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    Structural Analysis Within Industries

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    premald
    This document discusses structural analysis within industries to understand differences in firm performance and profitability. It identifies several strategic dimensions along which firms can be analyzed, including specialization, branding, quality, and costs. Firms are grouped based on their strategies, and each group faces different mobility barriers, bargaining power with suppliers/customers, threats from substitutes, and rivalry. A firm's profitability depends on factors like the strategic group's position, barriers protecting the group, and the firm's position within the group. The document outlines steps to conduct a structural analysis and identify strategic opportunities.

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    Structural Analysis Within Industries

    Uploaded by

    premald
    1K views22 pages
    This document discusses structural analysis within industries to understand differences in firm performance and profitability. It identifies several strategic dimensions along which firms can be analyzed, including specialization, branding, quality, and costs. Firms are grouped based on their strategies, and each group faces different mobility barriers, bargaining power with suppliers/customers, threats from substitutes, and rivalry. A firm's profitability depends on factors like the strategic group's position, barriers protecting the group, and the firm's position within the group. The document outlines steps to conduct a structural analysis and identify strategic opportunities.

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    This document discusses structural analysis within industries to understand differences in firm performance and profitability. It identifies several strategic dimensions along which firms can be analyzed, including specialization, branding, quality, and costs. Firms are grouped based on their strategies, and each group faces different mobility barriers, bargaining power with suppliers/customers, threats from substitutes, and rivalry. A firm's profitability depends on factors like the strategic group's position, barriers protecting the group, and the firm's position within the group. The document outlines steps to conduct a structural analysis and identify strategic opportunities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    1K views22 pages

    Structural Analysis Within Industries

    Uploaded by

    premald
    This document discusses structural analysis within industries to understand differences in firm performance and profitability. It identifies several strategic dimensions along which firms can be analyzed, including specialization, branding, quality, and costs. Firms are grouped based on their strategies, and each group faces different mobility barriers, bargaining power with suppliers/customers, threats from substitutes, and rivalry. A firm's profitability depends on factors like the strategic group's position, barriers protecting the group, and the firm's position within the group. The document outlines steps to conduct a structural analysis and identify strategic opportunities.

    Copyright:

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 22

    Structural Analysis

    Within Industries
    On the horns of dilemma

    » Why does the performance of firms in the same industry


    differ ?
    » Why are some firms persistently more profitable ?
    » How does it relate to strategic posture of firms ?
    » How to select a competitive strategy ?
    Dimensions

    » Specialization
    » Brand Identification
    » Pull v/s Push
    » Channel Selection
    » Quality
    » Technological Leadership
    Dimensions (continue…)

    » Vertical Integration
    » Cost Position
    » Service
    » Price Policy
    » Leverage
    » Relationship With Parent Company
    » Relationship to Home and Host Government
    Structural Analysis

    Step : 1

    Characterize all the strategies along various


    dimensions
    Strategic Groups

    » They exists due to various reasons like ...


    » Once formed, firms in the same group resembles to one
    another closely
    » MUST include firm’s relationship to its parent
    » CAUTION: what degree of strategic difference is
    important
    » All five forces wont have equal impact on different groups
    Drawing Strategic Group Map

    » Identify two important competitive dimensions


    » Plot the firms on the two-variable map
    » Draw circles around the firms that are clustered together
    » Indicate potential movement of firms with arrows
    Possible Axes

    High

    High

    Market 
    penetration
    Brand image

    Low

    Low Specialty focus Broad range Low cost focus

    Product line mix
    Direct mail Retail stores Online

    Distribution channels
    High

    Product 
    price

    Low

    Broad Narrow
    Strategic focus differentiation
    Group A
    Full line, vertically integrated
    Full low manufacturing costs,
    low service,
    Line moderate quality

    Group C

    Moderate line, assembler


    medium price, very high
    Specialization
    customer service, low
    quality, low price

    Group B
    Narrow line,
    assembler,high price,
    high tech, high quality

    Group D
    Narrow line, highly
    automated, low price,
    Narrow low service
    Line

    High Vertical Assembler


    Integration
    Vertical Integration
    Structural Analysis

    Step : 2

    Access the height and composition of mobility


    barriers protecting each group
    Mobility Barriers

    » Factors that deter the movement of firms from one


    strategic position to another
    – e.g. scale economies, switching cost …
    » Depends on strategic group that the entrant seeks to join
    » Prevents quick imitation of successful strategy
    » No exhaustive list of mobility barriers
    » AGAIN Don’t forget the parent
    Structural Analysis

    Step : 3

    Access the relative bargaining power of each


    strategic group
    Bargaining Power

    » Different degree of bargaining with Customers/ Suppliers


    prevails in different groups
    » Two sets of customers or suppliers
    – Common Suppliers/ Customers
    – Group Specific Suppliers/ Customers
    » The extent to which relative power can vary depends on
    the industry
    Structural Analysis

    Step : 4

    Access the relative power of each strategic


    group vis-à-vis substitute products
    Threat of Substitutes

    » Groups may face differing levels of exposure to


    competition from substitutes
    – e.g. Computer vendor selling computers for home users is less
    vulnerable from Computers produced for developers by some
    other vendor
    Structural Analysis

    Step : 5

    Access the pattern of market interdependence


    among strategic groups
    Rivalry Among Firms

    » Forces of rivalry are not faced equally by all firms in the


    industry
    » Greater diversity implies
    – Difficult to understand one another’s intentions and reactions
    – Increased likelihood of repeated outbreaks
    – Higher the force of rivalry
    » Hence process of competitive rivalry is not symmetrical
    Rivalry Among Firms

    » Factors determining the pattern of rivalry:


    – Market Interdependence
    – Product Differentiation
    – Number of Strategic Groups and their relative sizes
    – Strategic Distance among groups
    » Strategic Distance refers to the degree to which
    strategies in groups diverge
    Determinants of Firm’s Profitability

    1. Mobility barriers protecting the strategic group


    2. Position of strategic group within industry
    3. Position of firm within strategic group
    4. Scale of strategic group
    5. Cost of Entry
    6. Time of Entry
    7. Firm’s Implementation Ability
    Strategy Group & Cost Position

    » Low cost position overall v/s that within the strategic


    group
    » Requires sacrifice in a other area of a strategy
    » Difference between cost in strategic group and those of
    low cost strategic group is crucial
    » Relative cost position among group is a key variable
    Strategic Opportunities

    1. Create a strategic group


    2. Shift to a more favorably situated strategic group
    3. Strengthen the structural position of the existing group
    4. Strengthen the firm’s position in the group
    5. Shift to a new group and strengthen that group’s
    structural position
    “Strategy is a choice on
    how to compete”
    - Michael Porter

    Thank
    you …

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