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Competitive Analysis and Co-opetition, G1 (113251002 IPCM3 Ann, 113212016…
Competitive Analysis and Co-opetition
2. Industry Structure & Profitability Analysis
Porter's Five Forces Framework
Purpose
Evaluate ROIC
Assess Long-term Profitability
Set Price Ceiling
Determine Maximum Price & Margin
Strategic Positioning
Avoid Price Wars & Build Defense
Horizontal Forces: Price Ceilings
Intensity of Rivalry
Compete for Market Share & Limit Prices
Threat of new Entry
High Sunk Costs Build Barriers
Threat of Substitutes
High Price-Performance Caps Price
Vertical Forces: Value Distribution
Bargaining Power of Buyers
Low Switching Costs Squeeze Margins
Bargaining Power of Suppliers
Key Resource Control Captures Profit
Entry & Exit Barriers
Entry Barriers & Sunk Costs
Capital Risk
Unrecoverable Sunk Costs
Deter Entrants
Prevent Hit-and-Run Entry
Exit Barriers & Price Wars
High Exit Barriers
Asset Specificity & Severance Costs
Destructive Price Wars
Excess Capacity Cannot Exit ➔ Lower ROE
Industry Case: Airline Industry
Structural Dilemma
High Fixed Costs & Low Exit Elasticity
Empirical Evidence
U.S. Airline Median ROE -11.3%
Digital Impact & Profitability Drivers
Digital Impact
Lower Switching Costs
Lower Buyer Barriers
Price Transparency
Information Symmetry Squeezes Margins
Profit Drivers
DuPont Analysis
Decompose ROE Drivers
Airline Case Formula
Core Profit Formula
Profit = Yield × Load Factor - Unit Cost
Key Metric Control
Raise Yield & Load Factor, Lower Unit Cost
1. General Environment Scanning & Industry Boundaries
PESTEL Analysis
framework used to scan the external macro-environment through six dimensions that may influence a firm's business environment.
P – Political
Government policies, political stability, trade restrictions.
E – Economic
Economic Conditions : Inflation, interest rates, economic growth, purchasing power.
S – Social
Consumer behavior, demographics, lifestyle, cultural trends.
T – Technological
Innovation, automation, digitalization, new technologies.
E – Environmental
Climate change, sustainability, resource availability.
L – Legal
Labor laws, consumer protection, industry regulations.
Defining Industry Boundaries – Who Are Our Actual Competitors?
Determine which companies genuinely compete within the same industry.
Demand-side Substitutability
Focus: Customers / Buyers
Whether customers can switch to alternative products.
Key question: If the price of Product A increases, would customers switch to Product B?
Products satisfy similar needs or functions.
Switching decisions may be influenced by price or functionality.
Supply-side Substitutability
Focus: Producers / Manufacturers
Whether manufacturers can switch their production capabilities.
Existing production facilities can be repurposed.
Manufacturers can enter the market without significant time or cost.
Key question: Can existing manufacturers quickly adapt their production lines to produce our product?
SCP MODEL & MARKET CONCENTRATION
Understand how industry characteristics influence business behavior and overall industry performance.
SCP Paradigm
Explains the relationship between industry structure, company conduct, and industry performance.
Structure
Industry structure (Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly)
Conduct
Influences
Determines
How firms behave and compete
Performance
Industry profitability
Market Concentration
Measures how much market power is concentrated among competing companies.
CR4
measures the combined market share of the four largest companies in an industry.
Example : there are six companies in the bread industry:
Company A 35% Market Share
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Company B 25% Market Share
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Company C 15% Market Share
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Company D 10% Market Share
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Company E 10% Market Share
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Company F 5% Market Share
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HHI (Herfindahl-Hirschman Index)
Unlike CR4, which only considers the four largest companies, HHI considers the market shares of all companies in the industry.
It works by squaring each company's market share and then adding all the results.
HHI above 2,500 indicates a highly concentrated market.
