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Intra-Industry Analysis
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OUTLINE
INTRODUCTION AND OBJECTIVES
SEGMENTATION ANALYSIS
STRATEGIC GROUPS
COMPETITOR ANALYSIS
Competitor Intelligence
SUMMARY
85
lNTRA-l;-lDUSTRY ANALYtilS
FIG
Classify the firms within an industry into strategic groups based on similari
ties in their strategies.
The
Custol
prod~
istics '
~I SEGMENTATION ANALYSIS 2
Industries tend to be defined broadly: the automobile industry, the computer soft
ware industry, the electric power industry. To analyze competition at a more fine
grained level, we need to define the markets within which firms meet at a more dis
aggregated level in terms of products and geography.
Seg
~DUSTRY ANALYSIS
SEGMI3~TATION ANALYSIS
y itself is an artificial
markets: notably in diesel fuel and aviation fuel, bitumen in Poland and Hungary;
and lubricants in Western Europe.
Differences in customers and competition between segments may also mean
differences in key success factors between segments. In the United States beer
industry, competing effectively in the market for standard, packaged beer requires
cost-efficient operation in the form oflarge-scale, automated production, regional or
national distribution through a vast network of local franchised distributors, and
heavy investment in advertising and promotion. However, in the market for spe
cialty beers, success is far more dependent on a carefully crafted, quality, flavorful
product; local mystique; and localized distribution that emphasizes freshness and
careful handling.
e environment is not
si-Cola's competitive
:s of Coca-Cola. For
ons of Boeing's com
. profit opportunities
his chapter explores,
,Ie to:
identifY the relative
in key success
~nces
,s based on similari
I
I,
'~on
erent submarkets
into segments and
seful not only for
t to enter, but also
sence and how to
industry earned
d in selected sub-
87
FIGURE 4.1
The Basis for
Segmentation:
Customer and
Product Character
istics
88
INTRA-INDUSTRY ANALYSIS
ain Stages of Segmentation Analysis as Applied to the European Metal Can Industry
1. Identify Key Segmentation VariabJesand Categories
Fruit
juice
r--
Steel 3-pie<:e
Pet
food
Soft
Beer
Oil
France
drink
Germany
~
. __ spain/Portugal
~
Italy
r-------t---~--i---~---r__-_____j~
e--f--
Steel 2pie<:e
Aluminum 2-piece
-
General cans
Composite cans
Aerosol cans
e-
3.AnaJyzeSegmentAttractwene~
Barriers to mobility
heavy cost of
aluminum
can lines
Internal rivalry
few companies
I-_~' low differentation
Substitutes
other types of can not viable
I-_~ plastic not attractive in small
sizes
I glass heavy
Buyer power
dominant influence of a
few soft drink cannerl
bottlers
Within each segment, how do customers choose,al"\d what is needed to survive competition1
5. Analyze Attractions of Broad versus Narrow Segment Scope
IJDUSTRY ANALYSIS
89
SEGMENTATION ANALYSIS
90
INTRA-INDUSTRY ANALYSIS
EXHIBIT 4.2
P
R
D
U
C
Luxury cars
Full-size sedans
Mid-size sedans
Small-size sedans
Station wagons
Passenger minivans
Sports cars
Sport-utility
Pickup trucks
E. Europe
Asia
Latin
America
AU$'lralasia
Africa
- - --
--
- ~
-~-~-~------ -~
One of the most useful applications of such a segmentation would be an understanding of how profit
ability in the past had varied between segments and the determinants of such differentials. For exam.,.
pie, during the 1990s:
The North America market for smallsized sedans has always yielded low profits due to the large num
ber of competitors (all the world's major auto producers including a number of low<ost producers
such as HyundaO, comparatively low product differentiation (as indicated by the convergence of car
designs, automotive technologies, and quality levels), and high level of capacity relative to demand.
