英國某商學(xué)院的EMBA課程講座課件

“Getthetools,breaktherules,makeadifference”:AconceptualmapofthecourseDefinitionandDynamicsofStrategyWhatisstrategy?Howcanyoubesureyouareaskingthe“right”strategyquestions?Howstrategydevelops:Context,Role-playing,Mentalmodels,andMetaphorsStrategyContentCompetitiveForcesinanIndustry

IndustryEvolution

ValuingFirmResources

Capabilitiesforpositioning

StrategyinActionImplementingStrategy

Institutionalstrategy:Canstrategymakeadifference?“Getthetools,breaktherule1StrategicManagementSession4IndustryAnalysisStrategicManagementSession42IndustryAnalysisLasttimewesaidthattodevelopourstrategyfurtherweneedtoknowourcompetitiveenvironment.Knowingthiswecanestablish:Whatdoweneedtodotoshapethefutureactionofcompetitorsandotherindustryplayers?Howshouldwerespondtotheactionsofcompetitorsandotherindustryplayers?IndustryAnalysisLasttimewe3ThesourceofprofitabilityisevolvingandsoistheroleofthemanagerThesourceofprofitabilityis4Whatfactorsexplainthesechanges?SustainingcompetitiveadvantageappearstobedifficultWhatfactorsexplainthesecha5TopTenU.STradedCompaniesbyMarketValue1. GE $494b2. Cisco $447b3. Intel $426b4. Microsoft $362b5.Walmart $307b6.Nokia $271b7. Exxon-Mobil $270b8. Lucent $228b9. IBM $196b10.Citigroup $187b1. IBM $37.6b2. AT&T $36.6b3. Exxon $24.2b4. GeneralMotors $14.5b5. Schlumberger $11.9b6. Amoco $11.8b7. Mobil $11.7b8. GE $11.5b9. Sohio $10.8b10. Chevron $9.6b 19801. Exxon $62.5b2. GE $58.4b3. IBM $54.1b4. AT&T $48.9b5. PhilipMorris $38.7b6. Merck $30.6b7. Bristol-MyersSquibb $29.4b8. Dupont $28.1b9. Amoco $27.9b10. BellSouth $27.9b19902000TopTenU.STradedCompaniesb6Source:JeffreyWilliamsThenwhyaresomeindustriesabletosustainhigherprices?Source:JeffreyWilliamsThenw7Whatdrivesprofitability?A:Intensityofcompetitioninanindustrywhich,inturn,isdeterminedbythestructureoftheindustryWhatdrivesprofitability?A:I8AveragePharma.Whyaresomeindustriesconsistentlymoreprofitablethanothers?BecausefirmsintheseindustriesconsistentlyfacelessintensecompetitionAveragePharma.Whyaresomeind9Whatexplainsprofitabilityvariation?41943100232BusinessuniteffectsCorporateparenteffectsIndustryeffectsYeareffectsNotexplainedbymodelTOTALEstimatesbyMcGahan&Porter1545n/a1002EstimatesbyRumelt38Whatexplainsprofitabilityva10FromEnvironmentalAnalysisto

IndustryAnalysisTHEINDUSTRYENVIRONMENTSuppliersCompetitorsCustomersSocialstructureTheIndustryEnvironmentliesatthecoreoftheMacroEnvironment.Thenational/internationaleconomyTechnologyGovernmentThenaturalenvironmentDemographicstructureSocialstructureFromEnvironmentalAnalysisto11TheSpectrumofIndustryStructuresConcentrationEntryandExitBarriersProductDifferentiationInformationPerfectCompetitionOligopolyDuopolyMonopolyManyfirmsAfewfirmsTwofirmsOnefirmNobarriersSignificantbarriersHighbarriersHomogeneousProductPotentialforproductdifferentiationPerfectInformationflowImperfectavailabilityofinformationTheSpectrumofIndustryStruc12Astructural(5forces)industryanalysisreveals:WhethertheindustryisattractiveThedimensionsalongwhichfirmscompeteWhatstructuralvariablesaffectcompetitionWhetherindividualorcollectivestrategiescan