4. Ecosystem Cooperation & Game Rules
The 6th Force Complementors & Value Net
Moving beyond Porter's 5 forces to a cooperative Value Net
Products that increase customer Willingness to Pay (WTP) for core offerings
Hardware & consumables (e.g., printers & ink cartridges)
Direct & indirect feedback loops driving winner-takes-all dynamics
Strategic Logic of Complement Dynamics
Monopolize and differentiate the core offering
Encourage intense competition, standardization, and overcapacity in complementor markets
Drive complement prices down to direct ecosystem value into the firm's bottleneck
Industry Benchmark: TSMC Open Innovation Platform (OIP, launched 2008)
Share process design kits (PDKs) with EDA & IP vendors for first-time silicon success
Strict pure-play foundry commitment (never compete with customers)
Controlling Bottlenecks & Architectural Advantage
Jacobides' Architectural Advantage Framework
Proactively redesign value chain boundaries rather than passively taking industry structure as given
Create and monopolize scarce, irreplaceable bottleneck layers
Control Scarce Bottlenecks (Gated Walled Garden)
Control distribution gateways and monetize customer access
Apple controlling iOS & the App Store (charging the 30% commission)
Commoditize Complementary Layers (Open-Source Disruption)
Open-source peripheral layers to neutralize rivals' platform advantages
Google open-sourcing Android (commoditizing mobile OS to direct traffic to search/ads)
PARTS Game Framework & Co-opetitive Dynamics
Core Co-opetition Philosophy (Brandenburger & Nalebuff)
Business is not zero-sum war: Cooperate to grow the pie; compete to divide the pie
Game Transformation: Shift from one-shot prisoner's dilemma to repeated games with credible retaliatory threats
5 Strategic Levers to Change Game Rules (PARTS Framework)
P - Players: Introduce new players or alter the payoff structure across customers and suppliers
A - Added Values: Maximize own uniqueness and value added so the ecosystem cannot bypass you
R - Rules: Shape contractual terms and transaction norms (e.g., Most-Favored-Customer clauses)
T - Tactics: Manage fog of war through credible commitments and strategic signaling
S - Scope: Link or delink market boundaries to leverage opponent scale against them (Judo strategy)
Taiwan Aviation Duopoly (China Airlines vs. EVA Air)
Passenger routes, loyalty programs, cabin service, and premium ticket pricing
Cargo belly space sharing, airport ground handling mutual backup, and bilateral route lobbying
3.Strategic Groups & Strategic Positioning Analysis
Strategic Group Mapping
Clusters rivals with similar strategies & resource configurations
Profitability varies across groups
Bubble Size = Firm Market Share
2 Strategic Dimensions
Eg.Auto: Price vs. Product Line Breadth
Supercar, Luxury, Mass, Budget
Mobility Barriers
Structural hurdles separating strategic groups
Prevents low-profit from :arrow_forward: high-profit
Eg.Gogoro: Battery-swapping station network moat
Industry Lifecycle Evolution & KSFs(Key Success Factors)
Time
5. Real-World Action-Response Rivalry
Real-World Case Study 7-Eleven vs. FamilyMart
Ecosystem Dynamics in Taiwan Convenience Retail
Baseline Symmetry & Mutual Forbearance
The Attack
The Response & Counter-Escalation
Chen’s AMC Model Predicting Attacks and Responses
The Behavioral Micro-Foundations of Rivalry
Awareness
Capability
Motivation
Action Types & Attack-Response Dynamics
Strategic Actions vs. Tactical Actions
Tactical Actions
Strategic Actions
Determinants of Attack & Response
Likelihood of Attack
Likelihood of Response
Market Commonality, Resource Similarity & Mutual Forbearance
Structural Preconditions for Rivalry
Resource Similarity (R/S)
Market Commonality (M/C)
Mutual Forbearance
Hypercompetition & Transient Advantage
Key Concept & Strategic Context
Creative Destruction & Hypercompetition
From Static Moats to Dynamic Maneuvers
Transient Advantage
G1
113251002 IPCM3 Ann
70%
113212016 IBS3 Tina
70%
115112404 IBS3 Devina
70%
114251017 IPCM Tony
90%
112251042 IPCM4 Kuan Yu
70%
Introduction
Early adopters & Low penetration
FSF: Product Innovation
Growth
Rapid increase in market penetration
KSF:Cost Efficiency (Scale Economies)
Maturity
Market saturation,price-sensitive
KSF: Brand Differentiation
Decline
Shrinking market
KSF:Niche Rationalization
There are 2 criteria
there are two main measurements