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... jetties and Strategies of Competitors Competitive Scope Strategic Intent Market Share Objective Competitive Position/Situation Strategic Posture Competitive Strategy Local Regional National Multinational Global Be dominant leader Overtake present leader Be an industry leader (top 5) Move into the top 10 Move up a step or two in the industry Overtake a particular rival Maintain position Survive Grow aggressively (acquisition and internal growth) Internal expansion (boost mkt share) Expansion via acquisition Maintain present share (growth equal to the industry) Give up share if necessary to achieve short-term profit objectives (stress profitability, not volume) Getting stronger; on the move Well-entrenched; able to maintain present position Stuck in middle of the pack Going after a stronger market position Struggling; losing ground Retrenching to a position that can be defended Mostly offensive Mostly defensive A combination of offensive and defensive Aggressive risk-taker Conservative follower Striving for low-cost leadership Focus mostly on market niche - High end - Low end - Geographic - Special buyers - Other foci Differentiation based on - Quality - Service - Technology - Product breadth - Image / reputation - Other features Predicting Competitors' Next Moves. Predicting rivals' moves is the hardest yet most useful part of competitor analysis. Good clues about what moves a specific competitor may make next come from finding out how much pressure the rival is under to improve its financial performance.
Aggressive rivals usually undertake some type of new strategic initiative. Content rivals are likely to continue their present strategy with only minor fine-tuning. Ailing rivals can be performing so poorly that fresh strategic moves, either offensive or defensive, are virtually certain. Since managers generally operate from assumptions about the industry's future and beliefs about their own firm's situation, strategists can gain insights into the strategic thinking of rival managers by examining their public pronouncements about where the industry is headed and what it will take to be successful, listening to what they are saying about their firm's situation, gathering information about what they are doing, and studying their past actions and leadership styles. Strategists also need to consider whether a rival is flexible enough to make major strategic changes. To predict a competitor's next moves, an analyst must get a good "feel" for the rival's situation, how its managers think, and what its options are.
The detective work can be tedious and time-consuming since the information comes in bits and pieces from many sources. But it is a task worth doing well because the information gives managers more time to prepare countermoves and a chance to beat rivals to the punch by moving first. Exhibit 4 Types of Key Success Factors Technology-related Ksfs Scientific research expertise (important in such fields as pharmaceuticals, medicine, space exploration, and other "high-tech" industries) Production process innovation capability Product innovation capability Expertise in a given technology Manufacturing-related Ksfs Low-cost production efficiency Manufacturing quality (fewer defects, less need for repair) High utilization of fixed assets (important in capital-intensive / high fixed-cost industries) Low-cost plant locations Access of adequate supplies of skilled labor High labor productivity (important for products with high labor content) Low-cost product design and engineering (reduces manufacturing costs) Flexibility to manufacture a range of models and sizes / take care of custom orders Distribution-related Ksfs A strong network of wholesale distributors / dealers Gaining ample space on retailer shelves Having company-owned retail outlets Low distribution costs Fast delivery Marketing-related Ksfs A well-trained, effective sales force Available, dependable service and technical assistance Accurate filling of buyer orders (few back orders or mistakes) Breadth of product line and product selection Merchandising skills Attractive styling / packaging Customer guarantees and warranties (important in mail-order retailing, big ticket purchases, new product introduction s) Skills-related Ksfs Superior talent (important in professional services) Quality control know-how Design expertise (important in fashion and apparel industries) Expertise in a particular technology Ability to come up with clever, catchy ads Ability to get newly developed products out of the R& D phase and into the market very quickly Organizational Capability Superior information systems (important in airline travel, car rental, credit card, and lodging industries) Ability to respond quickly to changing market conditions (streamlined decision-making, short lead times to bring new products to market) More experience and managerial know-how Other Types of Ksfs Favorable image / reputation with buyers Overall low cost (not just in manufacturing) Convenient locations (important in any retailing business) Pleasant, courteous employees Access to financial capital (important in newly emerging industries with high levels of business risk and in capital-intensive industries) Patent protection Overall low cost (not just in manufacturing) Pinpointing the Key Factors for Competitive Success Key success factors (Ksfs) are the major determinants of financial and competitive success in a particular industry. Key success factors highlight the specific outcomes crucial to success in the marketplace and the competences and capabilities with the most bearing on profitability. Identifying key success factors is a top-priority strategic consideration.
