Strategy: A View from the Top Group 5 Dougless Hentges Austin Mapes David Murdock Cindal Peterson Molly Redden

 Products  Customers  Geography  Stages in the production-distribution pipeline

Bargaining power of suppliers Bargaining power of buyers Threat of substitute products or services Threat of new entrants Industry competitors Rivalry among existing firms Industry competitors Rivalry among existing firms Suppliers Substitutes Buyers Potential Entrants

 Process of slow, gradual change  Models can help us understand how and why industries change  Not like structural change

 Radical, progressive, creative, and intermediating  Two types of obsolescence define these paths of change:  Threat to industry’s core activities  Threat to industry’s core assets

 Radical- Core activities and core assets threatened at the same time  Progressive- Most Common form, neither core activities or assets are threatened  Creative- Core assets threatened, core activities not  Intermediating- Core activities threatened but core assets not

 Analyze change in terms of vertical structure to horizontal or vice versa  Changes in degree of industry concentration  Increase or decrease in degree of product differentiation  Three industries:  Telecommunications, computers, and television  “Rule of Three and Four”

 Introduction  Growth  Maturity  Decline

 Technological standards  Competition for the standard  C.K. Prahalad Model:  Three phases for industry evolution  Globalization

 Segmentation  Competitor Analysis  Strategic Groups

 Strategic Segmentation  Customer Characteristics  Product or service related variables

 Who are our firm’s direct competitors now and in the near term?  What are their major strengths and weaknesses?  How have they behaved in the past?  How might they behave in the future?  How will our competitors’ actions affect our industry and company?

 Numerous Competitors  Rivalry  Fast food, Pharmaceuticals

 Market Analysis 1. Actual and potential size of market 2. Market and segment growth 3. Market and segment profitability 4. Underlying cost structure and trends 5. Current and emerging distribution systems 6. Regulatory issues 7. Technological changes

 Growth Vector Analysis Product Options Present ProductsFuture Products Market Options Present Markets Concentration (Fender) Product Development Future Markets Market Development Diversification (Yamaha)

 Gap Analysis  Can identify additional avenues for growth

Profit Pool Analysis – Profit pool: total amount of profit earned at all points along the industry’s value chain Four Steps 1. Define pool’s boundaries 2. Estimate its overall size 3. Allocate profits to the different value chain activities 4. Verify Results