Chapter 6 Analyzing Global Industry and Competitors

Once we understand global and regional forces in the international arena, we can focus on them and use them to our advantage

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Global Industry Demand, Using regression analysis to estimate demand over time in aggregate worldwide as well as disaggregated regional and national. Why do we need to do this?

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Global Industry Demand, Using regression analysis to estimate demand over time in aggregate worldwide as well as disaggregated regional and national. This is done to determine where production and distribution centers should be.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Global Industry Demand Export Market Demand: uses national export statistics to locate markets that could be serviced from the home base or foreign based subsidiaries. This is the other side of the equation. The supply side for us, their exports and our imports.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Global Industry Demand Export Market Demand: uses national export statistics to locate markets that could be serviced from the home base or foreign based subsidiaries. This is the other side of the equation. The supply side for us, their exports and our imports. In order to identify potential markets we require statistics that shows product classifications. There are many sources of trade statistics. the standard international trade classification—SITC, shows which nations import specific products. Nations Trade Data Yearbook, is another source of data. These statistics are held by each country so they know their position in the global market as well as maintaining compliance with WTO rules.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Global Industry Demand Export Market Demand Global Consumption and Production Trends. Who is buying (selling) what and where

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Locating Import Sources of Supply, Once we know who is buying what and where, we need to use the same data to see who is selling what are where, i.e. we need to secure reliable sources for our imports.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Identifies dominant firms in particular industries: nationalities, sizes, influence

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Identifies dominant firms in particular industries: nationalities, sizes, influence Industry structures are becoming more global as mergers and acquisitions, particularly among major players (‘mega-mergers’) are increasingly affecting industry competitive landscapes.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide infrastructures and payments mechanisms;

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide infrastructures and payments mechanisms; increasing numbers of nations are adopting democratic institutions;

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide infrastructures and payments mechanisms; increasing numbers of nations are adopting democratic institutions; more markets adopt capitalism and open up

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide infrastructures and payments mechanisms; increasing numbers of nations are adopting democratic institutions; and more markets adopt capitalism and open up Regional political trends: trade blocs increase and firms look to multi-market brands and supply chains

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide infrastructures and payments mechanisms; increasing numbers of nations are adopting democratic institutions; and more markets adopt capitalism and open up Regional political trends: trade blocs increase and firms look to multi-market brands and supply chains National elections and changes in political and economic agendas are constant sources of political uncertainty

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Global economic growth affects industry global demand

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Global economic growth affects industry global demand Regional economic growth affects how firms allocate resources among worldwide operations

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Global economic growth affects industry global demand Regional economic growth affects how firms allocate resources among worldwide operations National economic growth affects country industry demand and affects national sales goals, manufacturing capacity plans and demand management for individual countries

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends National industrialization efforts: create demand for new types of financial services, industrial products, consumer products (education, healthcare, brands, labor-saving products)

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Global firms have the inside knowledge of international markets and therefore know the direction of the markets. Therefore they can always find a way to jump to the forefront of the market. For example, national industrialization efforts create demand for new types of financial services, industrial products, consumer products (education, healthcare, brands, labor-saving products)

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends National industrialization efforts: create demand for new types of financial services, industrial products, consumer products (education, healthcare, brands, labor-saving products) Societal Priorities: At the regional and country levels, national governments push issues onto corporate agenda (conservation, recycling, rural development, transportation)

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Worldwide Effects of technology on society.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Worldwide Effects of technology on society on: Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: better medical technologies have lead human longevity enhanced; graying of national populations

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available to a wider potential population.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet. Internet has made it possible to be in touch with customers and customize their services to their clients.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet. Internet has made it possible to be in touch with customers and customize their services to their clients. It has enabled firms to interface their suppliers with their distributors.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet. Internet has made it possible to be in touch with customers and customize their services to their clients. It has enabled firms to interface their suppliers with their distributors. It has give small companies an opportunity to compete globally.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet. Internet has made it possible to be in touch with customers and customize their services to their clients. It has enabled firms to interface their suppliers with their distributors. It has give small companies an opportunity to compete globally. Capital market is more competitive.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Political Trends Economic Trends Societal Trends Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and services have made global icons out of people and brands Company Effects of technology Technology has transformed how firms do business internally and externally via internet and intranet. Internet has made it possible to be in touch with customers and customize their services to their clients. It has enabled firms to interface their suppliers with their distributors. It has give small companies an opportunity to compete globally. Capital market is more competitive. Intranet has made communication and data available to all employees of the companies faster and more accurately.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Financial Benchmarks are important indicators of the industry attractiveness and competitiveness. These benchmarks are profit rate, return on assets, return on sales, etc.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Financial Benchmarks Key Success Factors are those that allow a company to prosper and survive such as: strategic expertise, competencies, resources, and competitive capabilities They are different for different corporations depending whether they are providing a commodity or service.

Worldwide Industry Analysis Evaluations of Worldwide Market Demand Assessing Industry Supply Chains Industry Structure Drivers of Industry Change Financial Benchmarks Key Success Factors

Global Competitor Analyses Competitors could come from the neighborhood (country), region, and worldwide.

