BA 4302 Chapter 3

How strong driving forces and competitive forces are.

The number and sizes of buyers, the number of rivals, and the pace of product innovation.

The power and influence of industry driving forces.

Whether buyer demand is strong or declining.

The costs incurred by buyers in switching to competing brands or substitute products are relatively high.

When buyers are unlikely to integrate backward into the business of sellers.

The industry is composed of a few large sellers and the customer group consists of numerous buyers that purchase in fairly small quantities.

Whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.

When the items purchased from suppliers are in short supply.

To reduce the costs of switching suppliers.

When industry members are struggling to earn good profits.

When newcomers can expect to earn attractive profits.

When the items purchased from suppliers are in short supply.

Rapid market growth.

To ask if the industry's growth and profit prospects are strongly attractive to potential entry candidates.

The competitive pressures associated with rivalry among competing sellers in the industry for buyer patronage.

Rapid growth in buyer demand and high buyer switching costs.

When one or more competitors become dissatisfied with their market position.

Industry rivals are not particularly aggressive in drawing sales and market share away from rivals.

- Demand for the product is growing slowly, one or maybe several industry members become dissatisfied with their market position. - Buyers have low switching costs - When strong companies outside the industry acquire weak firms in the industry and launch aggressive moves to build market share.

Is conductive to industry members earning attractive profits.

Is competitively unattractive from the standpoint of earning good profits.

The lower the combined profitability of industry members.

- Identifying the driving forces. - Assessing whether their impact will make the industry more or less attractive. - Determining what strategy changes are needed to prepare for the impact of the driving forces.

Ups and downs in the economy and in interests rates.

Mounting competition from substitutes and increasing efforts to collaborate with suppliers via strategic alliances.

Increases in the economic power and bargaining leverage of customers and suppliers, growing supplier-seller collaboration, and growing buyer-seller collaboration.

Increasing efforts on the part of industry members to collaborate closely with their suppliers.

That will strengthened or weaken market demand, make competition more or less intense, and lead to higher or lower industry profitability.

A cluster of industry rivals that have similar competitive approaches and market positions.

Employ similar competitive approaches and occupy similar positions in the market.

The variables chosen as axes for the map should be highly correlated.

Industry driving forces and competitive pressures favor some companies or groups and hurt others and the profit potential of different strategic groups varies because of strengths and weaknesses in each strategic group's position.

Predict what strategic moves rivals are likely to make next, thereby allowing a company to prepare defensive countermoves and develop strategies to exploit rivals' missteps.

It helps a company to anticipate what moves rivals are likely to make next to craft its own strategic moves.

- Which rivals badly need to increase their unit sales and market share? - Are there predictable trends in the timing of rivals' new-product launches or marketing promotions? - Which rivals have a strong incentive, along with the resources, to make major strategic changes? - Which rivals are likely to enter new geographic markets or expand their product offerings?

Are the strategy elements, intangible assets, and competitive capabilities that most affect industry members' abilities to prosper in the marketplace.

- Through identifying an industry's dominant economic characteristics. - Assessing the five competitive forces. - Considering the impacts of the driving forces. - Comparing the market positions of industry members. - Forecasting the likely next moves of industry rivals.

- Consider on what basis customers choose between competing brands. - What resources and competitive capabilities firms need to be competitively successful. - What shortcomings are almost certain to put a company at a significant competitive disadvantage.

High utilization of fixed assets.

High labor productivity (especially if the production process has high labor content).

- The industry's growth potential. - Whether competition appears destined to become stronger or weaker. - How the industry's driving forces might affect overall industry profitability. - The company's competitive position relative to rivals. - The company's proficiency in performing industry key success factors.

Whether the industry's product is strongly or weakly differentiated.