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Analysis - Coggle Diagram

- - - - Isolates: An isolated system does not allow either
        matter or energy to enter or leave
        
        If no heat loss, then it is an isolated system
      - Closed:A closed system does not allow matter to
        enter or leave, but does allow energy to enter
        or leave
        
        Vacuum Insulated Thermos
      - Open:An open system can exchange both energy
        and matter with its surroundings
        
        Steam turbine power generator
  - - - 1.Firms cannot directly CONTROL the general environment’s segments.
        2.However, these segments influence the actions that firms take.
        3.Successful firms learn how to gather the information needed to understand all segments and their implications for selecting and implementing the firm’s strategies.
      - Opportunities and Threats
        
        Opportunity : A condition in the general environment that, if exploited effectively, helps a firm achieve growth and profitability.
        
        Threat: A condition in the general environment that may hinder a firm’s efforts to achieve growth and profitability
      - Focus is on Growth & profitability:Sales revenue and costs
        
        MACROENVIRONMENT (PEST)ANALYSIS
        
        General Environment
        
        4 major segments
        
        -Political/Legal
        
        1.Competition (Antitrust) laws
        2.Taxation laws
        3.Labor laws
        4.Industry-specific law and regulations
        5.Industrial policies
        6.Educational policies
        
        – Economic
        
        1.Gross domestic product
        2.Inflation rates
        3.Interest rates
        4.Exchange rates
        5.Trade deficits or surpluses
        6.Budget deficits or surpluses
        7.Personal savings rate
        8.Business savings rates
        
        – Demographic
        
        – (Social)Sociocultural
        
        1.Population size
        2.Age structure
        3.Geographic distribution
        4.Income distribution
        5.Workforce
        6.Diversity attitudes about the quality of work life
        7.Shifts in work and career preferences
        8.Shifts in product and service preference characteristics
        
        – Technological
        
        1.Product innovations
        2.New communication technologies
        3.Applications of knowledge
        4.Focus of private and government-supported R&D expenditures
        
        – Physical/Ecologic
        
        – Global/International
        
        How to conduct a PEST Analysis
        
        1.Identify all determinants of demand & supply
        2.Select those that are influenced by environmental trends
        3.Understand the segment of the trends
        4.Understand interrelationships between trends
        5.Scan early signals of environmental changes and trends
        6.Detect meaning through ongoing observations of environmental changes and trends
        7.Forecast anticipated outcomes based on monitored changes and trends
        8.Assess the timing and importance of environmental changes and trends for firms’ strategies and their management
        
        Sources for Environmental Analysis:
        
        9 more items...
  - - - Introduction to Industry Analysis
        
        1.An INDUSTRY is a group of firms that produce similar products or offer similar services that are close substitutes.
        2.Compared with the general environment, the industry environment has a more direct effect on the firm’s: 1)Competitiveness
        2) Profitability (above-average returns)
        
        • Five Forces of Competition
        
        profit potential of indusrty
        
        – The intensity of rivalry among competitors
        
        Industry rivalry increases when:
        1.There are numerous or equally balanced competitors.
        2.Industry growth slows or declines.
        3.There are high fixed costs or high storage costs.
        4.There is a lack of differentiation opportunities or low
        switching costs.
        5.When the strategic stakes are high.
        6.When high exit barriers prevent competitors from leaving the industry
        
        – Product substitutes
        
        The threat of substitute products increases when:
        1.Buyers face few switching costs.
        2.The substitute product’s price is lower.
        3.Substitute product’s quality and performance are equal to or greater than the existing product.
        Differentiated industry products that are valued by customers reduce this threat.
        
        – The power of buyers
        
        Buyer power increases when:
        1.Buyers are large and few in number.
        2.Buyers purchase a large portion of an industry’s total output.
        3.Buyers’purchases are a significant portion of a supplier’s annual revenues.
        4.Buyers’switching costs are low.
        5.Buyers can pose threat to integrate backward into the sellers’industry
        
        – The power of suppliers
        
        Supplier power increases when:
        1.Suppliers are large and few in number.
        2.Suitable substitute products are not available.
        3.Individual buyers are not large customers of suppliers and there are many of them.
        4.Suppliers’goods are critical to the buyers’marketplace success.
        5.Suppliers’products create high switching costs.
        6.Suppliers pose a threat to integrate forward into buyers’industry
        
        – The threats posed by new entrants
        
        1.Economies of scale
        2.Product differentiation
        3.Capital requirements
        4.Switching costs
        5.Access to distribution channels
        6.Cost disadvantages independent of scale
        7.Government policy
        8.Expected retaliation
        
        • Using Industry Analysis
        
        SCP:The Structure-Conduct-Performance Model
        
        1.Originally developed to spot anticompetitive conditions for antitrust purposes
        2.Came to be used to assess the possibilities for above-normal profits for firms within an industry
        3.Model of environmental threats was developed from this economic tradition
        
        Using Industry Analysis:
        STEP 1: For each of the five forces, identify the different parties involved, along with 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, or weak).
        STEP 3: Determine whether the five forces, overall, are supportive of high industry profitability.
        STEP 4: Respond to industry structure threats or exploit structure opportunities
        
        • Banking Industry in Turkey
        
        • Network Industries
        
        Network industries are those industries that produce goods and services that satisfy the characteristics of what we call network products:
        1.Consumption externalities.
        2.Complementarity, compatibility and standards.
        3.Switching costs and lock-in.
        4.Significant economies of scale in production.
        