reducetheintensityofcompetitionWhatkindsofexogenousforcescanaffect

thestructureoftheindustryAstructural(5forces)indust13Drawbacksof5forcesanalysis:Itonlyoffersastaticpicture.Doesnotexplainwhytheindustryevolvedthewayitdidandhowitwillevolveinthefuture.Itdoesnothighlighttheroleof:technology(e.g.theeffectoffabrictechnologiesonItalianfashion),andregulation(e.g.theeffectofcountrypoliciesaboutglobalwarmingonrenewableenergy).Drawbacksof5forcesanalysis145forcescanexplainwhyindustrieschangeIndustriesintransitionUSBankinginthe90sCiticorp&TravelersBankAmerica&NationsBankFirstUnion&CoreStatesBancOne&FirstChicagoNBDAutomobileFiat’sattemptsatmergerVolkswagenTelecommunicationsVodaphone&DoCoMovs.WorldComPublishingBertelsmann&NapsterBarnesandN&BertelsmannBecause...RelevantindustryisfinancialservicesBanksvs.mutualfundsshareofhouseholdfinancialassets:90%vs.10%in198055%vs.44%in1997EconomiesofscaleinNewProductDevelopmentImoditizationinlong-distanceNeedtoincreasemarketpowerre:distributorsMarketpowerre:publishers5forcescanexplainwhyindus15U.S.SoftDrinkIndustry

Highlights,mid-1980sRisinginternationalsalesHighlyandincreasinglyconcentratedTop2firmsgainingmarketshareattheexpenseof

remainingfirmsMorenewproductintroductionsandadvertisingIncreasingpricecompetitionTurnoverinownershipofalllargercompaniesexcept

Coca-ColaandPepsiBottlers'roleimportantforconcentrateproducerU.S.SoftDrinkIndustry

Highl16TheU.S.SoftDrinkIndustry

inthemid-80sSuppliers:Sweeteners,ContainersRivals:ConcentrateProducersPotentialEntrants:TakeoversPotentialsubstitutes:otherbeveragesBuyers:Bottlers,Stores,OtherTheU.S.SoftDrinkIndustry

17IndustryStrategicchallengesIdentifyandsegmentcompetitivegroupsAnalyzerivalrywithinandacrosssuchgroupsIdentifythefocus(e.g.,price,quality,service,innovation,features),nature,andintensityofrivalryCompetitorCompetitorCompetitorCompetitorCompetitorCompetitorRivalryamongexistingcompetitors

Whatisthenature,intensity,andfocusofrivalrywithinanindustry?CompetitorscanfocusonmultiplefactorsPrice,quality,service,features,innovation,etc.IntensityofrivalrycanvarywithinandacrosscompetitorgroupsIndustrygrowthratesCorporatestakes(e.g.,strategicbusinesses)Exitbarriers(e.g.,specializedassets)Fixedcosts(e.g.,capacityincrements)LackofproductdifferentiationSwitchingcostsIndustryStrategicchallengesCo18RivalryTwodominantplayersStrongdemandforsoftdrinks,especially

amongjunioragegroupsProductinnovationAdvertisingimportantandsubstantialRivalryTwodominantplayers19StrategicchallengesIdentify,buildandexploitbarrierstoentrytominimizecompetitionFirmBIndustryPotentialEntrantsPotentialEntrantsFirmAFirmCBarrierstoentryBarrierstoentry

Whatfactorskeeppotentialcompetitorsout?Scaleeconomiese.g.,aerospaceindustryScopeeconomiese.g.,retailingCapitalrequirementse.g.,aerospaceindustryProprietarytechnologiese.g.,pharmaceuticalsBrand(product)differentiatione.g.,perfumeSwitchingcostse.g.,MSDOSoperatingsystemAccesstodistributione.g.,CampbellsoupEntrydeterringregulationsStrategicchallengesFirmIndust20PotentialEntrantsHighcapitalexpendituresinadvertisingEconomiesofscaleinmarketing,distribution,and

maybeproductionHighproductdifferentiationLimitedaccesstodistributionchannelsIncumbentshavetheresourcestoretaliateagainst

potentialentrantsPotentialEntrantsHighcapital21Strategicchallenges:UnderstandthefunctionalityofproductsandservicestocustomersIdentifybenefitsand/oradvantagesofpotentialsubstitutesIncorporatethebenefitsofsubstitutesorprovidebetterpriceorperformancefeaturesFirmAIndustryCustomersFirmDFirmCFirmBThreatofsubstitutes