The North America/European markets for passenger minivans have been highly profitable segments due
to strong demand relative to capacity and comparatively few participants. Chrysler's survival during the
19805 was primarily du:e to its strong position within this segment (with its Dodge Caravan and Plymouth
Voyager). The influx of companies into minivans was eroding their margins during the late 19905.
Worldwide, the market for luxury cars was highly unattractive for most of the 1990s. Despite this tra
ditionally being a high margin segment due to high product differentiation and price insensitivity of
buyers, Rolls Royce, Mercedes, Jaguar, and BMW were, as a group, barely profitable. ThesmaH size
of the segment made it difficult to spread the fixed costs of new model development. I.ow demand
due to recession in Europe and a luxury tax in the United States resulted in an overhang of excess
capacity. New entry by Honda (Acura), Toyota (Lexus), and Nissan (Infiniti), together with the acquisi
tion of Jaguar by Ford, had greatly increased competition. Meanwhile, enhancement in the quality
and features of mass-produced family sedan made these cars closer substitutes for luxury cars.
Once we understand the factors that determined segment profitability in the past, then we can predict
segment profitability in the future.
significant barriers to the mobility of firms from other segments, a segment will be
unable to maintain superior profitability to that of the industry.4 In most industries,
the increased flexibility of design and production made possible by computer-aided
design and flexible manufacturing systems has had the effect of reducing barriers to
mobility. In the automobile industry, high margin segments such as luxury cars, pas
senger vans, and sport utility vehicles have seen a sharp rise in competition as volume
car manufacturers have entered them.
Segmentation analysis can -also be useful in identifYing unexploited opportuni
ties in an industry. For example, a segmentation matrix of the restaurant industry in
DUSTRY ANALYSIS
market by prod-
15I/l
AfrIca
~~ _l
==J
SEGMENTATION ANALYSIS
a town or locality might reveal a number of empty segments. The interesting ques
tion is whether such empty segments represent unexploited opportunities or
whether they reflect a lack of customer demand. Consider the market for kitchen
appliances. In the early 1960s, microwave ovens and dishwashers were manufactured
almost exclusively for the catering trade. A segmentation analysis of the appliance
industry might have alerted the firms established in these segments to opportunities
for developing these products for the consumer market.
Differences in competi
tive structure and in customer preferences between segIT1ents imply differences in
the basis of competitive advantage. Using the same analysis of buyers' purchase cri
teria and the basis on that firms compete that was outlined in Chapter 3 (see Figure
3.6), we can identify Key Success Factors for individual segments.
For example, the United States bicycle industry can be segmented on the basis of
the age-group of the customer (infants, children, youths, adults), price, branding, and
distribution channel. Combining and categorizing these segmentation variables results
in four major segments each with different Key Success Factors (see Figure 4.2).
of how profit.
Is. For exam
FIGURE 4.2
Segmentation and Key Success Factors in the u.S. Bicycle Industry
segment will be
most industries,
computer-aided
cing barriers to
uxury cars, pas
tition as volume
91
92
INTRA-INDUSTRY ANALYSIS
_I
STRATEGIC GROUPS
Whereas segmentation analysis concentrates on the characteristics of markets as the
basis for disaggregating industries, strategic group analysis uses the characteristics
of firms as the basis for division. A strategic group is "the group of firms in an
industry following the same or a similar strategy along the strategic dimensions."6
Strategic dimensions include those decision variables that best distinguish the busi
ness strategies and competitive positioning of the firms within an industry. These
may include product market scope (in terms of product range and geographical
breadth), choice of distribution channels, level of product quality, degree of vertical
integration, choice of technology, and so on. By selecting the most important strate
gic dimensions and locating each firm in the industry along them, it is usually possi
NDUSTRY ANALYSIS
93
STRATEGIC GROUPS
ce ofwhich segments
Irion versus segment
iepend on two major
costs. In an industry
dopt a similar strate
s need to be adopted
iculries for the firm
,affected by its strat ~
tweight motorcycles
:ison could not com
age to the firm's rep
eems to be suffering
segment specialists
evealed.
