Please enable JavaScript.

Coggle requires JavaScript to display documents.

Industry and Sectors, An Industry is a group of firms producing products…

- - - - Great power over buyers and suppliers. Dominant competitor in an industry can enjoy monopoly powers
  - - - Power over buyers and suppliers, action from one firm highly influential on others. Interest in minimising rivalry to maintain common front to buyers and suppliers
  - - - Low entry barriers, competition heavy on price
  - - - Industry life cycle
        
        Each industry goes through similar cycle
        
        Development
        
        Growth
        
        Shake-out
        
        Maturity
        
        2 more items...
        
        Market becomes saturated, cluttered. Growth & profits variable. Weaker competitors go out of business
        
        Still low rivalry, barriers to entry low, companies build scale, exp, loyalty. Suppliers may become powerful if shortage of resources as markets grow
        
        Industry experimental, few players, highly differentiated products / services. 5 forces weak, rivalry low
        
        Only a model, one stage doesn't predictably follow another. Industry can de-mature through radical re-innovation
      - Five-forces analysis
        
        Used regularly, can compare changes on radar-plot as industry dynamic changes
- - - - Scope - product, geographical, distribution channel characteristics
        
        Extent of product/range
        
        national/regional/global coverage
        
        number of market segments served
        
        distribution channels used
      - Resource commitment defined by brands, marketing, extent of vertical integration
        
        extent (number) of branding
        
        Marketing effort (Advertising spread, size of salesforce)
        
        Extent of vertical integration
        
        Product or service quality
        
        R&D spending, tech leadership (leader vs follower)
        
        Size of org
      - Each group should be different from each other within the same industry or sector
        
        Whatever characteristics are chosen, key that they separate high and low performers in the industry
      - Groups can be mapped on graph with key characteristics in market that differentiate between high/low performers
    - - Understand competition
        
        highlights and focuses on direct competition
        
        More specific than industry analysis, establish key dimensions
      - Analysis of strategic opportunities
        
        Identify most attractive strategic spaces
        
        White spaces relatively unoccupied, black holes impossible to exploit
      - Analysis of mobility barriers
        
        Identify obstacles in moving from one strategic group to another
  - - - Small segmnets = niches
  - - - Compares competitors by key success factors
        
        Critical success factors (CSFs) - aspects that are either particularly valued by customers, or provice significant advantage in terms of cost
        
        Value curves - graphical depiction of how consumers perceive a competitor's relative performance across CSFs
        
        Value Innovation - Used in creation of new market spaces by excelling in established CSFs, where other competitors are performing badly, identifying new unrecognised needs
    - - New market spaces where competition in minimised
        
        Value innovator is company that competes in 'blue oceans'
        
        constrasts with 'red oceans' where industries well defined and rivalry intense
        
        Used to ID potential spaces with little competition (strategic gaps)
- - - - Reduce identified threats
      - Take advantage of best opportunities
  - - - Challenge existing assumptions
      - Encourange broader perspectives
- - - - more rivalry = harder to be successful
        
        competitors should be aiming for same consumer groups with similar products/services
        
        Influenced by
        
        Competitor concentration/balance
        
        number/size of competitors, one or two dominant, or numerous?
        
        Industry growth rate
        
        strong growth = orgs grow with market
        
        low growth = rivalry, resistance, price competition, low profits
        
        High fixed costs
        
        High investment needed in capital equipment / research
        
        high rivalry as spread costs by increasing volume and cutting prices
        
        High exit barriers
        
        high closure or disinvestment costs = increased rivalry
        
        fight to maintain market share
        
        Low differentiation
        
        commodity market for products / services - poorly differentiated
        
        rivalry, easy for customers to switch
    - - Greater threat of entry = harder for incumbents
        
        attractive industries = high barriers for entry
        
        Factors
        
        Scale and experience
        
        Economies of scale hard to match
        
        Experience curve, learn to do things more efficiently
        
        Access to supply/distribution channels
        
        Do incumbants have control? Customer/supplier loyalty, proprietary tech, locations, brands
        
        Capital requirements
        
        Level of finance required to enter market
        
        Legislation / gov. action
        
        Patent protection, market regulation, direct gov. action
        
        Expected retaliation
        
        Existing firms prevent entry / make it too costly to overcome?
    - - Products/services that offer same/similar function, but different nature
        
        Demand reduced for original as customers switch
        
        Risk puts cap on prices that can be charged
        
        Extra industry effects
        
        Come from outside incumbents industry, not competitiors within
        
        Need to look outside for more distant threats
        
        Price / performance Ratio
        
        Threat that even if more expensive, offers advantages that customer values
    - - Consider immediate customers not necessarily end consumer
        
        Conditions to consider
        
        Concentrated buyers
        
        Fewer larger customers account for majority
        
        Buyer power high
        
        Low switching costs
        
        Ease for buyer to switch from seller to competitor
        
        Strong negotiating position
        
        Buyer competition threat
        
        Capability to ensure themselves or acquire capability
        
        Backwards or vertical integration
        
        Low buyer profits and impact on quality
        
        Buyer struggling, likely to be looking to reduce costs
        
        quality of buyers product / service unaffected by purchased products
        
        Buyers are distinguished from end consumer
        
        Identify strategic customers towards which strategy is primarily orientated
    - - Provide org with what it needs to produce products / services
        
        Fuel, raw materials, equipment, labour, finance
        
        Supplier high power where
        
        concentrated suppliers, fewer produces dominate supplies
        
        High-switching costs, expensive or disruptive to move
        
        Supplier competition threat - able to enter industry and cut out buyer - forward vertical integration
        
        Differentiated products / services - no/few substitutes
        
        If many suppliers, concentrate on those that are strategically important...
    - - Complementor
        
        Some industries need the understanding of a sixth force
        
        Complementor rather than competitor
        
        Supply
        
        More attractive for supplier to deliver when also delivers to another org
        
        Demand
        
        Custoemrs value your product / service more when they have another orgs. product
        
        Network Effects
        
        One customer in an industry has a positive effect on the value of that product for other customers
      - Shift in persepective, 5 forces suggest competitiveness, better to cooperate to increase value
    - - Value Net
        
        map of orgs. in a business environment
        
        opportunities for cooperation
    - - more than listing strengths/weaknesses/driving factors
      - Determine if it's a 'good' industry to compete in
      - Assessment of the attractiveness of the industry
      - Possible strategies for long-term survival / competitive advantage
    - - Which industries to enter / leave?
      - How can the 5 forces be managed?