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© The McGraw-Hill Companies, Inc., 1998Irwin/McGraw-Hill

CHAPTER -3

Mohammad Mizenur Rahaman

Ph.D Researcher

Assistant Professor

Shahjalal University of Science & Technology, Sylhet

INDUSTRY AND

COMPETITIVE

ANALYSIS

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Q-1: Categorizing the Objectives and Strategies of Competitors

Competitive Scope

Strategic Intent

Market Share Objective

Competitive Position

Strategic Posture

Competitive Strategy

• Local• Be dominant leader

• Aggressive expansion via acquisition & internal growth

•Getting stronger; on the move

•Mostly offensive

• Regional• Overtake industry leader

•Well-entrenched

•Mostly defensive

• National• Be among industry leaders

• Expansion via internal growth

•Stuck in the middle of the pack

•Combination of offensive & defensive

• Multicountry• Move into top 10

• Expansion via acquisition

•Going after a different position

•Aggressive risk-taker

• Global• Move up a notch in rankings

• Hold on to present share

•Struggling; losing ground

•Conservative follower

• Maintain current position

•Give up present share to achieve short-term profits

•Retrenching to a position that can be defended• Just survive

•Striving for low-cost leadership

•Mostly focusing on a market niche

•Pursuing differentiation based on– Quality– Service– Technology superiority– Breadth of product line– Image & reputation– More value for the money– Other attributes

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Question 2: What Are the Key Factors for Competitive Success?

l KSFs are competitive elements that most

affect every industry member’s ability to

prosper in the marketplace

4 Specific strategy elements

4 Product attributes

4 Resources

4 Competencies

4 Competitive capabilities

l KSFs spell difference between

4 Profit and loss

4 Competitive success or failure

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Identifying IndustryKey Success Factors

l Answers to three questions pinpoint KSFs

4 On what basis do customers choose between

competing brands of sellers?

4 What must a seller do to be competitively

successful -- what resources and competitive

capabilities does it need?

4 What does it take for sellers to achieve a

sustainable competitive advantage?

l KSFs consist of the 3 - 5 really major

determinants of financial and competitive

success in an industry

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Example: KSFs for Apparel Manufacturing Industry

l Fashion design -- to

create buyer appeal

l Low-cost manufacturing

efficiency -- to keep selling

prices competitive

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Example: KSFs for Tin and Aluminum Can Industry

l Locating plants close to end-use

customers -- to keep costs of shipping

empty cans low

l Ability to market plant output within

economical shipping distances

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Strategic Management Principle

A sound strategy incorporates

efforts to be competent on all

industry key success factors and

to excel on at least one factor!

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Question 3: Is the IndustryAttractive or Unattractive and Why?

Develop conclusions about whether the industry

and competitive environment is attractive or

unattractive, both near- and long-term, for

earning good profits

Objective

Principle

A firm uniquely well-suited in an otherwise

unattractive industry can, under certain

circumstances, still earn unusually good profits

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Things to Consider inAssessing Industry Attractiveness

l Industry’s market size and growth potential

l Whether competitive conditions are conducive to rising/falling industry profitability

l Will competitive forces become stronger or weaker

l Whether industry will be favorably or unfavorably impacted by driving forces

l Potential for entry/exit of major firms

l Stability/dependability of demand

l Severity of problems facing industry

l Degree of risk and uncertainty in industry’s future

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Conducting an Industry andCompetitive Situation Analysis

l Two things to keep in mind:

1. Evaluating industry and competitive

conditions cannot be reduced to a

formula-like exercise--thoughtful

analysis is essential

2. Sweeping industry and competitive

analyses need to done every 1 to 3

years