1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R FOUR Understanding Market Opportunities 4

Cell Phones  billion users  Third generation phones very popular 30% in Japan and 93% in Korea  Developing markets  Manufacturer Market driven by phones with new features, very volatile  Some consolidation among providers  Difficult to get licenses

 4Cs  Company  Context  Competition  Customer  How attractive is the market we serve or propose to serve?  How attractive is the industry in which we would compete?  Are the right resources in places to effectively pursue the opportunity at hand?

The Seven Domains of Attractive Opportunities (Exhibit: 4.1.) Macro Level Micro Level Market Domains Industry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

The Seven Domains of Attractive Opportunities Market DomainsIndustry Domains Market Attractiveness Industry Attractiveness

Discussion Question 1.What’s a market?

Discussion Question 2. What’s an industry?

Discussion Questions 3. Is the market vs. industry distinction important? Why or why not?

Discussion Questions 4. Do macroenvironmental trends matter? What are their implications?

Macro Trend Analysis: DemographicDemographic environment Sociocultural environment EconomicEconomic environmentenvironment Regulatory environment Technological environment Natural environment

Discussion Question  Let’s identify a trend or two of each type and consider what businesses might be affected.

Discussion Question 5.What are the key questions a macro trends analysis should answer?

Discussion Questions 6. Does industry attractiveness matter? Why or why not?

A Tool for Assessing Industry Attractiveness: Porter’s Five Forces Rivalry among existing industry firms Threat of substitute products Bargainingpower of buyers Bargainingpower of suppliers Source: Adapted from Michael E. Porter, “Industry Structure and Competitive Strategy: Keys to Profitability,” Financial Analysts Journal, July-August 1980, p. 33. Threat of new entrants entrants

Discussion Question 7. If you are preparing a marketing plan, where’s the best place to look for information about macro trends?

Discussion Question 8. What’s the difference between the macro and the micro level of analysis?

The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

Understanding Markets at the Micro Level Involves looking individually at customers to understand the attractiveness of the target segment

Understanding Industries at the Micro Level Involves looking at the company and whether it has a sustainable competitive advantage

The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

The Team Domains Opportunities are only as good as the people who will pursue them