Whatalternativesareavailabletocustomers?CompetitorscanemergefromwithinoroutsideanindustryAnalyzepotentialcompetitorsfromcustomerperspectiveLookbeyondcurrentindustrystructure“Substitutes”can:providethesamefunctionalitydieselvsgasenginesDirecTVvscableeliminatetheneedforaproductwatermetersvsflatrateStrategicchallenges:FirmIndus22SubstitutesLowlikelihoodofsubstitutiongiven

risingshareofsoftdrinksrelativeto

otherbeveragesSubstitutesLowlikelihoodofs23StrategicChallengesIdentifycriticalinputsandanalyzesuppliersorsuppliergroupsAnalyzeindustryofcriticalsuppliersIdentifydegreeandnatureofsupplierpowerSuppliersSuppliersSuppliersSuppliersSuppliersSuppliersIndustrySupplierpower

Howcanmysuppliersextract“value”?SupplierconcentrationFewvsmanysuppliersSuppliervolumeLargevssmallpurchasedecisionsProductdifferencesDependenceonuniquefeaturesThreatofforwardintegrationAbilitytobecomecompetitorSwitchingcostsLimitationsonabilitytochangesuppliersStrategicChallengesSuppliersS24SupplierPower-SweetenersLittlebargainingpower:Theyselltorelativelylargeandconcentratedconcentrateproducers(withtheexceptionofG.D.Searle)PriceofsugarisknownConcentrateproducershavetheresourcestointegratebackwardAlso,concentrateproducersaresensitivetothepriceofsweeteners:ItisabigpercentageofconcentrateproductioncostsItisnotadifferentiatedproduct(withtheexceptionofnon-nutritivesweeteners)Therefore,themarketpowerofsweetenersuppliers(withtheexceptionofG.D.Searle)relativetoconcentrateproducersislow.SupplierPower-SweetenersLittl25SupplierPower-ContainersMostlylowandinsomecasesmoderatemarketpower:ItisabigpercentageofconcentrateproductioncostsOverallundifferentiatedproductwithcertainexceptionsBuyersarerelativelylargeandconcentratedSomeself-manufactureonthepartofbuyersContainersarecomparableandthepricecanbeinferredSupplierPower-ContainersMostl26CustomerCustomerCustomerCustomerCustomerCustomerStrategicchallengesFocusonhowtosegmentmarketsserved(geography,industries,products,size,etc.)AnalyzebuyingcriteriaandpowerofimportantmarketsegmentsIndustryBuyerpower

Howcanmycustomersextract“value”?BuyerconcentrationFewvsmanycustomersVolumeofpurchasesLargevssmallpurchasedecisionsAvailablealternativeproductsCompetitiveproductsThreatofbackwardintegrationAbilitytobecomeacompetitorSwitchingcostsThreatofswitchingsuppliersInformatione.g.viacomparisonshoppingCustomerCustomerCustomerCustom27BuyerPower-BottlersBottlershavegenerallylowbargainingpower:Threatofforwardintegration(eg.concentrate-ownedbottlers)65%oftheircostsplussharedadvertisingcostsareinfluencedbyconcentrateproducersTheycouldnotplayoffconcentrateproducersagainstoneanother:becauseproductwasdifferentiatedonthebasisofmarketingactivities,theycouldnotcrediblythreatentobottlelesser-knownbrands;becauseofterritorialexclusivity,theycouldnotthreatentoleaveoneconcentrateproducerforanotherwhoalreadyoperatedinthatarea.LargebottlersmighthavebeenabletoexercisemoderatepoweroverconcentrateproducersBuyerPower-BottlersBottlersh28BuyerPower-StoresandFountainsFoodstoreshadmoderatepower:SoftdrinkswereimportantbecausetheydrewtrafficinthestoreBottlersfoughtforshelfspaceSomeregionalconcentrationFountainshadlowtomoderatepower:SoftdrinkswereimportantbecausetheywereasubstantialsourceofprofitsSomelargebuyersConcentrateproducerscompetedintenselyoverfountainsalesBuyerPower-StoresandFountai29TheU.S.SoftDrinkIndustryinthemid-1980sSuppliers:Sweeteners,ContainersPower: Sweeteners:Low(exceptforD.GSearle) Containers:ModeratetolowRivals:ConcentrateProducersRivalry:HighPotentialEntrants:TakeoversThreat:LowPotentialsubstitutes:otherbeveragesThreat:LowBuyers:Bottlers,Stores,OtherPower:ModeratetolowTheU.S.SoftDrinkIndustryi30Evolutionoftheindustry,