lk made it vulnera
as Coca-Cola and
(uired by Cadbury
~a, Jaguar, }U\1C
f markets as the
characteristics
of firms in an
dimensions."6
guish the busi
industry. These
d geographical
gree of vertical
portant strate
s usually possi-
FIGURE 4.3
Strategic Groups in the World Automobile Industry
ble to identify one or more groups of companies that have adopted more or less
similar approaches to competing within the industry. Figure 4.3 identifies strategic
groups within the world automobile industry, and Figure 4.4 identifies strategic
groups within the oil industry. 7
Strategic groups were developed as a result of empirical analysis of the domestic
appliance 8 and brewing industries. 9 Most of the empirical research into strategic
groups has been concerned with analyzing differences in profitability among firms. 10
The basic argument is that mobility barriers between strategic groups permit some
groups of firms to be persistently more profitable than other groups. In general, the
proposition that profitability differences within strategic groups are less than differ
ences between strategic groups, has not received robust empirical support. l l The
inconsistency of empirical findings may reflect the fact that the members of a strate
gic group, though pursuing similar strategies, are not necessarily in competition with
one another. For example, within the world oil industry, the nationally based inte
grated oil companies such as Petrobras (Brazil), Indian Oil, Mitsubishi Oil (Japan),
and Petronas (Indonesia), are not competing directly with one another, although they
are located within the same strategic group. Results from the U.S. airline industry
suggest that, though strategic group analysis may not tell us much about profitability
differences, it can be useful in helping us understand the types of competitive
responses by different firms within an industry.12
For our purposes, strategic group analysis is more valuable as a descriptive than
a predictive tool. Because strategic group analysis focuses on strategic similarities
94
INTRA-INDUSTRY ANALYSIS
FIGURE 4.4
Strategic Groups
Within the World
Petroleum Industry
rather than competitive relationships, its potential for explaining inter-firm profit
ability differences is limited. However, as a means of gaining a broad picture of the
types of firms within an industry, the kinds of strategies that have proven viable, and
how different firms are positioned in relation to one another, strategic group analysis
can contribute substantially to the understanding of industry structure, firm strategy,
and industry evolution. This view of strategic groups as a valuable descriptive device
is supported by Reger and Huff's evidence that managers within an industry have
consistent perceptions of groupings of similar firms. 13
~ COMPETITOR ANALYSIS
The purpose of competitor analysis is to predict the behavior of one's closest rivals.
The importance of competitor analysis to a company depends on the structure of its
industry. In a fragmented industry where firms produce an undifferentiated product,
as in the case of most agricultural commodities, market competition is the outcome
of the strategies and decisions of so many producers that there is little point in ana
lyzing the behavior of individual firms. In highly concentrated industries, the com
petitive environment of a company depends critically on the behavior of a few rivals.
In household detergents, the industry environment is dominated by the competitive
interaction of Procter & Gamble, Colgate-Palmolive, and Lever Brothers (Uni
lever). The same can be said ab~ut large passenger jet aircraft (Boeing and Airbus
Industrie), jet engines (GE, Pratt & Whitney, Rolls-Royce), soft drinks (Coke and
---------
.------
IUSTRY ANALYSIS
95
COMPETITOR ANALYSIS
Pepsi), news weeklies (Time, Newsweek, and US. News & World Report), and the
retail market for office supplies (Office Depot, Staples, and Office Max). Similar
circumstances exist in more local markets. For the owner of the Shell gas station in
the English village of Coalpit Heath, the dominant feature of the local gasoline
market is the competitive behavior of the Texaco station across the road.
Even in markets that are not dominated by two or three competitors, the extent
of differentiation in the goods and services offered by different firms may mean that
a company faces just one or two close competitors whose strategies substantially
impact its profitability.
