Midterm Study Flashcards
What 5 main jobs does industry analysis affect?
1) Entrepreneurship
2) IB
3) Consulting
4) M&A
5) Economic Development
Bloom’s Taxonomy(with well structured or vaguely worded problems)
Higher Order (Vaguely Worded) 1) Evaluation 2) Synthesis 3) Analysis Lower Order (Well Structured Problems) 4) Application 5) Comprehension 6) Knowledge
Keys to building effective teams (6)
1) Past experiences
2) Team effectiveness research
3) Framework building team
4) Reflections/Discussions
5) Team Charter
6) Expectations, Assumptions, options
Tuckman’s stages of team development
Launch/Organize then:
1) Forming
2) Storming
3) Norming
4) Performing
Sherman’s 3-Ds
1) Dialogue
2) Discuss
3) Decide
3 Roles of organizational leadership
1) Organizing
2) Coordinating
3) Facilitating
PSDA Model
Plan
Study
Do
Act
Corporate Ecosystem from inside out
1) Company
2) Operating Environment
3) Industry
4) Remote Environment
Competitive/Market intelligence
Operating and industry
Environmental Scanning
Operating, industry, and remote
Macro-environment
Remote and industry
Micro-environment
Industry and operating
Diamond “E” Framework
Want to do: manager preference
Need to do: industry pressures
Can do: capability
3 Purposes for NAICS
1) Simplified for NAFTA partners
2) Based on production not consumption
3) Used to measure economic activity
System before NAICS
K-apital L-abour E-nergy M-aterials S-ervices
Two measures of market share
Revenue
Volume
Why might market shares change over time? (6)
1) Entry/exit
2) M&A
3) Calculated during a promotion
4) Scandal
5) Industry growth
6) Customer fired
Industry power curve axises
Y: Net income / highest net income
X: Rank ordering of companies based on net income
5 Reasons for consolidation by M&A and Hor/Vert Integration
1) Improve cost and quality
2) Acquire new tech
3) Gain market share
4) Stop intense competition
5) Enter new markets
HHI Index
A^2 + B^2 + C^2 + D^2 with top 4 largest competitors market share percentage
When is the industry non-concentrated (Using HHI)
HHI < 1800 post merger or change in HHI < 50
4 Benefits of EOScale
1) FC/Units
2) Specialized equipment
3) Product redesign
4) Increase purchasing power
4 Parts of Diseconomies of scale
1) Too much complexity
2) Decrease motivation
3) Shortage of inputs
4) Time-pressure
2 parts of Economies of Scope
1) Wider variety of G&S
2) Share common parts outside of production (marketing person)
Do learning curves for firms go up or down?
Down. As volume produced increases, average time to produce it decrease.
How to calculate learning curve
80% learning curve = Costs down by 20% when units double
5 implications of building production based on a learning curve
1) Build capacity to lower costs
2) Penetrative pricing
3) Concern about loss of key employees
4) Loss in flexibility
5) Evolving customer preferences
What does a move on the experience curve mean versus a jump?
Move is EOS, a jump is process innovation, experience is both
Horizontal integration versus vertical integration
Horizontal: M&A with competing businesses
Vertical: M&A with suppliers/channel partners
5 Benefits of vertical integration
1) Securing critical supplies
2) Lowering costs
3) Improving quality
4) Planning
5) Specialized assets
5 Benefits of horizontal integration
1) Reduction in competitors
2) Lowered costs
3) Increased differentiation
4) New markets/distribution channels
5) New capability
4 Steps to define value chain
1) ID major activities
2) Required elements at each stage
3) Determine unique value at each stage
4) ID center of gravity
Definition and 5 characteristics of Hypercompetition
Def: High competition creates disequilibrium, change, and low profits
1) Short product life cycles
2) New tech
3) Frequent entry by outsiders
4) Re-positioning by incumbents
5) Tactical redefinition of industry boundaries
Benefits to first-mover advantage? (2 points)
1) Better access to resources/channels
2) Ahead on experience curve
What are Meta-Markets?
Cluster of products that are closely related. Called complements. Can be spread across industries.