mid-1980stoearly1990sRestructuringofbottlingoperationsakeydimensionofcompetitionPriceofconcentratetobottlersraised,priceofsoftdrinksfallsInternationalmarketsofkeyimportanceforprofitabilityRoleofbottlersimportantinternationallyProductinnovationandproductlineproliferationNewretailformats(warehouseclubs)Growingimportanceofprivatelabelsoftdrinks,otherbeveragesaspotentialsubstitutes“NewAge”beveragesalsoimportantaspotentialsubstitutesEvolutionoftheindustry,

mid31TheU.S.SoftDrinkIndustryinthe1990sSuppliers:Sweeteners,ContainersPower: Sweeteners:Low Containers:LowRivals:ConcentrateProducersRivalry:HighPotentialEntrants:TakeoversThreat:LowPotentialsubstitutes:otherbeveragesThreat:HighBuyers:Bottlers,Stores,OtherPower:ModerateonlyforcertaindistributionchannelsTheU.S.SoftDrinkIndustryi32WhyistheSoftDrinkIndustry

intheUSstructuredthisway?Only2majorplayers–why?entrybarrierssunkcosts(scaleeconomiesinadvertising)retaliationabilityregardingnewentrants(e.g.PhilipMorris)marketforeclosure(distributionchannels,bottling)Intenserivalryyetmajorplayersprofitable–why?lowcapitalinvestmentadvertisingintensitynon-pricerivalry(advertising,productdifferentiation)marketsaturation,internationalexpansionWhyistheSoftDrinkIndustry33WhyistheSoftDrinkIndustry

intheUSstructuredthisway?Bottlerterritorialexclusivity–why?coffee&milkhistoryavoidpricecompetitionrewardregionalbrandandmarketdevelopmentenouragemarketsaturationswitchingcostsBottlerbuy-outs–why?capacitycommitmentsefficiencyimprovementsWhyistheSoftDrinkIndustry34StrategicGroupsSoftDrinks&NonSoft-DrinkBeveragesNonsoft-drinkbeveragesSoftDrinksTypeofBeverageDSDbyownbottlers“Piggy-back”WarehousedeliveryMeansofdistributionCoke&PepsiBrandInternationalShasta,CottPriceInternationalHires,DrPepperA&W,7-UpBrandNationalRCColaBrandInternationaladvertisingintensityregulationadvertisingintensityregulationStrategicGroupsSoftDrinks&35StrategicGroupsinBookRetailingVirtualPhysicalPresenceLocalNationalInternationalGeographicReachMailOrder,OnlinePriceConvenienceSpecialisedofferingsB&N,BordersPriceAvailabilitySocialExperienceIndependentsLoyaltyKnowcustomsConvenienceFront-endFixed-costTechnologycultureEoSCultureSuperstore“recipe”StrategicGroupsinBookRetai36SummaryofSoftDrinkIndustry:Concentrateproducershaverelativelyhighmarketpowervs.othercompetitiveforcesandarehighlyconcentrated(rivalryisfocusedbetweentwoplayers)Theindustryremainedattractiveintheearly90s,butthekeydimensionsofcompetitionchangedSomeofthechangeswereduetoexogenousfactorsbutotherswereinitiatedbythemajorplayersTherefore,theprofitabilityoftheseplayerswillbetoalargeextentdeterminedbyhowrivalrybetweenthemplaysoutalongthedimensionstheyhavecontrolover.Couldthemajorplayerscompetelessaggressivelywitheachother?“Industry”canbeanalyzedatmanylevels.Themorefine-grainedtheanalysis,thebettertheinsightsregardingthreatsandopportunitiesSummaryofSoftDrinkIndustry37Youcanshapethereactionofyourcompetitors:CommitmentEstablishanduseareputationAlexandertheGreatinTyrosWritecontractsCutoffcommunicationCrossingthestreetBurnbridgesbehindyouCortezinMexicoProgramyourresponsetoyourcompetitor’smovesCorneringacatcanbedangeroustoyourhealthYoucanshapethereactionof38Youcanshapethestructureofyourindustry:CompetitivemovesNewproductintroductionsPricechangesAdvertisingcampaignsInvestmentsVerticalintegrationDiversificationStrategicalliancesSpin-offsLegalactionsInstitutionalactions