Global Competitor Analyses Global Competitor Analysis GCA provides insights into rivals’ strategies

Global Competitor Analyses Global Competitor Analysis GCA provides insights into rivals’ strategies and enable companies to: Outwit Rivals - detect marketplace changes more quickly than competitors

Global Competitor Analyses Uses of Global Competitor Analysis GCA provides insights into rivals’ strategies and enable companies to: Outwit Rivals Outmaneuver Rivals - Being the first to introduce new products and technologies

Global Competitor Analyses Uses of Global Competitor Analysis GCA provides insights into rivals’ strategies and enable companies to: Outwit Rivals - detect marketplace changes more quickly than competitors Outmaneuver Rivals - Being the first to introduce new products and technologies Outperform Rivals - In terms of new product development, market share, customer satisfaction levels and corporate reputation

Global Competitor Analyses Global Competitor Analysis would take place on different levels.

Global Competitor Analysis 1-- Internal Assessments Corporate missions: provide overviews of corporate priorities in terms of products, markets, technology, and corporate culture

Global Competitor Analysis 1-- Internal Assessments Corporate missions: provide overviews of corporate priorities in terms of products, markets, technology, and corporate culture Strategic intents: relate to long-term competitive aspirations of the company such as its market position and share

Global Competitor Analysis 1-- Internal Assessments Corporate missions: provide overviews of corporate priorities in terms of products, markets, technology, and corporate culture Strategic intents: relate to long-term competitive aspirations of the company such as its market position and share Core competencies: are articulations of what companies do better than others – their acknowledged expertise vis-à-vis the rest of the industry. Microsoft and software; Unilever and everyday products.

Global Competitor Analyses 2-- External Assessments: Analyzing Competitor Operations Total sales and regional breakdowns show current revenue streams of competitors and regional sales dependencies

Global Competitor Analyses 2-- External Assessments: Analyzing Competitor Operations Total sales and regional breakdowns show current revenue streams of competitors and regional sales dependencies Global demand analyses show recent sales trends in specific regions and product areas

Global Competitor Analyses 2-- External Assessments: Analyzing Competitor Operations Total sales and regional breakdowns show current revenue streams of competitors and regional sales dependencies Global demand analyses show recent sales trends in specific regions and product areas Supply Chain Strategy: the efforts firms are making to streamline purchasing, manufacturing, and distribution activities on a worldwide basis

Global Competitor Analyses 2-- External Assessments: Analyzing Competitor Operations Total sales and regional breakdowns show current revenue streams of competitors and regional sales dependencies Global demand analyses show recent sales trends in specific regions and product areas Supply Chain Strategy: the efforts firms are making to streamline purchasing, manufacturing, and distribution activities on a worldwide basis Strategic initiative analyses: highlight management priorities in market expansion efforts

Global Industry Analysis show us market opportunities. Using Market Opportunity and Competitive Analyses to Craft Global Strategies Global Industry Analysis show us market opportunities.

(interface with the suppliers) Using Market Opportunity and Competitive Analyses to Craft Global Strategies Global Industry Analysis show us market opportunities. Supply chain Analysis shows where to buy resources for our production process (interface with the suppliers)

Supply chain Analysis shows where to buy Using Market Opportunity and Competitive Analyses to Craft Global Strategies Global Industry Analysis show us market opportunities. Supply chain Analysis shows where to buy Competitor Analysis shows weaknesses and strengths of competition

Using Market Opportunity and Competitive Analyses to Craft Global Strategies Global Industry Analysis show us market opportunities. Supply chain Analysis shows where to buy Competitor Analysis shows weaknesses and strengths of competition From these we could craft strategies for market share and competitions’ strengths and weaknesses.

Market Selection Strategies Using Market Opportunity and Competitive Analyses to Craft Global Strategies Market Selection Strategies Large international companies routinely monitor market sizes and growth rates in over 150 national markets: large markets and markets with potential are always priorities Smaller companies may be more selective to avoid head-to-head competition

Competitive Effects on Strategic Decision-Making Using Market Opportunity and Competitive Analyses to Craft Global Strategies Competitive Effects on Strategic Decision-Making Companies must not only satisfy customers but out-compete market rivals Market challengers must be careful how they attack strong market leaders; but few firms are strong everywhere Smaller companies lacking global reach or resources can use acquisitions, joint ventures or global alliances to attack larger competitors Large companies can use superior brand names, corporate reputations, cost structures, and technologies to attack weaker competitors

Key Points Analyzing industries on a worldwide scale Evaluation of market demand Industry supply chains Industry structure Industry change drivers Financial benchmarks Analyses of global competitors

Key Points Analyzing industries on a worldwide scale has become essential as companies and industry sectors have expanded their global presences throughout international markets. Worldwide industry analyses starts with evaluations of worldwide and regional market demand and demand within individual countries. Export market demand should also be assessed using national and international trade statistics.

Key Points Industry supply chains can be analyzed to assess international sources of supply, national expertise in manufacturing, and global distribution patterns Industry structure analyses shows leading companies in particular sectors. Firms can then isolate individual rivals for in-depth competitor analyses of sales and supply chains

Key Points Industry change drivers should be examined, including trends in global, regional, and national political and economic environments, societal and technological trends. Financial benchmarks are provide guidelines for corporate assessment of business divisions and subsidiaries Key success factors evaluate where to focus corporate efforts: “what they must do well” to be successful in their industry

Key Points Analyses of global competitors include: Internal assessments of Rivals’ corporate missions Strategic intents Core competencies External assessments of Global and regional revenue streams Trends Supply chain strategies Strategic initiatives