How to establish context for STEEP
Geography and time
Axises on the STEEP priority matrix
Y: Probability of occurrence
X: Probable impact on industry
8 Steps to analyze an industry
1) Define scope
2) ID industry participants
3) Determine pressure points from the 5 forces
4) Evaluate strength of each force
5) ID major drivers of change
6) ID Strategic positions for players
7) Determine KSFs
8) Assess attractiveness of industry and opportunities for competitive advantage
5 Non-price competitive weapons
1) Promotions
2) Wider selection
3) Customer service
4) Customization
5) Warranties
What are the characteristics of driving forces?
Causes that reshape the industry and alter competitive conditions.
What are the 12 common driving forces?
1) LT growth rate
2) Globalization
3) Internet
4) Buyer behaviour change
5) Manufacture process change
6) Product/marketing innovation
7) Entry/exit major firms
8) Changing lifestyles
9) Changes in cost
10) Reductions in risk
11) Regulatory
12) Diffusion of knowledge
5 barriers to entry examples
1) Capital requirements
2) Economies of scale
3) Legal barriers
4) Distribution channels
5) Switching costs
4 point when there is threat of substitutes
1) Low switching costs
2) Comparable
3) Tech changes
4) High profits
5 points contributing to supplier power
1) Few suppliers
2) Unique product supplied
3) Switching costs
4) Industry is not important to supplier
5) Threaten forward integration
5 points that contribute to buyer power
1) Low concentration of buyers
2) Buyers have low switching costs
3) Buyers can integrate backwards
4) Represent high proportion of industry’s sales
5) Industry’s products are commodities
4 reasons to use strategic group mapping
1) Why forces shape some firms and hurt others
2) Show profit potential
3) Illustrate rivalry between companies and strategic groups
4) Where the “best” place to be (mobility barriers)
4 steps to build an SGM
1) ID two characteristics that differentiate firms
2) Plot firms on graph
3) Assign firms to a group
4) Circle groups by sales
Formula for a Competitive pressure map
Increased pressure = % revenues from a market X % market share of invading firm
What are 4 things that can be found out from a CPM
1) Threats
2) Allies
3) Acquisition targets
4) Opportunities
4 parts of a CPM
1) Companies are circles
2) Alliances are shown by connecting lines
3) Pressure is indicated by an arrow (size and direction)
4) Focal firm at centre or organize by firm size
What is the difference between an industry and a market?
Industry: Group of firms
Market: Geographical, common G&S
5 ways an industry boundaries can be defined
1) Primary activity
2) Purpose of study
3) Country of origin
4) NAICS
5) Timeframe
5 examples of switching costs
1) Purchasing new equipment
2) Training
3) Costs to remove old equipment
4) Data conversion
5) New relationships
How is product differentiation determined by tech change? (3)
1) Speed
2) Degree of change
3) Incremental or disruptive
Is the line on a Performance/Time graph for a disruptive technology steeper or flatter than a line for the performance improvement required by the market?
Steeper
5 systems that stabilize industry system
1) Tit-for-tat
2) Checks and balances
3) Shared power systems
4) Polarized blocs
5) Collective security
Value drivers: definition and 3 examples of
Increase perceived value or decrease costs
1) Features
2) Customer Service
3) Complements
Cost drivers: definition of cost leader and 4 examples of cost drivers
(V-C) > Competition
1) Cost of inputs
2) EOScale
3) Learning-curve effects
4) Experience-curve effects
What are the top 3 reasons for industry concentration?
1) M&A
2) Entrance barriers
3) Regulation
How is the degree of Vertical integration calculated?
% of sales generated within the firm’s boundaries
4 Risks of vertical integration
1) Increased cost because of no competition necessary
2) Decreased quality
3) Decreased flexibility
4) Legal (Anti-trust)
What are 3 examples of specialized assets?
1) Site-specific: mining equipment
2) Physical asset: Bottling equipment
3) Human asset: Human expertise
2 alternatives to vertical integration
1) Taper integration (some integration)
2) Strategic outsourcing (opposite of VI)
What is the industry mind-set?
Perceptions, expectations & assumptions about the industry now and future
What is the 4 parts of the the framework to analyze a competitor with a SGM?
1) Current strategy
2) Objectives
3) Resources & Capabilities
4) Assumptions