(lobbying,etc)DistributionchannelsSizeofinstalledbaseLeasevs.sellYoucanshapethestructureof39Specialcase:GamesofattritionGamesofattritioncangoonforlong.Thisistrueevenwhenstrongegosandemotionsarenotinvolved.Becauseatanypointinthegameitisreasonableforeachcompetitortoexpectthatiftheotherleaves,theywillwintheprize.Thus,theyarecostly.Youdon’twanttobecaughtupinone.Ifyouare:Trytochangetheotherplayer’sbeliefsaboutyou:Demonstratecommitmentbeforeorduringthegame.Shemightnotenter,exit,orcollaborate.Specialcase:Gamesofattriti40HowtouseindustryanalysisFindouttheattractivenessofanindustrybeforeenteringSeekwaystolowerbarrierstoentryifyouwishtoenterIngeneral,seekwaysto“pushback”ontheforcesofcompetitioniftheyareunfavourabletoyouHowtouseindustryanalysisFi4130minutegroupassignmentPickoneoftheindustriesthattheindividualsinyourgroupareanalysing.Assesseachofthefiveforcesandwhetheroverallthisisanattractiveindustry.Howaretheseforceslikelytochangetheindustryinthefuture?Howcananincumbentimproveitsposition?(or,Howcananpotentialentrantimproveitsposition?)30minutegroupassignmentPic42“Getthetools,breaktherules,makeadifference”:AconceptualmapofthecourseDefinitionandDynamicsofStrategyWhatisstrategy?Howcanyoubesureyouareaskingthe“right”strategyquestions?Howstrategydevelops:Context,Role-playing,Mentalmodels,andMetaphorsStrategyContentCompetitiveForcesinanIndustry

IndustryEvolution

ValuingFirmResources

Capabilitiesforpositioning

StrategyinActionImplementingStrategy

Institutionalstrategy:Canstrategymakeadifference?“Getthetools,breaktherule43StrategicManagementSession4IndustryAnalysisStrategicManagementSession444IndustryAnalysisLasttimewesaidthattodevelopourstrategyfurtherweneedtoknowourcompetitiveenvironment.Knowingthiswecanestablish:Whatdoweneedtodotoshapethefutureactionofcompetitorsandotherindustryplayers?Howshouldwerespondtotheactionsofcompetitorsandotherindustryplayers?IndustryAnalysisLasttimewe45ThesourceofprofitabilityisevolvingandsoistheroleofthemanagerThesourceofprofitabilityis46Whatfactorsexplainthesechanges?SustainingcompetitiveadvantageappearstobedifficultWhatfactorsexplainthesecha47TopTenU.STradedCompaniesbyMarketValue1. GE $494b2. Cisco $447b3. Intel $426b4. Microsoft $362b5.Walmart $307b6.Nokia $271b7. Exxon-Mobil $270b8. Lucent $228b9. IBM $196b10.Citigroup $187b1. IBM $37.6b2. AT&T $36.6b3. Exxon $24.2b4. GeneralMotors $14.5b5. Schlumberger $11.9b6. Amoco $11.8b7. Mobil $11.7b8. GE $11.5b9. Sohio $10.8b10. Chevron $9.6b 19801. Exxon $62.5b2. GE $58.4b3. IBM $54.1b4. AT&T $48.9b5. PhilipMorris $38.7b6. Merck $30.6b7. Bristol-MyersSquibb $29.4b8. Dupont $28.1b9. Amoco $27.9b10. BellSouth $27.9b19902000TopTenU.STradedCompaniesb48Source:JeffreyWilliamsThenwhyaresomeindustriesabletosustainhigherprices?Source:JeffreyWilliamsThenw49Whatdrivesprofitability?A:Intensityofcompetitioninanindustrywhich,inturn,isdeterminedbythestructureoftheindustryWhatdrivesprofitability?A:I50AveragePharma.Whyaresomeindustriesconsistentlymoreprofitablethanothers?BecausefirmsintheseindustriesconsistentlyfacelessintensecompetitionAveragePharma.Whyaresomeind51Whatexplainsprofitabilityvariation?41943100232BusinessuniteffectsCorporateparenteffectsIndustryeffectsYeareffectsNotexplainedbymodelTOTALEstimatesbyMcGahan&Porter1545n/a1002EstimatesbyRumelt38Whatexplainsprofitabilityva52FromEnvironmentalAnalysisto