In the UK newspaper industry, ten national daily newspapers and a number
of regional and local papers compete fiercely. Yet, for The Independent, the
competitive environment is determined primarily by The Times and the Daily
Telegraph. Among the tabloids The Sun, Daily Mirror, and Star form another
intensely competitive group.
In the U.S. automobile market, more than 20 manufacturers vie for market
share. However, Jaguar's competitive environment is most strongly influ
enced by the product, pricing, and promotional policies of Mercedes-Benz
and BMW.
inter-firm profit
Dad picture of the
roven viable, and
ic group analysis
re, firm strategy,
escriptive device
an industry have
It is not only through marketing activities that firms' competitive strategies are
interdependent. In industries where plant capacity is large relative to the total mar
ket, investment decisions are highly interdependent. 14 In petrochemicals, any single
firm's calculation of the returns on investment in a new plant must take careful
account of other firms' investment plans. Research and development activities show
similar interactions. In pharmaceuticals, the returns to research and development
depend crucially on being the first company to file for a patent on a new drug. R&D
investments require a careful appraisal 'of whether other firms are pursuing similar
avenues of research and, if so, their stage of development.
It is in the analysis of these intensive interactions between small numbers of
competitors that applications of game theory described in the previous chapter
have proven to be especially useful. The value of game theory is that it provides a
structured approach to identifYing the choices available to the different players,
specifYing the payoffs, and showing how the game can be changed to alter the pay
offs. The central weakness is that formal game theory models cannot be applied to
complex business situations. The approach to competitor analysis followed here is
less theoretical but more practical. It focuses on two issues: acquiring information
about competitors and predicting their behavior.
Cotnpetitor Intelligence
Competitor analysis has three major purposes:
To forecast competitors' future strategies and decisions
To predict competitors' likely reactions to a firm's strategic initiatives
To determine how competitors' behavior can be influenced to make it more
favorable
For all three purposes, the key requirement is to understand competitors in order
to predict their choices of strategy and tactics and their reactions to environmental
changes and our own competitive moves. To understand competitors, it is imponant to
96
INTRA-INDUSTRY ANALYSIS
be informed about them. One of the fastest growing areas of corporate activity in recent
years has been competitor intelligence. About one-tenth oflarge U.S. corporations are
estimated to have competitor intelligence units, a proportion that has tripled since
1988. Competitor intelligence involves the systematic collection and analysis of pub
lic information about rivals for informing decision making. Business rteek notes that
Anne Selgas, Eastman Kodak's director of competitive intelligence:
... regularly reads an extensive list of publications that even she considers a
tad bizarre. Her favorite is the Transylvania Times, a semi-weekly out of
tiny Brevard in North Carolina's Transylvania County. A medical film
rival-Sterling Diagnostic Imaging Inc.-has a plant there, and Selgas says
the paper has lots of hiring and layoff news that heips her understand
what's going on. 15
Historically, European and Asian companies have given greater attention to com
petitor intelligence than U.S. companies. However, increased competitive pressures
and greater need for fast responses have caused many firms to focus greater attention
on their competitors. Discount broker Charles Schwab created its competitor intel
ligence program in 1994, tracking both traditional and new competitors by paying
consultants to visit rivals' offices, hiring competing firms' employees, and quizzing
customers. The distinction between public and private information is not always
clear-the application of trade secrets law to the information carried by an employee
moving between firms is especially murky. As a result, competitor intelligence
always runs the risk of degenerating into industrial espionage. General Motors' case
against Volkswagen over the alleged theft of confidential information by Mr. Lopez
and his colleagues is the most publicized recent example. In June 1996, Boehringer
Mannheim Corp. sued Johnson &Johnson's Lifescan Inc. for obtaining confidential
information relating to its AccuEasy blood-monitoring device through eavesdrop
ping on a sales meeting.
