Bài giảng Crafting & Executing Strategy - Chapter 3 Evaluating a company’s external environment

CHAPTER 3EVALUATING A COMPANY’S EXTERNAL ENVIRONMENTStudent VersionMcGraw-Hill/IrwinCopyright đ2012 The McGraw-Hill Companies, Inc.3.1From Thinking Strategically about the Company’s Situation to Choosing a StrategyThinkingstrategicallyabout a firm’sexternalenvironmentThinkingstrategicallyabout a firm’sinternalenvironmentForming astrategicvision ofwhere thefirm needs to headIdentifyingpromisingstrategicoptionsfor the firmSelecting thebest strategyand businessmodel for the firmChapter 3Chapter 4The External EnvironmentThe Macro-EnvironmentIs the broad environmental context in which a firm’s industry is situated.Includes strategically relevant components over which the firm has no direct control.General economic conditionsImmediate industry and competitive environmentQUESTION 1: DOES THE INDUSTRY OFFERATTRACTIVE OPPORTUNITIES FOR GROWTH?Defining Growth:What is the current market size in units or sales?What is the past, current and expected rate of growth for the market\industry?Considerations:Different sectors\regions of a market grow at different rates.Growth varies with the industry’s life cycle stage—emergence, rapid growth, maturity, and decline.Growth does not guarantee profitability.QUESTION 2: WHAT KINDS OF COMPETITIVE FORCES ARE INDUSTRY MEMBERS FACING, AND HOW STRONG ARE THEY?The Five Competitive Forces:Competition from rival sellersCompetition from potential new entrantsCompetition from substitute products producersSupplier bargaining powerCustomer bargaining powerCompetitive Pressures That Act to Increase the Rivalry among Competing SellersBuyer demand is growing slowly or declining.It is becoming less costly for buyers to switch brands.Industry products are becoming more alike.There is unused production capacity, and\or products have high fixed costs or high storage costs.The number of competitors is increasing and\or they are becoming more equal in size and competitive strength.The diversity of competitors is increasing.High exit barriers stop firms from exiting the industry.Competitive Pressures Associated with the Threat of New EntrantsEntry Threat Considerations:Strength of barriers to entryExpected reaction of incumbent firmsAttractiveness of a particular market’s growth in demand and profit potentialCapabilities and resources of potential entrantsEntry of existing competitors into market segments in which they have no current presenceCompetitive Pressures from the Sellersof Substitute ProductsSubstitute Products Considerations:Ready availability of substitutesPricing, quality, performance, and other relevant attributes of substitutesSwitching costs that buyers incurIndicators of Substitutes’ Competitive Strength:Increasing rate of growth in sales of substitutesSubstitute producers adding output capacityIncreasing profitability of substitute producersCompetitive Pressures Stemming from Supplier Bargaining PowerSupplier Bargaining Power Considerations:Ready availability of supplier productsCriticality of supplier products as industry inputsNumber of suppliers of standard\commodity itemsBuyers’ costs for switching among suppliersAvailability of substitutes for suppliers’ productsFraction of supplier sales due to industry demandRatio of suppliers relative to industry buyersBackward integration into suppliers’ industryCompetitive Pressures Stemming from BuyerBargaining Power and Price SensitivityBuyer Bargaining Power Considerations:Buyer costs for switching to competing sellersDegree to which industry products are commoditizedNumber and size of buyers relative to sellersStrength of buyer demand for sellers’ productsBuyer knowledge of products, costs and pricingBackward integration of buyers into sellers’ industryBuyer discretion in delaying purchasesBuyer price sensitivity due to low profits, size of purchase, and consequences of purchase Is the Collective Strength of the Five Competitive Forces Conducive to Good Profitability?Is the state of competition in the industry stronger than “normal”?Can industry firms expect to earn decent profits given prevailing competitive forces?Are some of the competitive forces sufficiently powerful to undermine industry profitability?QUESTION 3: WHAT FACTORS ARE DRIVING INDUSTRY CHANGE, AND WHAT IMPACTS WILL THEY HAVE?Strategic Analysis of Industry Dynamics:Identifying the drivers of change.Assessing whether the drivers of change are, individually or collectively, acting to make the industry more or less attractive.Determining what strategy changes are needed to prepare for the impacts of the anticipated change.QUESTION 4: HOW ARE INDUSTRY RIVALSPOSITIONED—WHO IS STRONGLY POSITIONEDAND WHO IS NOT?A Strategic GroupIs a cluster of industry rivals that have similar competitive approaches and market positions:Have comparable product-line breadthSell in the same price/quality rangeEmphasize the same distribution channelsUse the same product attributes to buyersDepend on identical technological approachesOffer similar services and technical assistanceQUESTION 5: WHAT STRATEGIC MOVES ARE RIVALS LIKELY TO MAKE NEXT?Competitive IntelligenceInformation about rivals that is useful in anticipating their next strategic moves.Signals of the Likelihood of Strategic Moves:Rivals under pressure to improve financial performanceRivals seeking to increase market standingPublic statements of rivals’ intentionsProfiles developed by competitive intelligence unitsQUESTION 6: WHAT ARE THE KEY FACTORS FOR FUTURE COMPETITIVE SUCCESS?Key Success FactorsAre the strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that are necessary for competitive success by any and all firms in an industry.Vary from industry to industry, and over time within the same industry, as drivers of change and competitive conditions change.QUESTION 7: DOES THE INDUSTRY OFFER GOOD PROSPECTS FOR ATTRACTIVE PROFITS?Industry Profitability Considerations:The industry’s overall growth potentialEffects of strong competitive forcesEffects of prevailing drivers of change in the industryCompetitive strength of the firm: its market position relative to its rivals, its capability to withstand competitive forces, and whether its position will change in the course of competitive interactionsThe success of the firm’s strategy in delivering on the industry’s key success factors