Page 1 Situation Analysis

Page 2 Hierarchy of External Influences Firm Political/Legal Economic Socio-Cultural Technical Global Five Forces Competitors Industry Structure Strategic Groups Political/Legal

Page 3 Industry Vital Statistics Industry scope: How is the industry defined? What are its boundaries? General: Size, growth rate Key Players: Rivals, customers, suppliers, government agencies Structure: Fragmented vs. concentrated; vertically integrated, etc. Performance: Profit levels, trends, distribution of, variability of

Page 4 Life Cycle Stage Growth is Good Growth Rate Time

Page 5 Innovation Cycle Time Slow is good, unless you’re the one driving innovation Growth Rate Time t1t1 t2t2 t3t3

Page 6 Concentrated Structure Dominant Player No. 2 Fringe Players Concentrated is good, if you’re No. 1 or No. 2 …or, if you’re a smaller player in a protected niche

Page 7 Fragmented Structure No Dominant Player No Clear No. 2 Multiple Players Fragmented is good, if you’ve got the best strategy/technology

Page 8 Threat of Substitute Products Threat of New Entry Threat of New Entry Bargaining Power of Buyers Bargaining Power of Buyers Bargaining Power of Suppliers Bargaining Power of Suppliers (+) or (-) or no influence on... Profit = (P – C) x Qty. Intensity of Rivalry Intensity of Rivalry Porter’s Five-Forces of Industry Analysis

Page 9 Plays out in the following ways: * Jockeying for strategic position * Price competition * Advertising wars -- Coke vs. Pepsi * New product introductions – Cheerios cereal (14 types) Regular Cheerios Apple-Cinnamon Cheerios Honey-Nut Cheerios Frosted Cheerios Three-Grain Cheerios Cheerios with Berries (blueberry, strawberry, banana, mixed) Yogurt Cheerios (vanilla or straw) Fruity Cheerios (like Fruit Loops, only healthier) * Increasing consumer warranties or service Intensity of Rivalry Among Existing Competitors

Page 10 Situation Analysis Summary Grid SeriousMild Great Threat No ImpactOpportunity Economics Technology Remote Socio-Cultural Environment Political-Legal Global Environment Demographics New Entrants Competitive Substitutes Environment Buyers-Customers Suppliers Rivalry TOTAL IMPACT

Page 11 Situation Analysis – Newspapers SeriousMild Great Threat No ImpactOpportunity Economics Technology Remote Socio-Cultural Environment Political-Legal Global Environment Demographics New Entrants Competitive Substitutes Environment Buyers-Customers Suppliers Rivalry TOTAL IMPACT

Strategic Map Strategic Dimension / Coordinate #1 Strategic Dimension / Coordinate #2

Strategic Map: Beer ( Pre-light / Pre-microbrew) Dark/Full Light Low PriceHigh Price Amber Regular

Strategic Map: Beer ( Current) Old Swill Guinness Blackened Voodoo Anchor Porter Amstel Cardinal Miller Lite Bud Light Sam Adams Bass Ale Pilsner Urquell Killian’s Red Red Wolf Amber Bock Lowenbrau Killian’s Brown Lowenbrau Dark Milwaukee’s Best Light Bud Miller Dark/Full Light Low PriceHigh Price Amber Regular

Strategic Map: Beer-like Beverages? Mike’s Hard Lemon Woodchuck Cider Smirnoff Ice New Strategic Dimension Dark/Full Light Low PriceHigh Price Amber Regular Guinness Blackened Voodoo Anchor Porter Sam Adams Bass Ale Pilsner Urquell Killian’s Red Red Wolf Milwaukee’s Best Light Bud Miller

Situation Analysis of Coffee Industry Major Rivals: Major Products: Customer Segments: Other Characteristics:

Page 17 SeriousMild Great Threat No ImpactOpportunity Economics Technology Remote Socio-Cultural Environment Political-Legal Global Environment Demographics New Entrants Competitive Substitutes Environment Buyers-Customers Suppliers Rivalry TOTAL IMPACT Situation Summary Grid – Coffee Industry

Strategic Dimension #1 Strategic Dimension #2 Strategic Map of Coffee Industry Don’t use Price as a dimension

We worry about: We are encouraged by: Page 19 Strategic Threats and Opportunities Coffee Industry

Page 20 Break…