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** most common industry driving forces?

(i) Emerging new internet capabilities & applications.

(ii) Increasing Globalization.(iii) Changes in an industrys long term growth rate.

(iv) Changes in who buys the product & how they use it.

(v) roduct Innovation.(vi) !echnological Change & manu"acturing process

Innovation.

(vii) #ar$eting Innovation.

(viii) Entry or e%it o" maor "irms(i%) Changes in cost & e""iciency.

(%) Growing buyer pre"erences "ro di""erentiated products.''''''''''''''''''''''''''''''''''''''''''''''''''

** Merger & Acquisition?Merger: hen two companies come together to "rom onecompany. Is a combination o" two companies. merger inwhich two corporations lose their separate identities & mite to"orm a completely new corporation.

!here are three types o" #erger*(a) +orizontal(b) ,ertical(c) Geographic emission.

Acquisition: n ac-uisition is when are company buys anotherone an ac-uisition occurs when an organization ac-uiressu""icient shares to gain ownership o" another organization.

** Briefly describe the procedure of thinking

strategically about the companys situation to

choose a strategy?

!he strategic pportunities o" #otor vehicle companies must

adapt their strategies to customer concerns about gasolineprices.'''''''''''''''''''''''''''''''''''''''''''''''''

** hat do you understand by the terms vertical

!ntegration & "ori#ontal !ntegration? $lease describe%

ertical !ntegration: ,ertical Integration is the process inwhich several steps in the production or distribution o" aproduct or service are controlled by a single company. In orderto increase that companys power in the mar$et place. ,erticalIntegration are !hree !ypes*(i) /ac$ward (ii) 0orward (iii) /alanced

"ori#ontal !ntegration: +orizontal Integration means astrategy to increase our mar$et shared by ta$ing over a similarcompany. !his merger can be done in the same geography orprobably in other countries to increase our reach.'''''''''''''''''''''''''''''''''''''''''''''''''

** "o' the effect of ()perience +urve, helps to increaseprofitability?

Industry activities characterized by strong learning e%periencecurve e""ects that means learning by doing such as unit costsdecline as companys e%perience in per"orming the activitybuilds. ny companies have signi"icant cost advantagesbecause o" their learning e%perience in per"orming particularactivities. e can show it by a curve live

0rom the curve we can say li$e these production cost or error

cost slowly goes down but unit o" production goes up thatmeans unit o" production is increasing. /ecause i" a company

have previous e%perience to do a wor$ then i" they do that wor$

again then they need lower time to produce that product. lsoincrease their unit o" production but decrease their costproduction that previous time by reducing time or cost o"

production & increasing unit o" production.

** )conomics of -cale & )conomic of scope?

)conomic of -cale:

.i/Economics o" scale is about gaining bene"its by productionlarge volume o" a product..ii/I" re"er to reducing average cost "or a single asset..iii/It has been $nown "or a long time..iv/It use the most e""icient process..v/E%ample* 1uch asCost o" roducing 233 unit is 433 !$.

Cost o" producing 533 unit is (433533) 6 27337333 !$.

/ut i" producing 533 unit under economics o" scale then

producing cost will 837333 !$.)conomic of -cope:

.i/Economics o" scope brings bene"its by producing a widevariety o" products by e""iciency use o" the operations.

.ii/It re"er to lowering average cost o" producing two or moreproducts.

.iii/Is relatively new approach to business strategy.

.iv/It uses the process to produce similar products using high

technology..v/E%ample* such as

9 company produce product 6 : !$.; < < < / 6 = !$.

!otal cost o" (7 /) 6 2> !$. unit.I" we produce o" product (7 /3?nder ceononics o" scope then producing cost will be 25t$.+ere7(2>*25) !$ 6 5 will called economies o" scope.'''''''''''''''''''''''''''''''''''''''''''''''

** strategic moves are rivals likely to make net?

redicting the ne%t strategic moves o" competitors is

the hardest yet most use"ul part o" competitors analysis.!o predict what strategic moves rivals are li$ely toma$e ne%t include the "ollowing@

(i) hich rivals badly need to increase their unit sales

& mar$et shareA

(ii) hich rivals have a strong incentive to a di""erentposition on the strategic group mapA

(iii) hich rivals are good candidates to be ac-uiredA

(iv) hich rivals are li$ely to enter new geographic

mar$etsA(v) which rivals are strong candidates to e%pand their

product o""eringsA

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IdentifyStrategicOptions

Select theBest

Strategy &Business

model

Formulating

StrategicVision

ThinkingStrategically

about ExternalEnironment

ThinkingStrategically

about InternalEnironment

#onitoring &

Evaluating "orta$ing corrective

action.

8/13/2019 the Names of Most Common Industry Driving Forces

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*** 0escribe the factors to consider in identifying

an industrys dominant economic features?Industrys dominant economic "eatures not only sets the

stage "or the analysis to come but also promotes understandingo" the $inds o" strategic moves that industry members are li$elyto engage..i/ Market si#e & gro'th rate: #ar$et size means haw big isthe industry & how it. Growth rate means haw "ast the industryis growing. lso it represent the mar$et growth rate..ii/ 1umber of 2ivals@ Is the industry scrapped into manysmall companies or concentrated & dominated by a "ew largecompetitors..iii/ -cope of competitive rivalry: It represent the geographic

area which most companies compete local7 regional7 national7multinational are global..iv/ 1umber of buyers@ It means mar$et demand scrapedamong many buyers..v/ 0egree of product differentiation@ It represents theproducts o" rivals becoming more di""erentiated or lessdi""erentiated..vi/ -upply & 0emand conditions: Is a surplus o" capacitywhere pushing prices & pro"it margins goes down.(vii) ace o" technological change@ It means what role doesadvancing technology play o" industry..viii/ ertical integration:It represent the cost or competitiveadvantage or disadvantage annunciated with being "ully orpartially integrated.i/ )conomics of scale:It re"er to reducing in average cost "ora single asset./ 3eaning curve effects: It re"ers that any companies havesigni"icant cost advantages.

