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INDUSTRY AND

COMPETITIVE ANALYSIS

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INDUSTRY AND COMPETITIVE ANALYSIS AIMS AT

DEVELOPING INSIGHTFUL ANSWERS TO FOLLOWING.

i. What are industrysdominant economic features.

ii. What is competition and how strong arecompetitive forces.

iii. What causes industryscompetitive structure andbusiness environment to change?

iv. Which companies are strongest / Weakestposition

v. What strategic moves rivals are likely to make

vi. What are key factors for competitive success

vii. Is the industry attractive and what are prospectsof above average profits.

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INDUSTRYS DOMINANT

ECONOMIC FEATURES Market Size

Scope of Competitive Rivalry

Market Growth Rate

Number of Rivals and Their Sizes

Extent of Integration of Industry Rivals Pace of Technological Changes and new

product introductions.

Economies of Scale Vis-A-Vis Rivals

Cluster of Participants In any Location

Learning Curve Effects

Capacity Utilization

Capital Requirements Ease of Entry and Exit

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COMPETITION

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RIVALRY AMONG COMPETITIVE SELLERS1. Rivalry intensifies as the number of competitors increases and as

competitors become more equal in size and capability.

2. Rivalry is usually stronger when demand for the product is growingslowly.

3. Rivalry is more intense when industry conditions tempt competitorsto use price cuts or other competitive weapons to boost unitvolume.

4. Rivalry is stronger when customers costs to switch brands are low.

5. Rivalry is stronger when one or more competitors are dissatisfiedwith their market position.

6. Rivalry increases in proportion to the size of the payoff from asuccessful strategic move.

7. Rivalry tends to be more vigorous when it costs more to get out of abusiness than to stay in and compete.

8. Rivalry becomes more volatile and unpredictable the more diversecompetitors are in terms of their visions, strategic, objectives,strategies, resources, and countries of origin.

9. Rivalry increases when strong companies outside the industryacquire weak firms in the industry and launch aggressive, well-funded moves to transform their newly acquired competitors into

major market contenders.

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POTENTIAL ENTRY OF NEW

COMPETITORS

Economics of scale

Cost and resource advantage of existing firms

Learning curve effects

Brand preference and customer loyalty

Capital requirements

Access to distribution channels

Regulatory policies of Government

International trade restrictions.

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COMPETITIVE PRESSURE FROMSUBSTITUTE PRODUCTS

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COMPETITIVE PRESSURE FROM

SUPPLIERS BARGAININGPOWER

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COMPETITIVE PRESSURE FROM

BUYERS BARGAINING POWER

Cost of switching

Number of buyers

Buyers level of information ofsellers products

Buyers thinking on backward

integration.

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INDUSTRYS COMPETITIVE

STRUCTURE & BUSINESSENVIRONMENT

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CONCEPT OF DRIVING FORCES

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COMMON DRIVING FORCES

a. Internet and new E-Commerce opportunities andthreats

b. Increasing globalization

c. Long term industry growth rate

d. Product innovation

e. Technological change

f. Marketing innovation

g. Entry or exit of major firms

h. Diffusion of technological know how

i. Changes in cost and efficiencyj. Growing buyer preferences for differentiated

products

k. Government policy changes

l. Changing social concerns.

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ENVIRONMENTAL SCANNING

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WHICH COMPANIES ARESTRONGEST / WEAKEST

Use Of Strategic Group

Maps

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STRATEGIC MOVES OF RIVALS

Monitoring Competitors Strategies

Evaluating who are going to be

major players Predicting Competitors next moves

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KEY FACTORS FOR

COMPETITIVE SUCCESS.

Technology Related

Manufacturing Related

Distribution Related

Marketing Related

Skills Related

Organizational Capability

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IS INDUSTRY ATTRACTIVE ?

ARE PROSPECTS ABOVE

AVERAGE PROFITABILITY?