',!DUSTRY ANALYSIS
COMPETITOR ANALYSIS
97
FIGURE 4.5
A Framework for
Competitor Analysis
she considers a
I-weekly out of
~ medical film
and Selgas says
ler understand
: attention to com
rnpetitive pressures
us greater attention
ts competitor intel
lpetitors by paying
'Yees, and quizzing
ltion is not always
ied by an employee
~etitor intelligence
meral Motors' case
tion by Mr. Lopez
: 1996, Boehringer
lining confidential
uough eavesdrop-
~lem is likely to be
ltic approach that
iwill be used. Our
eat generals from
~telligence and to
1.5 shows a basic
the analysis.
investment projects are being undertaken, what hiring is taking place, what new
products are in the pipeline, what acquisitions or strategic alliances have recently
been undertaken or rumored, what new advertising and promotional campaigns
have been planned? Because of the importance of communicating both to employees
who implement the strategy and to the investment community who evaluates the
strategy and forecasts its implications for future performance, companies are becom
ing more explicit about their strategic plans. For example, British Petroleum's web
site includes not only the company's annual report to shareholders and 10K report,
but also its press releases and reports to analysts. Taken together, these include
explicit statements of corporate strategy and strategies for each of BP's businesses
(upstream, downstream, chemicals, and alternative energy), together with forecasts
of key operating and financial variables. Predictions about future strategies can also
be inferred from current decisions: Sears, Roebuck's announcement in 1993 of its
intention to sell its Dean Witter financial services subsidiary was seen as a signal
that Sears was refocusing on its core retailing businesses and would subsequently
devote resources and top management energies into revitalizing its competitive posi
tion within U.S. retailing. Similarly, AT&T's desire in 1997 to acquire the regional
Bell operator, SBC Communications, was widely viewed as an indicator that AT&T
had yet to abandon its old monopolistic ways and embrace aggressive cost and tech
nological competition, and customer-focused marketing in the new, global telecom
munications market.
98
INTRA-INDUSTRY ANALYSIS
A competitor's strate
gic decisions are conditioned by its perceptions (of the outside world and of itself)
and by assumptions concerning the industry and about business in general. Both are
likely to reflect the theories and beliefs that senior managers hold about their indus
try and the determinants of success within it. Evidence suggests that, not only do
these systems of belief tend to be stable over time, they also tend to converge within
an industry. Hence, at any point of time, different firms tend to adhere to very simi
lar beliefs. These industry-wide beliefs about the determinants of success have been
described by J-C Spender as "industry-recipes."18
Industry-recipes may limit the ability of a firm, and indeed an entire industry, to
respond rationally and effectively to external change. The result may be that established
firms have a "blindspot" to competitive initiatives of a newcomer. During the 1960s,
the Big Three U.S. automobile manufacturers firmly believed that small cars were
unprofitable. This belief was based on their own experiences-which were, in part, a
consequence of their own cost allocation procedures. As a result, they were willing to
yield the fastest growing segment ofthe U.S. automobile market to Japanese and Euro
pean imports. Similar beliefs explain the complacency of British and U.S. motorcycle
manufacturers in the face ofJapanese competition (see Exhibit 4.3).
~USTRY ANALYSIS
iompany driven by
~ or GEC pIc is a
!share goals such as
~ ROI objective is
fat. Such a reaction
~ritish motorcycle
.cs industry have
anies to Japanese
market segments
Gamble to com
eting competition
, promotions, and
t losses for up to
~portant to com
~~ of the subsid
~ Important. How
~
respond to com
~or's objectives is
~ore a company is
~ with the present
~ng well short of
Fcompanied by a
99
COMPETITOR ANALYSIS
EXHIBIT 4.3
Motorcycle Myopia
During the 1960s, the motorcycle markets in Brit
ain and the United States were dominated by
BSA and Harley-Davidson, respectively. At the
beginning of the 1960s, Japanese manufactur
erSt spearheaded by Honda, began to make
inroads into the market for small bikes in both
countries. The leading British and U.S. manufac
turers discounted the Japanese threat, princi
pally because of their disregard for smaller
motorcycles.