*** "o' the bargaining po'ers of buyers shape the

competition 'ithin in industry? hen it becomes stronger

& 'hen 'eaker? 0escribe briefly%

.a/ Bargaining po'ers of buyers shape the competition

'ithin the industry:4

(i) /uyers cost o" switching to competing brands or substitutes

are relatively low.(ii) !he number o" buyers is small.

(iii) /uyers demand is wea$ & catch at sellers.(iv) /uyers are well in"ormed about sellers products7 price &

costs.(v) /uyers have wise udgment in whether & when they

purchase the product..b/ Buyer bargaining is stronger & 'eaker:

-tronger: (i) /uyer switching costs to competing brands ansubstitute products are low.

(ii) Barge volume purchases by buyers are important to seller.(iii) /uyer demand is wea$ or declining.

(iv) Identi"y o" buyer ads prestige to the sellers list o"customers.eaker:(i) /uyers purchase the item in small -uantities.(ii) /uyer switching costs to competing brands are high.(iii) sellers brand reputation is important to a buyer.(iv) /uyer partnering with selected sellers provide attractivewin*win opportunities.(v) particular sellers product delivers -uality that is veryimportant to buyer.

*** "o' the bargaining po'er of suppliers shape

the completion 'ithin the industry? 'hen it become

stronger & 'eaker? 0escribe briefly?

ns@ /argaining power o" suppliers shape the

completion within the industry are given@*

(i) "ew large suppliers are the primary sources o" aparticular item.

(ii) It is di""icult or costly "or industry members to

switch their purchases "rom are supplier to another.

(iii) Certain needed inputs are in short supply.(iv)Certain supplier provide e-uipment or services that

deliver valuable cost saving e""iciencies.

(v) Certain suppliers provide a di""erentiated input thatenhances the per"ormance -uality.-upplier bargaining po'er is stronger & 'eaker:

-tronger:

(i) Industry members incurs high costs in switching

their purchase.(ii) eeded inputs are in short supply.

(iii) supplier has a di""erentiated input that enhances

the -uality or per"ormance o" sellers products.

(iv) 1ome suppliers threaten to integrate "orward intothe business o" industry members.

eaker:

(i) 1eller switching costs to alternative suppliers arelow.

(ii) Good substitute input e%ist.

(iii) !here is a surge in the availability o" supplies.

(iv) 1eller partnering with selected suppliers providesattractive win*win opportunities.

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*** "o' the driving forces 'ithin the industry can

impact favorably or unfavorably to boost or squee#e

profit margin?

s a rule the stranger the collective impact o" the

"ive competitive "orces7 the lower the combinedpro"itability o" industry participants.

hen the collective impact o" the "ive competitive

"orces is moderate to wea$7 an industry is competitivelyattractive in the since that industry members can

reasonably e%pect to earn good pro"it & a nice return

on investment.

!he ideals competitive environment "or earning

superior pro"its is one in which both suppliers andcustomers are in wea$ bargaining positions7 there re no

good substitutes7 high barriers bloc$ "urther entry etc.

!he intensity o" competition allows good pro"itabilitybut is also promotes sound strategic thin$ing about how

to better match company strategy.

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** (5roup Mapping,? "o' it helps to understand

competitive positions among rivals 'ithin the

industry?

-trategic 5roup Mapping: 1trategic group mappingis a techni-ue "or displaying the di""erent mar$et or

competitive positions that rivals "irms occupy in the

industry. hich companies are strongly position &

which are wea$ly positioned is an integral part o"analyzing on industry competitive structure. !he best

techni-ue "or revealing the mar$et positions o" industrycompetitors is strategic group mapping.

!t helps to understand to competitive positions

among rivals 'ithin in industry:4

a) Identi"ying the competitive characteristics that

di""erentiate "irms in the industry. !ypical variables are

priceD-uality range7 geographic coverage7 degree o"vertical integration use o" distribution channels etc.

b) lot the "irms on a two*variable map using pairs o"

these di""erentiating characteristics.

c) ssign "irms that "all in about the same strategyspace to the same strategic group.

d) #a$ing the circles proportional to the size o" the

groups share o" total industry salws revenues.

*** hat do you see as they key success factors for

being a successful competitor in your industry%

0escribe briefly?

Identi"ying the $ey success "actors o" the industry

structure in a business plan involves conducting mar$et

research as part o" constructing your business plan.!he$ey success "actors you choose to trac$ "or your

business help you build your competitive strategy.

-tep 6

btain and use the templates provided by resources7such as the 1CE website7 to generate business plans7

including a competitive analysis. !hese can be "ound

on the 1CE website.-tep 7

ccess in"ormation provided by the Census.gov

website7 such as economic indicators7 to e%amine the

reports "or your industry and identi"y the characteristics

o" success"ul companies. Identi"y your main customersand their re-uirements.

-tep 8

Fetermine which $ey success "actors7 such as the

ability to attract new customers7 ability to retaine%isting customers or a low cost production structure

-tep 9

Fistinguish how companies whose pro"its re"lectgrowth in your industry are able to structure their

business to cope with changes in customer needs.

-tep

Identi"y your competitors products to assess theirstrengths and wea$nesses. /ased on your research7 plan

how to structure your company to create a competitive

advantage.

-tep ;

an$ your $ey success "actors by determining why

customers choose between competitors7

-tep