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• Industry and Competitive Analysis– Industry Structure– Evolution of Industries– Industry Supply Chain– Potential Industry Earnings– Porter’s 5 Forces Analysis– Competitive Intensity– Strategies for minimizing competitive
forces– Perceptual Map– Barriers to Entry/Incumbency advantages– DSIR effect
• Company Resources and Capabilities– ARC Analysis/HR– SWOT Analysis– Value Creating Processes/Core
• Porter’s insight recognizes that the following characteristics are important to profitability of the incumbent:
The intensity of competition
The ability of suppliers or buyers of industry products to restrain industry profits
The behavior of firms producing closely related goods not included in the industry
Potential for entry into the market by new firms
Porter's 5 Forces impact on profitability
Suppliers
Bargaining power of Suppliers
Customers
Bargaining power of
New entrant
Threat of New Entrants
Substitutes Threat fromSubstitutes
The incumbentfirms
Competitive rivalry
Root causes that put pressure onindustry profitability
Few large suppliersNo substitutesCustomers are fragmentedSwitching costs to another supplier are highSupplier integrating forward
Economies of scaleDownstream more profitableLow barriers to entry downstream
Concentration of buyersIncumbents are fragmentedProduct is undifferentiatedSwitching to another supplier is simpleProduct is not strategic to the customerCustomers can produce the product themselvesCustomer knows the production costsCustomers can integrate back-words
Reducing competitive rivalry withinDifferentiate your productAvoid price competitionReduce industry over capacityFocus on different customer segments
Reducing the Bargaining Power of SuppliersPartneringSupply Chain ManagementIncrease mutual dependencyBuild knowledge of supplier costs/methodsTake-over supplier
Reducing the Bargaining Power of CustomersPartneringIncrease loyaltyIncrease incentives and value addedIncrease switching costsCut out intermediaries
Suppliers
Bargaining power of Suppliers
The incumbentfirms
Competitive rivalry
Substitutes Threat fromSubstitutes
Customers
Bargaining power of
Porter's 5 Forces impact on profitability
Suppliers
Bargaining power of Suppliers
Customers
Bargaining power of
New entrant
Threat of New Entrants
Substitutes Threat fromSubstitutes
The incumbentfirms
Competitive rivalry
Nappies 14-16?
Porter's 5 forces insight-Intensity of competition amongst incumbents-Bargaining power of suppliers and buyers- Threat from substitutes and new entrants
Spectrum of competition-monopoly to perfect competition-Herfindahl-Hirschman index measure of intensity-strategies for minimizing intensity of competition
Product and brand differentiation is a key strategy-Perceptual mapping technique-Using perceptual maps for positioning products and brands