Eric TurnE!r, chairman of BSA ltd (manufac
turE!r of Triumph and BSA motorcycles) com
menwd in 1965:
The success of Honda, Suzuki, and
Yamaha has been Jolly good for us.
People start out by buying one of thE!
low-priced Japanese jobs. They get to
.enjoy the fun and exhilaration of the
open road and they frequently end up
buying one of our more powerful and
expensive machines. 26
~rofitability disci
s resulting from
i ld market prices.
petitor's strate
ld and of itself)
neral. Both are
ut their indus
,at, not only do
~onverge within
~re to very simi
~cess have been
I.,tIre industry, to
ithat established
Predicting a competitor's
future strategy is not enough. The key issue for a firm is evaluating the seriousness of
a potential challenge. The extent to that a competitor threatens a company's market
position depends on the competitor's capabilities. Detailed analysis of resources and
capabilities is deferred to the next chapter. At this stage, the key elements are an
examination of the firm's principal categories of resources including financial
reserves, capital equipment, work force, brand loyalty, and management skills,
together with an appraisal of capabilities within each of the major functions: R&D,
production, marketing, distribution, and so on.
Circumspection in evaluating a competitor's capabilities is essential before
embarking on a strategy that may provoke a competitor. Many brilliant and innova
tive new companies have failed to withstand the aggressive reactions of established,
well-financed incumbents. In the U. S. airline industry, most of the new entrants of
the early 1980s had been forced out of business by the end of the decade. Con
versely, the trepidation felt by established companies in network software, Internet
browser software, on-line news, information, and entertainment over Microsoft's
entry in these markets is a result of Microsoft's huge financial resources, its market
ing muscle, and its fearsome reputation for market dominance.
100
INTRA-INDUSTRY ANALYSIS
SU
share goals
the Japanese producers were not a serious threat in the big bike market
)USTRY ANALYSIS
101
SUMMARY
1945). However, subsequent studies have suggested that this practice is far from
prevalent. 20
The credibility of threats is critically dependent on the reputation of a company.21
Even though carrying out threats against rivals is costly and depresses short-term
profitability, such threats can build a reputation for aggressiveness that deters compet
itors in the future. The benefits ofbuilding a reputation for aggressiveness may be par
ticularly great for diversified companies where reputation can be transferred from one
market to another. 22 Hence, Procter & Gamble's protracted market share wars in dis
posable diapers and household detergents have established a reputation for toughness
that protects it from competitive attacks in other markets. Fortune magazine identifies
Gillette in razors and razor blades, Anheuser-Busch in beer,. and Emerson Electric in
sink disposal units as examples of companies whose aggressive quest for market share
has gained them reputations as "killer competitors," which has encouraged a number
of rivals to give up the fight. 23
Signaling may also be used to maintain a cozy industry environment of cooper
ation and restrained competition among firms. One means of avoiding price compe
tition in an industry is for firms to follow a pattern of price leadership. In the UK
gasoline market, the initiation of a price increase by a firm is normally preceded by a
period of consensus building during which the firm tests the water by press releases
that announce "the unsatisfactory level of margins in the industry," the "need for a
price increase to recoup recent cost increases," and the likelihood that "a price
increase will become necessary in the near future.,,24
$ requires that we
i in strategy. These
: change that may
~rna1-a failure to
~ within the com
legy and goals and
Sprovide a sound
~ns to a proposed
,strategy
change
I.
~ons may be cru
me four elements
seriousness of a
BSNTriumph
ity motorcycle,
er than market
~SUMMARY
d brand image,
e market
e Threats.
its competitors'
.ng is used to
rs designed to
r avoid certain
ation is well
main invasion
petitors of the
ely over-invest
tor's market, if
Ie competitive
e in deterring
, a warning to
versus Alcoa,
102
INTRA-INDUSTRY ANALYSIS
NOTES
1 "Computer Companies Rush to Servers to Boost Profits," Wall Street Journal, May 6,
1994: B6.
