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[BS-2] External Analysis, G3 (IBS3 Cathy, DSEAS3 Cheryl, DSEAS4 Andrew,…
[BS-2] External Analysis
Case Introduction
Soft Drink Industry(Cheryl)
Coca cola vs. PepsiCo
PESTEL
Political :silhouettes:
Cross-border trade
Transportation
Economic📊
Sales growth/stability
Socio-cultural📑
Health awareness
Food safety
Technological :star:
Automation
Manufacture
Equipment
Ecological :recycle:
Waste
Recycling
Legal :fountain_pen:
Terms of business
Trade
Investment
labor
5 Forces
Rivalry :red_flag:
Brand loyalty
Health concerns
Obesity and diabetes
especially children
Sales were divided
packaged juices
sports drinks
Entry🧩
Few new firms entry
pioneer new categories
EX.Red Bull
High market share
partner with major brands
EX. Lipton
Buyers :silhouette:
Retailers
Sam’s Club
Walmart
Restaurants
McDonalds
Subways
Substitutes📦
Carbonated drink market
Main dominance
Suppliers🏬
Packaging
The biggest material cost
aluminum cans
glass bottles
Advertising
High expenses
EX.7% of sales at Coca Cola
Sweetener
Concentrations
flavoring
caffeine
Macro Environment analysis 🌎
PESTEL
What :question:
political
:silhouette:
different levels governments
state, local, national
European Union
political issues
political sensitive
political stability, security, and corruption
economic
💰
economic growth, employment, inflation
economic inequality
socio-cultural
:silhouettes:
demographic trends, values, and culture
Western lifestyie
green-living
individual aspirations and expectations that might be shaped by social and cultural trends
ecological
:recycle:
natural environment
climate change, air pollution
technological
:star:
driver assistance, self-driving digital technologies
ride apps like Uber
a systematic way for looking at a company's macro-environment
legal
:lock:
the legal infrastructure
international laws between countries
different statutory provisions in different areas of law
Conclusion
consist
multiple layer
outer most macro environment
good checklist
need
judgement
How :question:
How to monitor
Kurt Bock👨
Attuned to the regulatory environment
Challenge🔥
Regulatory risk
Fiduciary rule
Best interests of your clients
Disruption from potential competitors that come into the market
Horizon Hobby
Transparent
Quarterly financials
Country Financial
Financial industries
Al Goldstein 👨
Avant
Financial industries
Evolve and really embrace the change
Sean Chou👨
Fieldglass
Changing composition of the workforce
Microsoft
Permit type case
Influence
Arbitrarily bring in people on a temporary basis 🚫
1 more item...
Temporary workers👯♂️
Same rights and privileges
As full time employees
Moving away from traditional on-premise enterprise
ASP
Saas
Cloud☁
Dynamic Industry Analysis
Pivotal
force
Force presenting greatest threat
Directly affects profit
EX.Airline industry
Competitors
merging
Industry concentration
Increasing seats utilization
Avoiding price war
Buyer
Suppliers
Substitute
Entrants
Major critisisms
Complement (互補品) should be counted in
EX. Hardware and Software
Ignoring Coopetition(競合)
Dynamic industry analysis
PESTEL
EX. Drug patent
Product life cycle
Product innovation
Substitute EX.drug
Product differentiation
Scale of economic
Demand growth
Misunderstanings
Industry boundry isn't clear
Ignoring atrributes
Dynamics
Intangible factors
One force to explain another
Assessing profitability as an average of 5 forces
Short-term profits to judge
Industry analysis
A systematic approach to looking at the different types of factors and the structural features of an industry.
:!!:
Industry
A set of similar firms associated with single product market 🤝
Nested concept
Definition
:!!:
Tool🔧
Understand the drivers of industry attractiveness
When industry profitability might change
Help managers make decisions about resource allocation
Such as entry and divestment decisions across an entire portfolio of product markets
Figure out where and how they can intervene strategically to improve the attractiveness or profitability of their industry
Industry & Profitability :question:
The industry can have significant impact on company’s profitability
Industry effects account for about
21%
Low profitability-technologically complex industries
Machinery or motor vehicles
High profitability-food products
structure-conduct-performance
Five Forces Framework
Application
Industry categories＆profitability
Industry
Airline
industry :airplane:
Low profitability
Main negative reasons
Higher
rivalry among the industries firms
2 more items...
Lower
barriers to entry
2 more items...
Patent pharmaceutical
industry :pill:
High profitability
Main positive reasons
Lower
rivalry among the industries firms
1 more item...
Lower
bargaining power of buyers
3 more items...
Fewer
the threat of the substitute
1 more item...
Higher
barriers to entry
2 more items...
Comparison
Type
rivalry among industry firms
threat of substitutes
bargaining power of buyers
bargaining power of suppliers
threat of new entrants
⛔️ entry barriers
1️⃣ scope economies
2️⃣ scale economies
cost advantages
3️⃣ learning curve economies
4️⃣ capital requirements
5️⃣ product differentiation
more difficult to reach or win over customers
6️⃣ access to distribution channels
🔟 expected retaliation
8️⃣ regulations that make entry difficult
difficult to easily copy and reproduce
9️⃣ proprietary technologies and processes
7️⃣ privileged access to raw materials and location
compete for the profits being created within the industry
:star:
Clearly analyze the industry and identify player roles
Structural attributes affecting competitive threats
How to attract consumer and keep them?
Enhance our competitiveness
Reduce their bargaining power
Ex. Walmart
= Increase their dependence
Make it higher :beer_mugs:
:one:Industry concentration
Hirschman Herfindahl Index (HHI)
The sum of the squared percentage market shares of all firms in an industry
Calculate market share
:two:Product differentiation
Promote heterogeneity of consumer preferences
Healthy competition
Ex. R&D
Ex. Advertising
Create customer value
The threat of substitute:explode:
Give consumers more choices
Ex.
Airbnb & Hotel
Uber、Lyft & Taxi
Note :star:
switching costs
customer loyalty
:three:Demand growth
Eating into other's market share
The stress trap :warning:
:five:Fixed or storage costs for the product or service
Ex. telecom bandwidth
Cutting price :red_cross:
Think about the net impact
Before price reduction
1 more item...
Lose-lose proposition
:four:Exit barriers
hard to exit
:six:Overcapacity
Decrease stock
📌 Definition
the structural features of an industry will drive the behavior or the conduct of firms and other actors in specific ways
example
single monopoly company
High pricing, high profits 💰
perfectly competitive industry
Fierce competition, poor profits 🤏
G3
IBS3 Cathy
DSEAS3 Cheryl
DSEAS4 Andrew
DSEAS3 Milly
DSEAS3 Sandy
DSEAS3 Eva
IBS3 Henry
DSEAS3 Jenny
