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Industry 1
Industry 2
Industry 2
Market size
Market growth rate and where the industry is in the growth cycle (early development, rapid growth
and takeoff, early maturity, late maturity and saturation, stagnant and aging, decline and decay)
Number of rivals and their relative sizesis the industry fragmented with many small companies or
concentrated and dominated by a few large companies
The number of buyers and their relative sizes
The pace of technological change in both production process innovation and new product
introductions
Whether the product(s)/service(s) of rival firms are highly differentiated, weakly differentiated, or
essentially identical
Whether companies can realize scale economies in purchasing, manufacturing, transportation,
marketing, or advertising
Whether high rates of capacity utilization are crucial to achieving low-cost production efficiency
Whether the industry has a strong learning and experience curve such that average unit cost declines
as cumulative output (and thus the experience of "learning by doing") builds up
Capital requirements
market contenders
The market attempts of companies in other industries to win customers over to their own substitute
products
how difficult or costly it is for the industry's customers to switch to substitute products
price of substitutes
The potential entry of new competitors
economies of scale
capital requirements
regulatory policies
uniqueness of product
availability of substitutes
Product innovation
Technological change
Marketing innovation
Emerging buyer preferences for differentiated products instead of a commodity product (or for a more
standardized product instead of strongly differentiated products)
Regulatory influences and government policy changes
Competitive Scope
Local
Regional
National
Multicountry
Global
Strategic Intent
Be the dominant leader
Overtake the present Industry leader
Be among the industry leaders (top 5)
Move into the top 10
Move up a notch or two in the industry rankings
Overtake a particular rival (not necessarily the leader)
Maintain position
Just survive
Market Share Objective
Aggressive expansion via both acquisition and internal growth
Expansion via internal growth (boost market share at the expense of rival firms)
Expansion via acquisition
Hold on to present share (by growing at a rate equal to the industry average)
Give up share if necessary to achieve short-term profit objectives (stress profitability, not volume)
Competitive Position/Situation
Getting stronger; on the move
Well-entrenched; able to maintain its present position
Stuck in the middle of the pack
Going after a different market position (trying to move from a weaker to a stronger position)
3
Technology-Related KSFs
Scientific research expertise (important in such fields as pharmaceuticals, medicine, space
exploration, other "high-tech" industries)
Production process innovation capability
Product innovation capability
Expertise in a given technology
Manufacturing-Related KSFs
Low-cost production efficiency (achieve scale economies, capture experience curve effects)
Quality of manufacture (fewer defects, less need for repairs)
High utilization of fixed assets (important in capital intensive/high fixed-cost industries)
Low-cost plant locations
Access to adequate supplies of skilled labor
High labor productivity (important for items with high labor content)
Low-cost product design and engineering (reduces manufacturing costs)
Flexibility to manufacture a range of models and sizes/take care of custom orders
Distribution-Related KSFs
A strong network of wholesale distributors/dealers
Gaining ample space on retailer shelves
Having company-owned retail outlets
Low distribution costs
Fast delivery
4
Marketing-Related KSFs
A well-trained, effective sales force
Available, dependable service and technical assistance
Accurate filling of buyer orders (few back orders or mistakes)
Breadth of product line and product selection
Merchandising skills
Attractive styling/packaging
Customer guarantees and warranties (important in mail-order retailing, big ticket purchases, new
product introductions)
Skills-Related KSFs
Superior talent (important in professional services)
Quaiity control know-how Design expertise (important in fashion and apparel industries)
Expertise in a particular technology
Ability to come up with clever, catchy ads
Ability to get newly developed products out of the R&D phase and into the market very quickly
Organizational Capability
Superior information systems (important in airline travel, car rental, credit card, and lodging
industries)
Ability to respond quickly to shifting market conditions (streamlined decision-making, short lead
times to bring new products to market)
More experience and managerial know-how
Other Types of KSFs
Favorable image/reputation with buyers
Overall low cost (not just in manufacturing)
Convenient locations (important in many retailing businesses)
Pleasant, courteous employees
Access to financial capital (important in newly emerging industries with high degrees of business
risk and in capital intensive industries)
Patent protection
7. Industry Attractiveness and Prospects for Above-Average Profitability
Whether the prevailing driving forces will favorably or unfavorably impact the industry.
The potential for the entry/exit of major firms (probable entry reduces attractiveness to existing firms;
the exit of a major firm or several weak firms opens up market share growth opportunities for the
remaining firms).
The stability/dependability of demand (as affected by seasonality, the business cycle, the volatility of
consumer preferences, inroads from substitutes, and the like).
Whether competitive forces will become stronger or weaker.
Whether competitive conditions and driving forces are conducive to rising or falling industry
profitability.