2-the 5 competitive forces that shape strategy

Question 1

job of the strategist cope with the competition - 4 forces

Answer 1

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

customer/supplier/new entrant service

Question 2

markets

Answer 2

Question 3

benign competition forces

Answer 3

Question 4

industry vs company

Answer 4

Question 5

commercial aircraft vs movies

Answer 5

Question 6

commodity vs photography

Answer 6

Question 7

4 factors in avaition

Answer 7

Question 8

position your company where the forces are the weakest

Answer 8

Question 9

reshape forces

Answer 9

Question 10

barriers to entrys

Answer 10

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

Question 11

five forces

Answer 11

Question 12

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

Answer 12

Question 13

power of suppliers

Answer 13

-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

Question 14

good industry analysis

Answer 14

Question 15

Power of buyers

Answer 15

-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

Question 16

the threat of substitutes

Answer 16

Question 17

reason for substitution

Answer 17

Question 18

existing companies rivalary intensity

Answer 18

Question 19

rivalry occurs

Answer 19

Question 20

same dimensions -zero sum game

Answer 20

Question 21

positive sum competition

Answer 21

expands the industry for different needs

Question 22

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

Answer 22

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

Question 23

industry structure changes-not a single point in time

Answer 23

Question 24

industry structure changes

Answer 24

-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

Question 25

implications for strategy in idustries

Answer 25

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

Question 26

positioning the company for forces

Answer 26

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

Question 27

paccer

Answer 27

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

Question 28

five forces

Answer 28

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

Question 29

exploit industry changes

Answer 29

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

Question 30

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

Answer 30

- 2 ways: redivide the profits or expand the profits by industry growth

Question 31

define the relevant industry: not too broad or narrow

Answer 31

/ 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

Question 32

distinct industry

Answer 32

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

Question 33

industry analysis framework

Answer 33