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1-HBS-strategy/marketing > 2-the 5 competitive forces that shape strategy > Flashcards

2-the 5 competitive forces that shape strategy Flashcards

1
Q

job of the strategist cope with the competition - 4 forces

A

in case of underlying drivers of profitability is the same-like car industry

customer/supplier/new entrant service

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2
Q

markets

A
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3
Q

benign competition forces

A
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4
Q

industry vs company

A
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5
Q

commercial aircraft vs movies

A
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6
Q

commodity vs photography

A
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7
Q

4 factors in avaition

A
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8
Q

position your company where the forces are the weakest

A
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9
Q

reshape forces

A
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10
Q

barriers to entrys

A

supply side:large production numbers drive down the cost
demand side: trust in established names and network effects of fellow customers
customer switching costs: ERP software
Capital requirements: huge lump sum
Incumbents: technically savey, cost structure
unequal access to distribution channels, low fare airlines
government policies: regulation like taxi and alcohol

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11
Q

five forces

A
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12
Q

average ROIC for 50% of industries were. zero or negative -median 15%

A
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13
Q

power of suppliers

A

-supplier does not depend on one individual company for profits
-industry participants face high switching cost-Bloomberg terminals
-differentiated products: patented drugs
-unions in airlines
-suppliers threaten if make much less profit than participants

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14
Q

good industry analysis

A
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15
Q

Power of buyers

A

-buy large sum and have leverage
-undifferentiated products and easy switch
-price sensitive customer shops around vs product can pay itself overtime- tax a accounting

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16
Q

the threat of substitutes

A
17
Q

reason for substitution

A
18
Q

existing companies rivalary intensity

A
19
Q

rivalry occurs

A
20
Q

same dimensions -zero sum game

A
21
Q

positive sum competition

A

expands the industry for different needs

22
Q

industry structure for profitably- which part can be reduced by suppliers or customers

A

growth rate: suppliers in power, more entrants
technology: low switching, and scale is dominant
government: how policymakers influence factors, pos or neg
complementary products: especially in high tech, can make substitute easier, positive or negative

23
Q

industry structure changes-not a single point in time

A
24
Q

industry structure changes

A

-shifting threat of new entry: changes of any factors mentioned above/patent expiration, increase fixed cost to gain scale
-changing suppliers/buyers power: consolidation in industry(best buy for all appliances), travel agent(internet replaced airlines)
-shifting threat of substitute: new technology changes substitutes and price performance comparison-flash memory
-new bases of rivalry: can come from industry maturation as profit margin falls or M&A to increase competitiveness and/or remove rivals -television /telecom

25
Q

implications for strategy in idustries

A

each company should know the average probability of its industry and its projection based on five forces to create a baseline and balancing the company wrt baseline

26
Q

positioning the company for forces

A

building defenses against current forces -capital industry have fierce cyclical forces during downtime however build to order can save them like customized trucks with owner operators

27
Q

paccer

A

paccer profitable for 68 years in truck business due to optimized value chain and charging extra for custom build trucks-20% roe

28
Q

five forces

A

five forces factor can analyze the prospect of the industry as well /entry vs exit points

29
Q

exploit industry changes

A

: internet for music industry removed entry barriers/however the main barrier was access to fresh artists and market on new stations

30
Q

shaping industry structure:to change forces is the best strategy to force competition to follow suit

A
  • 2 ways: redivide the profits or expand the profits by industry growth
31
Q

define the relevant industry: not too broad or narrow

A

/ 2 defining factors: scope of products and geographical - like sysco as a food distributor has multiple strategies across the board and not competing solely based on price

32
Q

distinct industry

A

any large differences in 5 factor can lead to distinct industry -

33
Q

industry analysis framework

A

1-HBS-strategy/marketing (20 decks)

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