1. DRIVING FORCES AND KEY SUCCESS FACTORS

2. Industries are characterized by trends and new developments
What factors are driving industry change and what impacts will they have?
Industries are characterized by trends and new developments
It is important not only to know the industry environment but also the ways in which it is changing.

3. Concept of Driving Forces
Forces that dictate the nature of change in the industry structure and competitive environment
Forces that create pressures or incentives to change

4. Most Common Driving Forces:
Growing use of Internet
Increasing globalization of the industry
Changes in the long-term industry growth
Changes in the buyers’ composition and the use of the product
Product Innovation
Technological change
Diffusion of technical know-how
Changes in cost and efficiency
Changing societal concerns, attitudes, and lifestyles

5. Assessing the Impact of the Driving Forces
Impact on the demand of the industry product
Is it rising ?
Is it falling ?
Impact on the competition
More or less intense?
Impact on Industry profitability
Higher or lower?

6. Driving Forces in Banking Industry?
Use of Technology
Use of computer
Internet
Consumers habits and lifestyles
Government policy
Product innovation

7. Driving Forces in Noodle Industry?
Consumers taste and preference
Consumers life styles
Health awareness

8. Not all these Driving Forces are equally important
Strategists need to identify the major determinants of how the industry evolves and operates.

9. Which companies are in the strongest / weakest positions?
Strategic Group Mapping
Strategic group consists of those rival firms, which have similar competitive approaches and positions in the market.

10. Strategic Groups within Industries
Strategic Groups are groups of companies that follow a business model similar to other companies within their strategic group – but are different from that of other companies in other strategic groups.
The basic differences between business models in different strategic groups can be captured by a relatively small number of strategic factors.

11. An industry contains one strategic group when all rivals have essentially same strategies.
When each rival pursues distinctively different strategies, there could be as many strategic groups as there are competitors.

12. Implications of Strategic Groups
The closest competitors are within the same Strategic Group and may be viewed by customers as substitutes for each other.
Each Strategic Group can have different competitive forces and may face a different set of opportunities and threats.
Mobility Barriers – factors within an industry that inhibit the movement of companies between strategic groups
Include barriers to enter another group or exit existing group

13. Strategic Groups in the Pharmaceutical Industry
High Risk – High Return
Focus on developing new proprietary drugs
Heavy R&D spending
Low Risk – Low Return
Focus on low-cost copies of drugs with expired patents
Production efficiency

14. STRATEGIC GROUP MAPPING IN BANKING INDUSTRY
Interest
High
Citizen, Prime
Sunrise, BOA
NMB,
BOK, Laxmi,
Everest,
S&C, NIB
HB, Nabil
Low
Low High
Customer Services

15. Strategic group analysis helps to understand which driving forces and competitive pressures often favours some strategic group and hurt others
Closer the strategic groups are to each other on the map, the stronger competitive rivalry among the member firms tends to be