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Chapter 8 by Mind Map: Chapter 8

1. What is industry analysis?

1.1. The micro-environment is that which immediately surrounds a business , the part of which the business interacts with frequently and over which it may have some influence.

1.2. The macro-environment comprises those influences that can affect the whole industry in which a business operates.

2. Industries and market

2.1. The importance of industry and market identification

2.1.1. Industries produce goods and services - the supply side of the economic system.

2.1.2. Markets consume goods and services that have been produced by industries - the demand side of the economic system.

2.2. The relationship between a business organization, its industry and markets

2.2.1. Analysis of the competitive environment is important to the development of an organization's future strategy, as is analysis of the macro-environment and internal analysis

2.2.2. The industry and market context will play an important role in shaping an organization's competencies and core competencies.

3. Industry analysis

3.1. Porter's five forces model of industry analysis

3.1.1. Force 1: The threat of new entrants to the industry The capital costs of entry Brand loyalty and customer switching costs Economies of scale or scope available to existing competitors Acess to input and distribution channels The resistance offered by existing business

3.1.2. Force 2: The threat of substitute products The extent to which the price and performance of the substitute can match the industry's product The willingness of buyers to switch to the substitute

3.1.3. Force 3: The bargaining power of buyers The number of customers and the volume of their puschases The number of business supplying the product and their size Switching costs and the availability of substitutes

3.1.4. Force 4: The bargaining power of suppliers The uniqueness and scarcity of the resource that suppliers provide How many other industries have a requirement for the resource Switching costs between suppliers The number and size of the resource suppliers

3.1.5. Force 5: The intensity of rivalry among competitors in the industry The relative size of competitors The nature of costs in industry sectors The maturity of the markets served The degree of brand loyalty of customers The degree of differentiation Goverment regulation The height of exit barriers

3.1.6. The five forces framework and profitability - a summary

3.1.7. Limitations of the five forces framework

3.1.8. It implies that suppliers, buyers and competitors are threats

3.1.9. It claims to assess ndustry profitability

3.1.10. It implies that the five forces apply equally to all competitors in an industry

3.1.11. The competitive analysis of nations or regions Factor conditions( physical resources, human resouces, capital resouces, infrastructure and knowledge resources) Market structures, organization and strategies Demand conditions Related and supporting industries

4. An alternative approach to competitive and collaborative analysis

4.1. Competitive and collaborative arenas

4.1.1. the industry - the industry within which the organization currently deploys its resources and competencies in producing products

4.1.2. Resource markets - the markets from which the organization, its competitors and other industries obtain their resource

4.1.3. Product markets - markets where the organization sells its products

4.1.4. Other industries - where business possess similar competencies to those of the organization

5. A resource-based approach to environment analysis

5.1. Limitations of existing frameworks of analysis

5.1.1. Do not sufficiently integrate external and internal analysis

5.1.2. Pre-suppose that business are naturally competitive and not collaborative in their behaviour

5.1.3. Tend to emphasize product and service markets rather than those where organizations obtain their resources

5.1.4. Do not adequately recognize: organizations themselves may alter their own competitive environment by their competence leveraging and building activities.

5.1.5. Do not adequately recognise: organizations currently outside a company's industry and market may pose a significant competitive threat if they possess similar core competencies and distinctive capabilities

5.1.6. Similarly do not recognise: the leveraging of existing competencies and the building of new ones may enable businesses to compete outside their current competitive arenas

5.2. The resource-based framework

5.2.1. The organization

5.2.2. its industry

5.2.3. product markets (existing markets, markets for substitutes, potential new markets)

5.2.4. resource markets

5.2.5. other industries

5.3. The organization

5.3.1. Consists of the business and a group of companies producing similar products and core competencies

5.4. The organization's industry

5.4.1. Consists of the business and a group of companies producing similar products, employing similar capabilities and technology

5.5. Product markets

5.5.1. Where businesses deploy their competences and sell their products and services

5.6. market subgroups

5.6.1. When customers are other businesses they can be grouped by the nature of the business, organization type and by their size

5.7. Customer motivations

5.7.1. sensitivity to price

5.7.2. sensitivity to quality

5.7.3. the extent of brand oyalty

5.8. Resource markets

5.8.1. where organizations obtain finance, human resources, materials, equipment,...

5.9. Competence-related industries

5.9.1. Other industries comprising business possessing similar competencies, which produce products or services, which are substitutes for those of the business in question must also be analysed

5.10. A summary of the resource-based model

5.10.1. The resource-based model is more complex than the five forces framework, but offers a more comprehensive analytical framework

6. Strategic group analysis

6.1. What are strategic groups?

6.1.1. cannot be precisely defined but consist of organizations possessing similar competencies serving customer needs in the same market segment producing products or services of similar quality

7. Competitor profilling

7.1. Step to profile key competitors

7.1.1. How and where the competitors might pose a threat

7.1.2. Under what circumstances might collaboration be sought and thereby opportunities realized

7.2. An analysis might be carried out using the following headings

7.2.1. Overview

7.2.2. Objectives

7.2.3. Resources

7.2.4. Past record of performance

7.2.5. Current products and services

7.2.6. Present strategies

8. Industry and market critical success factors

8.1. Critical success factors (CSFs) differ between individual industries and markets

8.2. CSFs have been applied broadly in various THE context with a large academic literature having emerged which applies the concept to all sectors of THE

8.3. The concept was developed further into'critical success factors' by Rockart (1979)

8.4. CSFs drives the strategy forward and makes the strategy successful

8.5. Whereas CSFs are concerned with those factors or elements without which the strategy would not be successful, KPIs represent a measurement tool