Académique Documents
Professionnel Documents
Culture Documents
MGT612
Strategic Management
Krishan Gopal
2
LEARNING OBJECTIVES
External factors are more important than internal factors in a firm achieving competitive advantage.
Economic
Demographic
Sociocultural
Industry
Environment
Competitive
Environment
Political/
Legal
Global
Technological
Macro Environment
Political, Economic, Sociocultural,
Technological, Environmental, Legal
Industry Environment
Strategic Group
The Organization
External factors are more important than internal factors in a firm achieving competitive advantage.
FORMS OF COMETITION
Generic Competition
Form Competition
Industry Competition
Brand Competition
Monopoly
Duopoly
Fragmented
10
What is our
firms industry?
11
FIVE-FORCES ANALYSIS
Threat of
Threat
Newof New
Entrants
Entrants
Economies of Scale
Barriers to
Entry
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Government Policy
Expected Retaliation
Threat of
Threat
Newof New
Entrants
Entrants
Bargaining
Power of
Suppliers
SUPPLIER POWER
Diamond supply
Percent
Others
Diamond
Retailers
50
When firms in the supply
industry can dictate
terms, they can extract
greater profits
DeBeers
50
19
The Oil and Gas Industry, Strategic Management: Formulation, Implementation and Control, Pearce,
Robinson & Mittal pg 539
21
Threat of
Threat
Newof New
Entrants
Entrants
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
BUYER POWER
ILLUSTRATIVE
Industry A
Suppliers
Profits
Buyers
Industry B
Suppliers
Profits
Buyers
In industries
characterized with
many suppliers
and few buyers,
buyers often
capture a greater
share of profits
25
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Threat of
Substitute
Products
Example:
Electronic security systems in place of
security guards
Fax machines in place of overnight mail
delivery
THREAT OF SUBSTITUTES
Soft drinks
Movie rentals
Block buster
Coke
Pepsi
Cable TV
Bottled water
Hollywood video
28
CAUSES OF RIVARLY
Barriers to Entry
Barriers to Exit
In addition to entry
and exit barriers,
many factors drive
rivalry
Strong brands
Proprietary technology
Start-up costs
Etc.,
Market growth
Few other opportunities
Sunk investments
Etc.,
Etc.
29
Threat of
Threat
Newof New
Entrants
Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Competing Firms in
Industry
Threat of
Substitute
Products
Bargaining
Power of
Buyers
Activity
Ajay is deciding whether to switch career and become a farmer he's always loved the countryside,
and wants to switch to a career where he's his own boss. Create five force analysis of the situation
35
36
Conclusion
The threat of new entry is quite high: if anyone looks as if they're
Government
Demographic
al
Environmenta Technologic
l
al
Political
Competitive
Ch 3 -38
Ch 3 -39
Ch 3 -40
Ch 3 -41
Important --
Ch 3 -42
Ch 3 -43
Gateway
Apple
Dell
Wt
Rating
Wtd
Score
Rating
Wtd
Score
Rating
Wtd
Score
Market share
0.15
0.45
0.30
0.60
Inventory sys
0.08
0.16
0.16
0.32
Fin position
0.10
0.20
0.30
0.30
Prod. Quality
0.08
0.24
0.32
0.24
Cons. Loyalty
0.02
0.06
0.06
0.08
Sales Distr
0.10
0.30
0.20
0.30
Global Exp.
0.15
0.45
0.30
0.60
Org. Structure
0.05
0.15
0.15
0.15
CSFs
Ch 3 -44
Gateway
Apple
Dell
CSFs (contd)
Wt
Rating
Wtd
Score
Rating
Wtd
Score
Rating
Wtd
Score
Prod. Capacity
0.04
0.12
0.12
0.12
E-commerce
0.10
0.30
0.30
0.30
Customer Serv
0.10
0.30
0.20
0.40
Price competitive
0.02
0.08
0.02
0.06
Mgt. experience
0.01
0.02
0.04
0.02
Total
1.00
2.83
2.47
3.49
Ch 3 -45
Important --
Ch 3 -46
THANK YOU
KRISHAN GOPAL
47