IndustryAnalysisTHEINDUSTRYENVIRONMENTSuppliersCompetitorsCustomersSocialstructureTheIndustryEnvironmentliesatthecoreoftheMacroEnvironment.Thenational/internationaleconomyTechnologyGovernmentThenaturalenvironmentDemographicstructureSocialstructureFromEnvironmentalAnalysisto53TheSpectrumofIndustryStructuresConcentrationEntryandExitBarriersProductDifferentiationInformationPerfectCompetitionOligopolyDuopolyMonopolyManyfirmsAfewfirmsTwofirmsOnefirmNobarriersSignificantbarriersHighbarriersHomogeneousProductPotentialforproductdifferentiationPerfectInformationflowImperfectavailabilityofinformationTheSpectrumofIndustryStruc54Astructural(5forces)industryanalysisreveals:WhethertheindustryisattractiveThedimensionsalongwhichfirmscompeteWhatstructuralvariablesaffectcompetitionWhetherindividualorcollectivestrategiescan

reducetheintensityofcompetitionWhatkindsofexogenousforcescanaffect

thestructureoftheindustryAstructural(5forces)indust55Drawbacksof5forcesanalysis:Itonlyoffersastaticpicture.Doesnotexplainwhytheindustryevolvedthewayitdidandhowitwillevolveinthefuture.Itdoesnothighlighttheroleof:technology(e.g.theeffectoffabrictechnologiesonItalianfashion),andregulation(e.g.theeffectofcountrypoliciesaboutglobalwarmingonrenewableenergy).Drawbacksof5forcesanalysis565forcescanexplainwhyindustrieschangeIndustriesintransitionUSBankinginthe90sCiticorp&TravelersBankAmerica&NationsBankFirstUnion&CoreStatesBancOne&FirstChicagoNBDAutomobileFiat’sattemptsatmergerVolkswagenTelecommunicationsVodaphone&DoCoMovs.WorldComPublishingBertelsmann&NapsterBarnesandN&BertelsmannBecause...RelevantindustryisfinancialservicesBanksvs.mutualfundsshareofhouseholdfinancialassets:90%vs.10%in198055%vs.44%in1997EconomiesofscaleinNewProductDevelopmentImoditizationinlong-distanceNeedtoincreasemarketpowerre:distributorsMarketpowerre:publishers5forcescanexplainwhyindus57U.S.SoftDrinkIndustry

Highlights,mid-1980sRisinginternationalsalesHighlyandincreasinglyconcentratedTop2firmsgainingmarketshareattheexpenseof

remainingfirmsMorenewproductintroductionsandadvertisingIncreasingpricecompetitionTurnoverinownershipofalllargercompaniesexcept

Coca-ColaandPepsiBottlers'roleimportantforconcentrateproducerU.S.SoftDrinkIndustry

Highl58TheU.S.SoftDrinkIndustry

inthemid-80sSuppliers:Sweeteners,ContainersRivals:ConcentrateProducersPotentialEntrants:TakeoversPotentialsubstitutes:otherbeveragesBuyers:Bottlers,Stores,OtherTheU.S.SoftDrinkIndustry

59IndustryStrategicchallengesIdentifyandsegmentcompetitivegroupsAnalyzerivalrywithinandacrosssuchgroupsIdentifythefocus(e.g.,price,quality,service,innovation,features),nature,andintensityofrivalryCompetitorCompetitorCompetitorCompetitorCompetitorCompetitorRivalryamongexistingcompetitors