2 This section draws heavily on the approach used by Michael E. Porter, Competitive
Advantage (New York: Free Press, 1985): chapter 7.
3 Alfred P. Sloan, My Years with General Motors (London: Sidgewick &Jackson, 1963): 65,
67.
4 For a formal analysis of mobility barriers, see Richard E. Caves and Michael E. Porter,
"From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deter
rence to New Competition," QuarterfyJournal ofEconomics 91 (1977): 241-262.
5 William H. Davidson and Bro Uttal, "Service Companies: Focus or Falter," Harvard
Business Review (July-August 1989): 77-84.
6 Michael E. Porter, Competitive Strategy (New York: Free Press, 1980): 129.
7 For further discussion of strategic groups and their role in strategy analysis, see John
McGee and Howard Thomas, "Strategic Groups: Theory, Research, and Taxonomy,"
Strategic ManagementJournal7 (1986): 141-160.
8 Michael Hunt, Competition in the Major Home Appliance Industry, doctoral dissertation,
Harvard University, 1973; and Michael E. Porter, "Structure Within Industries and
Companies' Performance," Review ifEconomics and Statistics 61 (1979): 214-227.
9 Ken Hatten, Dan Schendel, and Arnold Cooper, ''A Strategic Model of the U.S. Brew
ing Industry," Academy ofManagementJournal21 (1978): 592-610.
10 Karl Cool and Dan Schendel, "Strategic Group Formation and Performance: The Case
of the U.S. Pharmaceutical Industry," Management Science 33 (1987): 1102-1124; A.
Feigenbaum and H. Thomas, "Strategic Groups and Performance: The U.S. Insurance
Industry," Strategic ManagementJournal 11 (1990): 197-215.
11 K. Cool and I. Dierickx, "Rivalry, Strategic Groups, and Firm Profitability," Strategic
ManagementJournal14 (1993): 47-59.
12 Ken Smith, Curtis Grimm, and Stefan Wally, "Strategic Groups and Rivalrous Firm
Behavior: Toward a Reconciliation," Strategic ManagementJournal18 (1997): 149-157.
13 R. K. Reger and A. S. Huff, "Strategic Groups: Cognitive Perspective," Strategic Man
agementJournaf14 (1993): 103-124.
14 For an analysis of such interdependence, see Michael E. Porter and A. M. Spence, "The
Capacity Expansion Process in a Growing Oligopoly: The Case of Corn Wet Milling,"
in The Economics of Information and Uncertainty, ed. ]. McCall (Chicago: University of
Chicago Press, 1982).
15 "They Snoop to Conquer," Business Week, October 28,1996: 172-176.
16 Henry Mintzberg, "Opening up the Definition of Strategy," in The Strategy Process: Con
cepts, Contexts and Cases, ed. Qyinn, Mintzberg and James (Englewood Cliffs, N]: Pren
tice-Hall,1988).
17 Boston Consulting Group, Strategy Alternatives fOr the British Motorcycle Industry (Lon
don: Her Majesty's Stationery Office, 1975); M. Dertouzos, R. Lester, and R. Solow,
Made in America: Regaining the Productive Edge (Cambridge, MA: MIT Press, 1989).
18 J.-CO Spender, Industry Recipes: The Nature and Sources if ManagerialJudgement (Oxford:
Basil Blackwell, 1989). The propensity for social interaction to result in a convergence of
perceptions and beliefs is commonly referred to as "groupthink" and has been discussed
by Anne Huff, "Industry Influences on Strategy Reformulation," Strategic Management
Journaf3 (1982): 119-131.
-----~.-
USTRY ANALYSIS
NOTES
lence competitive
racteristic of suc
~~anders, politi
ilelr opponents.
