Contemporary Strategy Analysis
Contemporary Strategy Analysis
Robert M Grant, 7th Edition
Chapter 3: Industry Analysis: The fundamentals
Introduction and objectives * Identify the sources of profit in the external environment. * Focus of environmental analysis: industry analysis. Relevant both to corporate lvl & business-lvl strategy. * Corporate strategy: deciding which industries the firm should be engaged in and how it should allocate resources among the. – Assemsment of the atrrativeness of different industries in ters of profit potential. This chapter focus onunderstanding how the competitive structure og an industry determines its profitability. * Business strategy - concerned with establishing competitive advantage. Identify general sources of competitive advantage: Key success factors.
From environmental analysis to industry analysis * Business environment consists of al external influences that affect its decisions and performance. * Prerequiite for effective environmental analysis is to distinguish the vital from the merely important. * The core of the firms business environsment is formed by the relationships with: customers, suppliers and competitors – this is the industry environment. * Macro-level factors still importat – the key issue is how these more general environmental factors affect the firms industry environment. Fig 3.1
The determinants of Industry Profit: Demand and competition * Starting point is simple: What determines the level of profit in an industry. * The prerequisite for profit is the creation of value for customers. * Surplus distributed depending on the forces of competition. * Firms profit determined by 3 factors. * The value of the product to customers * The intensity of competition * The bargaining power of producers relative to their suppliers and buyers * The joys of niche markets * Perfect competition / monopoly / barriers -> table 3.2 * Porters Five Forces
Robert M Grant, 7th Edition
Chapter 3: Industry Analysis: The fundamentals
Introduction and objectives * Identify the sources of profit in the external environment. * Focus of environmental analysis: industry analysis. Relevant both to corporate lvl & business-lvl strategy. * Corporate strategy: deciding which industries the firm should be engaged in and how it should allocate resources among the. – Assemsment of the atrrativeness of different industries in ters of profit potential. This chapter focus onunderstanding how the competitive structure og an industry determines its profitability. * Business strategy - concerned with establishing competitive advantage. Identify general sources of competitive advantage: Key success factors.
From environmental analysis to industry analysis * Business environment consists of al external influences that affect its decisions and performance. * Prerequiite for effective environmental analysis is to distinguish the vital from the merely important. * The core of the firms business environsment is formed by the relationships with: customers, suppliers and competitors – this is the industry environment. * Macro-level factors still importat – the key issue is how these more general environmental factors affect the firms industry environment. Fig 3.1
The determinants of Industry Profit: Demand and competition * Starting point is simple: What determines the level of profit in an industry. * The prerequisite for profit is the creation of value for customers. * Surplus distributed depending on the forces of competition. * Firms profit determined by 3 factors. * The value of the product to customers * The intensity of competition * The bargaining power of producers relative to their suppliers and buyers * The joys of niche markets * Perfect competition / monopoly / barriers -> table 3.2 * Porters Five Forces