1. Chapter 6 Analyzing Global Industry and Competitors John S. Hill

2. Chapter Outline Introduction Worldwide Industry Analysis Global Competitor Analysis Using Market Opportunity and Competitive Analyses to Craft Global Strategies

3. Figure 6-1: Global Analyses of Industries and Competitors Worldwide Industry Analysis  Industry Demand  Supply Chains  Structure  Industry Change Drivers  Financial Benchmarks  Key Success Factors Competitor Analyses  Global, Regional Sales & Market Dependencies  Supply Chain Deployments & Trends  Strategic Thrusts Inputs into Strategic Planning Process (Chapter 7)

4. Worldwide Industry Analysis  Evaluation of Worldwide Market Demand  Assessing Industry Supply Chains  Industry Structure  Drivers of Industry Change  Financial Benchmarks  Key Success Factors

5. Worldwide Industry Analysis  Evaluations of Worldwide Market Demand  Global Industry Demand, worldwide sector demand over time for regions and countries  Export Market Demand: uses national export statistics to locate markets which can be accessed from a given country base  Nations Trade Data Yearbook, this source uses a different product classification (the standard international trade classification— SITC); shows which nations import specific products  Table 6.2 Global Consumption and Production Trends: Machine Tool Industry (page 209)  Table 6.3 Deriving Harmonized System Product Codes: Computers and Components (page 210)  Table 6.4 Top 25 U.S. Annual Exports of Automatic Data Processing Machines (page 211)

6. Worldwide Industry Analysis  Assessing Industry Supply Chains  Locating Import Sources of Supply, the same databases as the exporting analyses; import statistics show which nations are competitive sellers into a given market  Manufacturing Site Assessment: shows which countries build up expertise in particular sectors. US in computer software, Japan in consumer electronics, etc.  Table 6.5 United Nations Trade Data: Imports/Exports (page 212)  Table 6.6 Top 25 U.S. Annual Imports of Cellular Phones (page 213): shows top foreign sources for US market  Table 6.7 Global Profile: Communications Equipment Industry (page 214): market size, growth, structure, demand drivers, supply chain aspects, profitability, KSFs

7. Worldwide Industry Analysis  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.  Table 6.8 Global Profile: Household Non-Durables Industry (page 215): dominant Unilever and P & G

8. Worldwide Industry Analysis  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

9. Worldwide Industry Analysis  Drivers of Industry Change  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

10. Worldwide Industry Analysis  Drivers of Industry Change  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 agendas (conservation, recycling, rural development, transportation)

11. Worldwide Industry Analysis  Drivers of Industry Change  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  Internet Technologies: gives the public access to companies via their websites

12. Worldwide Industry Analysis  Drivers of Industry Change  Technological Trends  Customer access: internet creates opportunities for personalized customer relationships  Supply chains: suppliers have technological interfaces with manufacturers, distributors and customers  Global Market Access via websites give small companies opportunities to trade worldwide  Human resource needs have changed from financial capital to human intellectual capital  The intranet, makes information and data increasingly accessible within companies  Global financial resource availability has been enhanced

13. Worldwide Industry Analysis  Financial Benchmarks are important indicators of the industry attractiveness and competitiveness  Key Success Factors (KSFs): strategic expertise, competencies, resources, and competitive capabilities

14. Global Competitor Analyses  Uses of Global Competitor Analyses  Internal Assessments  External Assessments: Analyzing Competitor Operations

15. 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

16. Global Competitor Analysis  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  Core competencies: are articulations of what companies do better than others – their acknowledged expertise vis-à-vis the rest of the industry: innovation styling, value

17. Global Competitor Analyses  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

18. Global Competitor Analyses  External Assessments: Analyzing Competitor Operations  Table 6.9 Competitive Profiles: Unilever and Proctor & Gamble (page 222)—total, regional sales, supply chain and new strategic initiatives  Figure 6.2 Global/Regional Analysis of Principal Competitors (page 223): sales, market shares, strengths, weaknesses  Figure 6.3 Intra-Regional Analyses of Individual Competitors (page 223): regional analysis by country  Figure 6.4 Geographic evaluations of competitor supply chains (page 224): R & D, materials, manufacturing, sales

19. Using Market Opportunity and Competitive Analyses to Craft Global Strategies  Market Selection Strategies  Competitive Effects on Strategic Decision- Making

20. 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  Table 6.10 Market Size/Growth and Investment Priorities (page 225): divisions into large, medium, small, and growth, stable and declining markets

21. 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  Table 6.11 Global Industry and Competitor Analysis Inputs into Strategy-Crafting and Decision Making (page 226)

22. 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

23. 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.

24. 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

25. 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

26. 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