© 2008 Knud Jensen, Rein Petersen, Neil Wolff 1 Knud Jensen Ted Rogers School of Management,...

© 2008 Knud Jensen, Rein Petersen, Neil Wolff 1

Knud JensenTed Rogers School of Management, Ryerson University

Industry Dynamics and Change


Understanding how to grow requires an in-depth

understanding and clarification of the external environment in which the organization exists.



Information is Important

Information about the following is important:

Industry

Market

Industry structure

Competitors

Buyers/consumers

Technology


The Big Three

1. Where are we currently?

2. Where do we want to go?

3. How do we get there?


The Why of Why?

Asking why? – questions basic beliefs and gets to the real cause of problems, issues, roadblocks, etc.

Challenges lead to insight Toyota’s 5 whys


More QuestionsExternally Focused Questions:

How and at what pace is the company’s market evolving?

What factors are driving market change and what impact will they have?

What are competitors up to? In what ways are competitive conditions growing stronger or weaker?

What does the changing market and competitive landscape mean for the company’s business over the next five years and beyond?


THE OBJECTIVES OF THE INFORMATION MUST ALWAYS BE KEPT IN MIND:

1. To develop a deep understanding of where the company is now with respect to the external environment.

2. To clarify the complex forces impacting on the company.



We need to understand magnitudes, market limitations, and most important, prospects for future growth.

Example:

Size and 2 – 5 years historical growth

Simple growth trends can generate a lot of discussion



Complexity:

You may be part of one industry

You may be part of several industries (via products/services, customers, suppliers)



Tools For The Industry:

Boundaries (What is your sandbox?)

Industry structure

Driving forces

Key success factors

Competitor analysis

Maps



Rivalry amongst competing sellers

Threat of new competitors

Threat of substitute products

Supplier bargaining power

Buyer bargaining power

Analyzing Competitive Forces


Driving forces are variables that have the capacity to change not only demand, but also the very nature of an industry.

Driving forces should be identified for your industry.

Changes result in:

Buyer behaviour modification

Structural change

Competitive reaction

Product portfolios

Disruptions

Driving Forces


Demographics

Technology

Innovations, inventions

Social and cultural changes

New products/services

Changes in buyer attitudes

Government regulations, policy, changes in law

Typical Driving Forces


Strategic Group Map Illustration


Identify competitive characteristics that differentiate firms in your industry. Choose two possible axes that you consider appropriate. Some possible axes to consider are:

Price/Quality (high, medium, low) Geographic coverage (local, national, international) Degree of vertical integration (none, partial, full) Product-line breadth (wide, average, low) Use of distribution channels (narrow, average, low) Degree of service offered (no-frills, limited, full)

Strategic Group Map


Complete Your Own Map


Think about what it takes to be successful in your industry

There are “must have” and there are “nice to have”

Identify the gap or gaps that exist between your success factors and those in the industry

If you want to grow, you have to fill the gaps

KSFs are not stable and they are not equal, but they are necessary

Key Success Factors (KSFs)


A summary of the characteristics of strengths, weaknesses, opportunities, and threats

Strengths:

Something we do well

Valuable know-how

Competitive capability

Attributes

Ventures, alliances

SWOT


A summary of the characteristics of strengths, weaknesses, opportunities, and threats con’t

Weaknesses:

Something we do poorly

A disadvantage

A deficiency in expertise or competence

Lack of assets (physical, human, intangible)

Missing capabilities

SWOT



Opportunities:

Best prospects

Competitive advantage

New customers, markets, products

Change in industry structure

SWOT



Threats:

Competitive behaviour

New product/service

Demographics

Technology

SWOT



Growing From SWOT Analysis:

Build on the organization’s strengths

Recognize weaknesses and correct, where possible

Take advantage of opportunities – this is what drives

growth Recognize threats to the organization and take steps to

minimize the effects

SWOT


“Before executives can chart a new strategy, they must reach common understanding of the company’s current position.”

W. Chan Kim andRenee Mauborgne

© 2008 Knud Jensen, Rein Petersen, Neil Wolff 1 Knud Jensen Ted Rogers School of Management,...

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