Industry Analysis Problems Exam I Matthew W. Ford College of Business Northern Kentucky University

Exam I Industry Analysis Problems CGW Industry 5 Forces Summary ForceHighlightsEffect F1 Intensity of Rivalrycapacity +27%; price/ton –12%; modest concentration; capex 10% of sales; falling capacity utilization – F2 Threat of Substitutesdigital substitutes: desktop publishing, electronic media in introductory industry life cycle phase – F3 Supplier Bargaining Powerlarge purchases of specialized equipment; backward integration into equipment design, pulpmaking, energy o F4 Buyer Bargaining Power30+ buyers, low CR4; narrow group of end markets; low switching costs; low buyer knowledge of industry o F5 Threat of Entrycapacity-related barriers, but significant entry; Euro gov’t subsidies; declining interest rates – Possibly a ‘3 minus’ industry—not favorable for sustained profits

Exam I Industry Analysis Problems 3.3 Study of the national food processing industry reveals the following info: 12 competitors; largest firm has 18% market share; high amounts of specialized equipment; high volume, low variety operating processes; large number of agricultural suppliers; growing popularity of stores that sell fresh, unprocessed food; large number of mergers in the downstream food distribution industry; federal regulations that require food processors to meet complex operating standards before output can be sold. Use a Five Forces framework to categorize this info & to assess potential for sustained industry profits. (You might consider a + 0 – approach similar to our class example to help your analysis)

Exam I Industry Analysis Problems 3.3Relevant Info Study of the national food processing industry reveals the following info: 12 competitors; largest firm has 18% market share; high amounts of specialized equipment; high volume, low variety operating processes; large number of agricultural suppliers; growing popularity of stores that sell fresh, unprocessed food; large number of mergers in the downstream food distribution industry; federal regulations that require food processors to meet complex operating standards before output can be sold. Use a Five Forces framework to categorize this info & to assess potential for sustained industry profits. (You might consider a + 0 – approach similar to our class example to help your analysis)

Exam I Industry Analysis Problems Five Forces Connection ForceHighlightsEffect F1 Intensity of Rivalry12 competitors (o) 18% highest share (o) flow processes (specialized equip/lo differentiation) (-) –/o F2 Threat of Substitutesgrowing unprocessed food stores (-)– F3 Supplier Powerlarge number of agricultural suppliers (+)+ F4 Buyer PowerM&A among downstream distributors (-)– F5 Threat of Entryspecialized equipment (+) Fed regs governing food processing (+) +

Exam I Industry Analysis Problems 3.3 Overall Overall, seems neutral to slightly negative (-/o) for sustainable industry profits to me.

Exam I Industry Analysis Problems 3.4 Information gathered on the lawn care services industry in Northern Kentucky reveals the following: 35 firms; 10% decline in average billing value over the past 3 years; primary equipment includes trucks, lawnmowers, leaf blowers, garden tools; development of low maintenance yards (e.g, mulch, wild flowers instead of grass); local hardware and material suppliers replaced by national chains; some residential and commercial customers doing their own lawn care; new employees develop skills quickly. Use a Five Forces framework to categorize this info & to assess potential for sustained industry profits. (You might consider a + 0 – approach similar to our class example to help your analysis)

Exam I Industry Analysis Problems 3.4 Relevant Info Information gathered on the lawn care services industry in Northern Kentucky reveals the following: 35 firms; 10% decline in average billing value over the past 3 years; primary equipment includes trucks, lawnmowers, leaf blowers, garden tools; development of low maintenance yards (e.g, mulch, wild flowers instead of grass); local hardware and material suppliers replaced by national chains; some residential and commercial customers doing their own lawn care; new employees develop skills quickly. Use a Five Forces framework to categorize this info & to assess potential for sustained industry profits. (You might consider a + 0 – approach similar to our class example to help your analysis)

Exam I Industry Analysis Problems Five Forces Connection ForceHighlightsEffect F1 Intensity of Rivalry35 competitors (-) 10% decline in billing value (-) general purpose equipment (+) – F2 Threat of Substituteslow maintenance yards (-)– F3 Supplier Powerlocal suppliers replace by national chains (-)– F4 Buyer Powercustomers backward integrating into industry (-)– F5 Threat of EntryShallow learning curve (-) –

Exam I Industry Analysis Problems 3.3 Overall Perhaps a ‘5 minus’ industry!