Whatisthenature,intensity,andfocusofrivalrywithinanindustry?CompetitorscanfocusonmultiplefactorsPrice,quality,service,features,innovation,etc.IntensityofrivalrycanvarywithinandacrosscompetitorgroupsIndustrygrowthratesCorporatestakes(e.g.,strategicbusinesses)Exitbarriers(e.g.,specializedassets)Fixedcosts(e.g.,capacityincrements)LackofproductdifferentiationSwitchingcostsIndustryStrategicchallengesCo60RivalryTwodominantplayersStrongdemandforsoftdrinks,especially

amongjunioragegroupsProductinnovationAdvertisingimportantandsubstantialRivalryTwodominantplayers61StrategicchallengesIdentify,buildandexploitbarrierstoentrytominimizecompetitionFirmBIndustryPotentialEntrantsPotentialEntrantsFirmAFirmCBarrierstoentryBarrierstoentry

Whatfactorskeeppotentialcompetitorsout?Scaleeconomiese.g.,aerospaceindustryScopeeconomiese.g.,retailingCapitalrequirementse.g.,aerospaceindustryProprietarytechnologiese.g.,pharmaceuticalsBrand(product)differentiatione.g.,perfumeSwitchingcostse.g.,MSDOSoperatingsystemAccesstodistributione.g.,CampbellsoupEntrydeterringregulationsStrategicchallengesFirmIndust62PotentialEntrantsHighcapitalexpendituresinadvertisingEconomiesofscaleinmarketing,distribution,and

maybeproductionHighproductdifferentiationLimitedaccesstodistributionchannelsIncumbentshavetheresourcestoretaliateagainst

potentialentrantsPotentialEntrantsHighcapital63Strategicchallenges:UnderstandthefunctionalityofproductsandservicestocustomersIdentifybenefitsand/oradvantagesofpotentialsubstitutesIncorporatethebenefitsofsubstitutesorprovidebetterpriceorperformancefeaturesFirmAIndustryCustomersFirmDFirmCFirmBThreatofsubstitutes

Whatalternativesareavailabletocustomers?CompetitorscanemergefromwithinoroutsideanindustryAnalyzepotentialcompetitorsfromcustomerperspectiveLookbeyondcurrentindustrystructure“Substitutes”can:providethesamefunctionalitydieselvsgasenginesDirecTVvscableeliminatetheneedforaproductwatermetersvsflatrateStrategicchallenges:FirmIndus64SubstitutesLowlikelihoodofsubstitutiongiven

risingshareofsoftdrinksrelativeto

otherbeveragesSubstitutesLowlikelihoodofs65StrategicChallengesIdentifycriticalinputsandanalyzesuppliersorsuppliergroupsAnalyzeindustryofcriticalsuppliersIdentifydegreeandnatureofsupplierpowerSuppliersSuppliersSuppliersSuppliersSuppliersSuppliersIndustrySupplierpower

Howcanmysuppliersextract“value”?SupplierconcentrationFewvsmanysuppliersSuppliervolumeLargevssmallpurchasedecisionsProductdifferencesDependenceonuniquefeaturesThreatofforwardintegrationAbilitytobecomecompetitorSwitchingcostsLimitationsonabilitytochangesuppliersStrategicChallengesSuppliersS66SupplierPower-SweetenersLittlebargainingpower:Theyselltorelativelylargeandconcentratedconcentrateproducers(withtheexceptionofG.D.Searle)PriceofsugarisknownConcentrateproducershavetheresourcestointegratebackwardAlso,concentrateproducersaresensitivetothepriceofsweeteners:ItisabigpercentageofconcentrateproductioncostsItisnotadifferentiatedproduct(withtheexceptionofnon-nutritivesweeteners)Therefore,themarketpowerofsweetenersuppliers(withtheexceptionofG.D.Searle)relativetoconcentrateproducersislow.SupplierPower-SweetenersLittl67SupplierPower-ContainersMostlylowandinsomecasesmoderatemarketpower:ItisabigpercentageofconcentrateproductioncostsOverallundifferentiatedproductwithcertainexceptionsBuyersarerelativelylargeandconcentratedSomeself-manufactureonthepartofbuyersContainersarec