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SMMC G2 [BS-2] External Analysis, G2 (108104041 外文三 范睿翔, 108103001 國企三…
SMMC
G2
[BS-2] External Analysis
Industry analysis
5 forces framework
Threats of substitutes
Bargaining power of buyers
Rivalry among industry firms
Bargaining power of suppliers
Threat of new entrants
SCP analysis
Conduct
R&D spending
New product
Advertising
Development
Pricing
Capital investment
Bargaining
Structure
Barrier to entry
Cost structures
Buyer and sellers
Demand growth
Product differentiation
Switching costs
Performance
Economic profits
Why care about industry analysis
Decide
intervene
Understand
Dynamic industry analysis
Combining 5 forces
Compariosn
5 forces are moderate
1 weak 4 moderate to strong
Pivotal forces
Key of profitability
US airline consolidation
Biggest threat
Sixth forces
Complement
Co opetition
Opposite of substitute
Profit increase
Hardware-software
How to use
Examine the structural attributes of each force
Assessment
Strong
Moderate
Weak
Combinaiton
Examine dynamics
Who for each of the five forces.
Potential entrants
Customers
Substitutes
Competitors
Analyze dynamic industry
Understanding of macro environment
PESTEL
Pattern of industry revolution
Industry life cycle
Common errors
Not keeping track of each forces
Ignoring attribution
Too broad、narrow definition
Not enough on behavioral ones
Not being clear about industry definition
Not evaluating overall profiability
As an average of 5 forces
Confusing short-run with long-run
Not examining dynamics
Natural Entry Barrier
Cost-competitive production based on the supply side
multiple product prodution
car models
learning curve economics
experience
aircraft, LCD screens
practice
scale of production
semiconductor
capital requirements
risky
reversible
Hard to reach customer and build demand
differentiation
service or product
customer loyalty
intangible product attributes
emotional attachment
Hard to reproduce advantage
privilege access
raw material
favorable location
hard to imitate
technology, process
government regulations
Expected Retaliation
exist firm retaliate with
new products
new marketing strategy
aggressive pricing
exist firm have more capability to retaliate
strong resources
excess capacity
necessary inventory
prevent accident happen
reputation for retaliation
slow industry growth
high exit cost
Analyzing the Macro environment
The PESTEL framework
Sociocultural
Culture and values
Individual aspirations and expectations
Demographic trends
Technological
Trends in R & D and Innovation
Disruption and new business models
Process and operational innovation
Economic
Employment
Changing composition of workforce
Full-time employees
contingent workforce
Interest rates and exchange rates
Economic growth
Ecological
Conservation
Climate change
Pollution, sustainability
Political
Political stability
Corruption
Security
Legal
Antitrust, labor, liability
International treaties and laws
Regulatory environment
Courts
Five Forces Framework
Competitors: rivalry among industry firms
Entrants: threat of new entrants
Substitutes: threat of substitutes products and services
Suppliers and Buyers: bargaining power
Rivalry among industry firm
Intensity of Rivalry is higher when:
Low industry concentration
High fixed /storage costs
Low Demand growth
High over-capacity
High Exit Barriers
Low product differentiation
Take product differentiation for example
provide more appealing product/services through R＆D or advertising
brand loyalty, segmented needs
Price Competition
easily matched by rivals
low down profits for all firms
Threat of Substitute
limit potential price by constraning prices
have better cost structure
Airbnb v.s Hotel
more innovative or value-proving
Uber,Lyft v.s Taxi
improving quickly in cost/ performence
Tesla v.s Automobile
meet similar needs
the closer substitute to industry's product/service
the more competitve and more threat to profitability
Bargaining power of Buyers/Suppliers
buyers are a bigger threat when...
Buyers are concentrated
Few buyers buy a large % of sales
Product Is not Important for buyer
Few switching costs to move to another product
Buyers can backward integrate
the more buyer know the info. of industry, the higher the buyers' bargaining power
Suppliers are a bigger threat when...
Suppliers are concentrated
Few suppliers control most supply
The supplier's products are important for industry
High switching costs/products are differentiated
The supplier can forward integrate
The more the suppliers rely on selling to the industry, the lower its bargaining power
Main Idea: Who can compete for the industry's profits? What limits/increases this competition?
G2
108104041 外文三 范睿翔
108103001 國企三 張博崴
108241019 觀餐三 陳頎翰
108104030 外文三 張明聖
108402034 國企三 楊子皜