        • Application: Generate actions to respond toindustry threats & to exploit opportunities
  - - - 1.Driving forces. Identifying the dynamics of change
        
        1.Driving forces analysis (DFA) is a way of understanding and accounting for change at the industry level.
        2."Drivers" are clusters of trends that create influences on changes to an industry's structure and a rival's competitive conduct.
        
        Industry Dynamics and the Forces Driving Change
        
        Driving forces analysis has three steps.
        
        Identifying what the driving forces are.
        
        Assessing whether the drivers of change are acting to make the industry more or less attractive.
        
        Determining what strategy changes are needed to prepare for the impact of the driving forces
        
        Identifying the Forces Driving Industry Change
        
        1.Changes in an industry’s long-term growth rate.
        2.Increasing globalization.
        3.Emerging new Internet capabilities and applications.
        4.Shifts in who buys industry products and how the products are used.
        5.Technological change and manufacturing process innovation. 6.Product and marketing innovation.
        7.Entry or exit of major firms. (?)
        8.Diffusion of technical know-how across firms and countries.
        9.Changes in costs and efficiencies.
        10.Reductions in uncertainty and business risk.
        11.Regulatory influences and government policy changes.12.Changing societal concerns, attitudes, and lifestyles
        
        Assessing the Impact of the Factors Driving Industry Change
        
        1.Are the driving forces, on balance, acting to cause demand for the industry’s product to increase or decrease?
        2.Is the collective impact of the driving forces making competition more or less intense?
        3.Will the combined impacts of the driving forces lead to higher or lower industry profitability?
        
        Adjusting Strategy to Prepare for the Impacts of Driving Forces
        
        1.What strategy adjustments will be needed to deal with the impacts of the driving forces?
        2.What immediate adjustments must be made?
        3.What actions currently being taken should be halted or abandoned?
        4.What can we do now to prepare for adjustments we anticipate making in the future?
        
        2.Critical (Key) Success Factors. Must-haves for success
        
        Critical success factors
        
        1.Critical success factors (also known as key success factors) are the few things that must go well to ensure success
        2.CSF concept emphasizes the importance of ongoing industry monitoring.
        3.The CSF method helps the analyst to identify the key factors that have to be performed well in order to achieve a superior level of competitive performance in an industry.
        
        CSFs can be broken down into the following segments
        
        1.Technology related— expertise in particular research or developmental processes,
        innovative production processes, access to potential partners with basic and applied scientific research expertise, and/or use of partnerships with universities or research consortia.
        2.Manufacturing related— expertise in quality management systems, Six Sigma processes, access to low cost production inputs, high levels of employee productivity, lowcost or fast-cycle design and engineering, and so on.
        3.Distribution related— how products are moved from the manufacturer to the end-user, providing local inventory, technical product support, and sales and service.
        4.Marketing related— related to any of the "4 Ps" of marketing (price, promotion, place, or product)
        5.Skills and capability related— location or large scale contracts, short production or delivery cycle times, effective supply chain management capabilities, uniquely skilled or experienced employees, and strong ecommerce capabilities, adaptive corporate cultures, and flexible structures.
        6.Other CSF types—Locational convenience, historical monopoly protection in particular regions, having patent protections, or strong balance sheets.
        
        Key Processes That May Constitute CSFs in Particular Industries
        
        Critical Success Factors
        
        1.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.
        2.These vary from industry to industry, and over time within the same industry, and in their importance as drivers of change and competitive conditions change.
        
        Identification of Critical Success Factors
        
        1.On what basis do buyers of the industry’s product choose between the competing brands of sellers—that is, what product attributes and service characteristics are crucial?
        2.Given the nature of competitive rivalry prevailing in the marketplace, what resources and competitive capabilities must a firm have to be competitively successful?
        3.What shortcomings are almost certain to put a firm at a significant competitive disadvantage?
        
        3.Strategic Groups. Define strategic groups and describe their influence on firms.
        
        Strategic Group Defined:
        1.A set of firms emphasizing similar strategic dimensions and using similar strategies.
        2.Intra-strategic group competition is more intense than is inter-strategic group competition due to:
        1).Similar market positions
        2).Similar products
        3).Similar strategic actions
        3.A strategic group consists of those industry members with similar competitive approaches and positions in the market:
        1).Having comparable product-line breadth.
        2).Employing the same distribution channels.
        3).Depending on identical technological approaches.
        4).Competing in the same geographic areas.
        5).Offering the same product attributes to buyers.
        6).Offering similar services and technical assistance
        
        Implications of a Strategic Group
        
        1.Intense competitive rivalry within a group threatens profitability of all group members.
        2.Strengths of the five forces differ across strategic groups.
        3.The closer the groups are in their strategies, the greater the rivalry between groups.
        
