Driving Force

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Chapter 20

Driving Forces Analysis

Ch20. Driving Forces










Short Description
Background
Strategic Rationale & Implications
Strengths & Advantages
Weaknesses & Limitations
Process for Applying Technique
Summary
Case Study: Digital Music Industry
FAROUT

FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.2

Ch20. Driving Forces
Short Description
• Driving forces analysis (DFA) is a way of
understanding and accounting for change at the
industry level.
• ‘Drivers’ are clusters of trends that create influences on changes to an industry’s structure and a rival’s
competitive conduct.

FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.3

Ch20. Driving Forces
Background
• DFA was developed in the 1950s as a means for helping
organizations and individuals deal with changes in the
business environment.
• FFA was used to analyze the conditions that support or restrain a given outcome.
• This work captured the fancy of economists and set the stage for the further development of DFA within the competitive
industrial context.
• Forces that push toward change are called driving forces. Forces that resist change are called restraining forces.
• DFs are those significant, underlying ‘currents’ that define and drive events and trends in certain directions.
• These forces are typically broad in scope, long term in nature and associated with uncertainty.
FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.4

Ch20. Driving Forces
Strategic Rationale and Implications
• Industry conditions change because forces are driving industry participants to alter their actions.
• DFs originate from within a firm’s industry and can create uncertainty.
• First task: look for the DFs of the macro-environment.
• DFs may seem obvious to one person but be hidden to
another.
• Should be done in a team environment.
• Firms have little control over DFs — ability to deal with them comes from recognizing and understanding their effect.
• DFA plays a critical role in the larger strategy development process.
FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.5

Ch20. Driving Forces
Strengths and Advantages
• DFA is an essential component of several other
analytical techniques. (environment/ industry)
• DFs by nature imply change.
• DFA receives a higher than average degree of
managerial agreement.
• DFA can be done in a less data-intense fashion
than many other techniques.
• Doesn’t necessarily require the firm to gather data
on a continual basis.
FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.6

Ch20. Driving Forces
Weaknesses and Limitations
• DFA cannot drive strategy formulation alone.
• Seldom answers specific strategy questions.
• DFs tend to be outside the control of any single firm.
• DFA nearly always needs to be inclusive and
participative.
• DF analysis can suffer from many of the common
internal, organizational biases when they are
generated using only internal personnel.

FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan.

Ch20.7

Ch20. Driving Forces
Process for Applying the Technique
• There are two steps involved in performing DFA.
The primary analytical task in performing DFA is to:
1. Identify the relevant DFs.
• Separate the major causes of industry
change from less important ones.
2. Assess the impact they will have on the industry.
• This involves identifying the small number of
DFs that are likely to have greatest impact
on the industry.
FT Press 2007. All Rights
Reserved.

Business and Competitive Analysis.
By C. Fleisher & B. Bensoussan....
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