs sports cars and pickup trucks)
    - - How narrowly or broadly you define it for your analysis is a matter of judgment
      - Choose an industry definition that makes the most sense to you, and be self-aware that you made this choice.
      - EX: Toyota (four-wheel passenger vehicle industry)
  - - - how “attractive” an industry might be
      - how profitable will the industry be
    - - provides deep insights into the reasons why industries are more or less profitable
      - to understand the drivers of industry attractiveness
      - tell us if and when industry profitability might change
      - To figure out where and how can intervene strategically to improve the attractiveness or profitability
      - make decisions about resource allocation such as the entry and divestment decisions across the firm’s entire portfolio of product markets
  - - - EX: an average profitability of around 13%,
        close to the 14% median rate of profitability
    - - average returns on equity over a rather long 13-year period
      - HIgh
        
        food products industry
        
        pharmaceutical industry
      - Low
        
        high-tech industry
        
        US airline industry
  - - - product differentiation
      - the nature if buyers and sellers
      - barriers to entry
      - switching costs
    - - specific structural features of this league, this industry
      - Why success?
        
        specific ways in which the league is structured
        
        TV rights contracts centrally on behalf of all the teams
        
        the revenues from these TV deals are shared more equally among the different teams
        
        a set of “financial fair play” rules, which require teams to manage their finances prudently to constrain teams
      - a multi-billion-dollar sport
        (top is the English Premier league and the second placed is German Bundesliga)
- - - - if the seat not be sold,and it will turn to lost revenue
        
        entry
        
        physical barriers are easy to cross over
        
        suppliers
        
        sales of fuel
        
        competition
        
        high repair cost
        
        normally price war in airline market
        
        waste seats
        
        little differentiation in service
        
        buyers/substitutes
        
        matter to a lesser extent
    - - based on safety reason, consumers will care less about other factors
    - - it is easy for any company to enter airline market,and barriers are not difficult to cross over physically (ex.permission of gate using)
  - - - consumers
        
        separated by different field (ex.doctor.normal consumers)
        
        physically health need
        
        substitutes
        
        competition
        
        high differentiated product
        
        protected by patent and laws
        
        brand royalty
        
        suppliers
        
        normal commodities
        
        entry
        
        patents
        
        laws and permissions
        
        high tech demand
- - - - Attuned to the regulatory environment
  - - - spent time with industry press
      - Get useful customer information
  - - - Increase of temporary workers
        
        evolve and really embrace change
- - - - social cultural
        
        demographic trends, values and culture,aspirations and expectations
      - technological
        
        trends in innovation and business models
      - economic
        
        economic growth, employment, inflation, interest and exchange rates, economic inequality
      - ecological
        
        pollution, sustainability, conservation, climate change
      - political
        
        public policy sensitivities, stability, security, corruption
      - legal
        
        ANTITRUST, labor, liability, international treaties and laws
      - analyze the macro environment
        
        ex.TOYOTA
        
        S
        
        Urbanization and growing middle class, aspiration to western lifestyles, green living, desire for convenience
        
        T
        
        Electric & hybrid car, OBCs, ride app, solar and battery infrastructure
        
        E
        
        Continued growth, economic stability, exchange and interest rates
        
        E
        
        Climate change, air pollution, waste and recycling
        
        P
        
        openness to trade and investment, regional stability, transportation and energy policy
        
        L
        
        treaties, laws carbon taxes, global warming treaties
  - - - ex. Mcdonald's
        
        broad
        
        Regard as Restaurant industry
        
        narrow
        
        Portray as Fast food industry or Burger and Fries style restaurants
- - - - location
      - proprietary technologies and processes
      - raw materials