At the very least, management needs to know the industry well enough to conclude what is more important to competitive success and what is less important. At most, Ksfs can serve as the cornerstones for building a company's strategy. Companies frequently win competitive advantage by concentrating on being distinctively better than rivals in one or more of the industry's key success factors. Key success factors vary from industry to industry, and even over time in the same industry, as driving forces and competitive conditions change. Table 3 - 4 lists the most common types of key success factors. Only rarely does an industry have more than three or four key success factors at any one time.
And even among these three or four, one or two usually outrank the others in importance. Strategic analysts, therefore, have to resist the temptation to include factors that have only minor importance -- the purpose of identifying Ksfs is to make judgments about what things are more important to competitive success and what things are less important. To compile a list of every factor that matters even a little bit defeats the purpose of highlighting the factors has are truly crucial to long-term competitive success. Drawing Conclusions about Overall Industry Attractiveness The final step of industry and competitive analysis is to review the overall industry situation and develop reasoned conclusions about the relative attractiveness or unattractiveness of the industry, both near-term and long-term. An assessment that the industry is attractive typically calls for some kind of aggressive, expansion-oriented strategic approach. If the industry and competitive situation is judged relatively unattractive, companies are drawn to consider strategies aimed at protecting their profitability.
Weaker companies may consider leaving the industry or merging with a rival. Important factors to consider in drawing conclusions about industry attractiveness are: The industry's growth potential. Whether prevailing driving forces will favorably or unfavorably impact the industry. The potential for the entry / exit of major firms (probable entry reduces attractiveness to existing firms; the exit of a major firm or several weak firms opens up market share growth opportunities for the remaining firms). The stability / dependability of demand (as affected by seasonality, the business cycle, the volatility of consumer preferences, inroads by substitutes, and the like). Whether competitive forces will become stronger or weaker.
The severity of problems / issues confronting the industry as a whole. The degree of risk and uncertainty in the industry's future. Whether the industry's overall profit prospects are above or below average. However, even if an industry is relatively unattractive overall, it can still be attractive to a company already favorably situated in the industry or to an outsider with the resources and skills to acquire an existing company and turn it into a major contender.
Appraising industry attractiveness from the standpoint of a particular company in the industry means looking at the following additional aspects: The company's competitive position in the industry and whether its position is likely to grow stronger or weaker (a well-entrenched leader in a lackluster industry can still generate good profits). The company's potential to capitalize on the vulnerabilities of weaker rivals (thereby converting an unattractive industry situation into a potentially rewarding company opportunity). Whether the company is insulated from, or able to defend against, the factors that make the industry unattractive. Whether continued participation in the industry adds significantly to the firm's ability to be successful in other industries in which it has business interests. Conclusions drawn about an industry's attractiveness and competitive situation have a major bearing on a company's strategic options and ultimate choice of strategy.
Exhibit 5 Industry and Competitive Analysis Summary Profile 1. DOMINANT ECONOMIC CHARACTERISTICS OF THE INDUSTRY ENVIRONMENT (market growth, geographic scope, industry structure, scale economies, experience curve effects, capital requirements, and so on) 2. DRIVING FORCES 3. COMPETITION ANALYSIS Rivalry among competing sellers (a strong, moderate, or weak force / weapon of competition? why? ) Threat of potential entry (a strong, moderate, or weak force?
assessment of entry barriers? ) Competition for substitutes (a strong, moderate, or weak force? why? ) Power of suppliers (a strong, moderate, or weak force? why? ) Power of customers (a strong, moderate, or weak force? why? ) 4. COMPETITIVE POSITION OF MAJOR FIRMS AND STRATEGIC GROUPS Favorably positioned? Why?
Unfavorably positioned? Why? 5. COMPETITOR ANALYSIS Strategic approaches? Predicted moves of key competitors? Who to watch and why 6. KEY SUCCESS FACTORS 7.
INDUSTRY PROSPECTS & ATTRACTIVENESS (OVERALL) Factors making the industry attractive Factors making the industry unattractive Special industry issues / problems Profit outlook (favorable / unfavorable )
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Research essay sample on Judging Industry Analysis And Competitive Strategies
