INDUSTRY/MARKET ANALYSIS FIRMS WILL ONLY SUCCEED IF THEY EFFECTIVELY ANALYSE THEIR COMPETITORS MUST FOLLOW THIS WITH AGGRESSIVE STRATEGIES
Oct 28, 2014
INDUSTRY/MARKET ANALYSIS
FIRMS WILL ONLY SUCCEED IF THEY EFFECTIVELY ANALYSE THEIR
COMPETITORSMUST FOLLOW THIS WITH AGGRESSIVE
STRATEGIES
SUSTAINABLE COMPETITIVE ADVANTAGE
THE REASON FOR COMPETITOR ANALYSIS
COMPETITIVE ADVANTAGE1. PRICE2. PRODUCT RANGE3. QUALITY4. SERVICE LEVELS………………
COMPETITIVE ADVANTAGE
MUST BE DEEPLY EMBEDDED IN THE FIRM OVER TIME
RESOURCES SKILLS CULTURE INVESTMENT
IT’S A DYNAMIC PROCESS NOT A STATIC ONE
SOURCES OF COMPETITIVE ADVANTAGE
LOW UNIT COST DIFFERENTIATIO
N NICHE MARKETS PERFORMANCE QUALITY SERVICE
VERTICAL INTEGRATION
SYNERGY TECHNOLOGY CULTURE &
LEADERSHIP
PORTER AGAIN
CONCENTRATES ON THREE KEY FACTORS
1. COST LEADERSHIP
UNIT COSTS KEPT AS LOW AS POSSIBLEWITHOUT REDUCING PRODUCT QUALITYACHIEVED BY economies of scale better training more investment in technology
PORTER
2. DIFFERENTIATION
MAKING PRODUCTS AS UNIQUE AS POSSIBLE (USP’s)
e.g. via product quality, customer service
THIS DIFFERENTIATES THEM IN THE CUSTOMERS MIND FROM THE OTHER FIRMS IN THE MARKET
PORTER
3. FOCUS STRATEGY
FOCUSSING THE MARKETING MIX ON A SPECIFIC SEGMENT OF THE MARKET - buyer group
NOT GOING FOR THE MARKET IN GENERAL BUT A PARTICULAR PART OF IT
e.g. Primark, Ryanair, Travel Lodge
ASSESSING THE DEGREE OF COMPETITION
PORTERS FIVE FORCES (previous presentation)
THE DEGREE OF CONCENTRATION OF FIRMS IN THE MARKET
THE RANGE OF AGGRESSIVE STRATEGIES OF COMPETITORS IN THE MARKET
DEGREE OF CONCENTRATION
LIES BETWEEN TWO EXTREMES i.e. perfect competition and monopoly
ADD TO THIS – CONTESTABLE MARKETS
CONTESTABLE MARKETS
WHAT IS A CONTESTABLE MARKET? (BAUMOL – 1982)
A MARKET WHERE THERE IS THE THREAT OF COMPETITION
WHERE THE BARRIERS TO ENTRY COULD BE OVERCOME
FEATURES OF CONTESTABILITY
ENTRY COSTS ARE LOW EXIT COSTS ARE LOW ENTRY & EXIT CAN BE MADE
SPEEDILY SUNK COSTS HIT & RUN TACTICS
CONTESTABLE MARKETS
WHERE CONTESTABILITY EXISTS THERE WILL BE MORE COMPETITION
AS EXISTING FIRMS WILL FEAR THE THREAT OF NEW FIRMS
THEY WILL BEHAVE MORE COMPETITIVELY
THE EFFECT LOWER PRICES HIGHER QUALITY MORE EFFICIENCY LOWER PROFITS
CONTESTABILITY IS POSSIBLE IF THE BARRIERS CAN BE
OVERCOME
THE RELEVANCE OF THE GOVERNMENT
KEY FACTOR INFLUENCINGA FIRMS COMPETITIVENESS
1. TAX POLICY 2. MONETARY POLICY3. SUBSIDIES, GRANTS, SUPPORT & HELP 4. CONTRACTS
5. LEGISLATION6. COMPETITION
POLICY7. INTERVENTION & BUREAUCRACY8. REGIONAL POLICY
THE INTERNATIONAL ENVIRONMENT
MUST ALSO BE ANALYSED DUE TO MULTINATIONALS & GLOBAL FIRMS GLOBAL ECONOMIC, SOCIAL,
TECHNOLOGICAL & POLITICAL CHANGE
KEY INTERNATIONAL ISSUES
LOW WAGE ECONOMIES OUTSOURCING TERRORISM/WAR/CRIME RESOURCE ACQUISITION
e.g. raw materials DEVELOPING COUNTRIES ENLARGEMENT OF THE
EU
EUROPEAN UNION STRATEGY e.g. the Euro
TECHNOLOGICAL ADVANCEMENT
TRADE ISSUES GLOBAL
BRANDING
COST MODELS
DIAGRAMS FOR KEY MARKET FORMS (see accompanying
text under this slide:17)
PERFECT COMPETITION
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OLIGOPOLY
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MONOPOLY
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PRICING PERFECT – ALL ARE PRICE TAKERS MONOPOLISTIC – SOME PRICE MAKERS
(via product diff) MOST ARE PRICE TAKERS
OLIGOPOLY – PRICE MATCHING & USUALLY A LEADER (price maker) OTHERS ARE PRICE TAKERS
MONOPOLY – PRICE MAKER USES DIFF PRICING DUE TO PED DIFFERENTIALS & ABILITY TO SEPARATE MARKETS