        Using Strategic Group Maps (SGM) to Assess the Market Positions of Key Competitors
        
        Constructing a strategic group map:
        1).Identify the competitive characteristics that delineate strategic approaches used in the industry.
        2).Plot the firms on a two-variable map using pairs of competitive characteristics.
        3).Assign firms occupying about the same map location to the same strategic group.
        4).Draw circles around each strategic group, making the circles proportional to the size of the group’s share of total industry sales revenues.
        
        Typical Variables Used in Creating Group Maps
        
        1.Price and quality range (high, medium, low).
        2.Geographic coverage (local, regional, national, global).
        3.Product-line breadth (wide, narrow).
        4.Degree of service offered (no frills, limited, full).
        5.Distribution channels (retail, wholesale, Internet, multiple).
        6.Degree of vertical integration (none, partial, full).
        7.Degree of diversification into other industries (none, some, considerable)
        
        Guidelines for Creating Group Maps
        
        1.Variables selected as map axes should not be highly correlated.
        2.Variables should reflect important (sizable) differences among rival approaches.
        3.Variables may be quantitative, continuous, discrete, or defined in terms of distinct classes and combinations.
        4.Drawing group circles proportional to the combined sales of firms in each group will reflect the relative sizes of each strategic group.
        5.Drawing maps using different pairs of variables will show the different competitive positioning relationships present in the industry’s structure.
        
        The Value of Strategic Group Maps
        
        Maps are useful in identifying groups of close and distant rivals in an industry.Not all map positions are equally attractive.
        1.Prevailing competitive pressures from the industry’s five forces may cause the profit potential of different strategic groups to vary.
        2.Industry driving forces may favor some strategic groups and hurt others.
        
        4.Competitor Analysis. Describe what firms need to know about their competitors and different methods used to collect intelligence about them.
        
        1.Competitive intelligence:
        Information about rivals that is useful in anticipating their next strategic moves.
        2.Signals of the likelihood of strategic moves:
        (1)Rivals under pressure to improve financial performance.(2)Rivals seeking to increase market standing.
        (3)Public statements of rivals’intentions.
        (4)Profiles developed by competitive intelligence units.
        
        SOAR Framework to determine a rival firm’s likely strategic moves and countermoves:
        
        1.The rival firm’s current strategy:How they are competing, strategies supporting change.
        2.The rival firm’s objectives:Goals, emphasis, attitude towards risks.
        3.The rival firm’s resources and capabilities:Strengths, weaknesses
        4.The rival firm’s assumptions about itself and its industry:Assessment of themselves, expectations of future.
        5.The rival firm’s response:How will they do in the future, their advantage over rivals, their relationship with rivals.
        
        Sources for Competitive Intelligence
        
        1.collecting Field Data, 2.collecting published data
        
        Classification of Actions are important
        
        Classify strategic moves by:
        1.Corporate/administrative
        2.Products
        3.Distribution channels
        4.Sales promotions
        5.Partnerships
        6.Target segments
        7.HR activities.
        8.Investment in IT inftrastructure etc
        
        Ethical Considerations in CI
        
        1.Practices considered both legal and ethical:
        1).Obtaining publicly available information.
        2).Attending trade fairs and shows to obtain competitors’brochures, viewing their exhibits, and listening to discussions about their products.
        2.Practices considered both unethical and illegal:
        1).Blackmail.
        2).Trespassing.
        3).Eavesdropping.
        4).Stealing drawings, samples, or documents
        
        5.Reverse-SWOT. Using a reverse SWOT to analyze competitors’strategic actions
        
        1.Companies undertaking strategic/marketing planning must assess their strengths and weaknesses.
        2.SWOT (aka TOWS) Analysis combines an inventory of opportunities and threats within or beyond the company’s environment with its strengths and weaknesses in order to establish its current position (strategic choices)
        
        The SWOT Matrix:
        
        A four-cell array used to categorize information at the conclusion of a SWOT analysis
        
        Should be based on customer perceptions, not the perceptions of the manager or firm.
        3.Elements with the highest total ratings should have the greatest influence in developing the strategy.
        4.Focus on competitive advantages by matching strengths with opportunities
        
        6.Decision Matrices. Identifying strategic choices
        
        Ansoff Matrix:
        1.A logical way for determining the scope and direction of a firm’s strategic development in the marketplace.
        2.Strategic development consists of two types of strategy:
        1).The portfolio strategy:objectives for each of the firm’s product/market combinations. 2).The competitive strategy: the route to take to reach those objectives.
        3).In the Ansoff product/market grid setting, the growth vector expressed in two dimensions:– products and markets