~et Journal,
May 6,
Porter, Competitive
Michael E. Porter
Contrived Deter~
241-262.
r Falter," Harvard
103
19 For a review of theory and research on competitive signaling, see O. Heil and T. S. Rob
ertson, "Toward a Theory of Competitive Market Signaling: A Research Agenda," Stra
tegic Management Journa112 (1991): 403-418.
20 Marvin B. Leiberman, "Excess Capacity as a Barrier to Entry: An Empirical Appraisal,"
Journal ofIndustrial Economics 35 (1987): 607-627.
21 For a survey of the strategic role of reputation, see Keith Weigelt and Colin Camerer,
"Reputation and Corporate Strategy: A Review of Recent Theory and Applications,"
Strategic ManagementJournal 9 (1988): 443-454.
22 P. Milgram and]. Roberts, "Predation, Reputation, and Entry Deterrence," Journal of
Economic Theory 27 (1982): 280-312.
23 "Companies That Compete Best," Fortune, May 22, 1989: 36-44.
24 Robert M. Grant, "Pricing Behavior in the UK Wholesale Market for Petrol,"Journalof
Industrial Economics 30 (1982): 271-292.
25 "Hewlett-Packard's Screeching Turn Toward Desktops," Business Week, September 11,
1989: 106-112.
26 Advertising Age, December 27,1965, quoted by Richard T. Pascale, "Honda A," Harvard
Business School, Case 9-384-049, 1983.
27 Forbes, September 15, 1966.
L29.
analysis, see John
, and Taxonomy,"
toral dissertation
n Industries and
214-227.
f the U.S. Brew
lIbility," Strategic
Rivalrous Firm
97): 149-157.
Strategic Man
1. Spence, "The
1 Wet Milling,"
); University of
[Y Process: Con
1R. Solow,
:ss,1989).
ment (Oxford;
onvergence of
een discussed
Management
DUSTRY ANALYSIS
auence competitive
acteristic of suc
mmanders, politi
I eir opponents.
I
eet Journal, May 6,
Porter, Competitive
Jackson, 1963): 65,
Michael E. Porter,
Contrived Deter
241-262.
r Falter," Harvard
129.
analysis, see John
, and Taxonomy,"
oral dissertation
.n Industries and
214--227.
f the U.S. Brew
ance: The Case
: 1102-1124; A.
e U.S. Insurance
bility," Strategic
. Spence, "The
Wet Milling,"
: University of
ndustry (Lon
R.Solow,
ess,1989).
ment(Oxford:
onvergence of
een discussed
Management
---
NOTES
103
19 For a review of theory and research on competitive signaling, see O. Heil and T. S. Rob
ertson, "Toward a Theory of Competitive Market Signaling: A Research Agenda," Stra
tegic ManagementJournal 12 (1991): 403-418.
20 Marvin B. Leiberman, "Excess Capacity as a Barrier to Entry: An Empirical Appraisal,"
Journal ofIndustrial Economics 35 (1987): 607-627.
21 For a survey of the strategic role of reputation, see Keith Weigelt and Colin Camerer,
"Reputation and Corporate Strategy: A Review of Recent Theory and Applications,"
Strategic ManagementJournal 9 (1988): 443-454.
22 P. Milgrom and J. Roberts, "Predation, Reputation, and Entry Deterrence," Journal of
Economic Theory 27 (1982): 280-312.
23 "Companies That Compete Best," Fortune, May 22, 1989: 36-44.
24 Robert M. Grant, "Pricing Behavior in the UK Wholesale Market for Petrol,"Journal of
Industrial Economics 30 (1982): 271-292.
25 "Hewlett-Packard's Screeching Turn Toward Desktops," Business week, September 11,
1989: 106-112.
26 Advertising Age, December 27, 1965, quoted by Richard T. Pascale, "Honda A," Harvard
Business School, Case 9-384-049, 1983.
27 Forbes, September 15, 1966.