© 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use....
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© 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 19 Analysing competitors and creating a competitive advantage
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Transcript of © 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use....
© 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 19Analysing
competitors and creating a
competitive advantage
The Porter model of competitive Industry structure
Entry barriersEconomies of scaleProprietary product differences
Brand Identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
Proprietary learning curves
Access to necessary inputs
Proprietary low-cost product design
Government policy
Expected retaliation
Rivalry determinantsIndustry growth
Fixed (or storage) costs/value added
Intermittent overcapacity
Product differences
Brand identity
Switching costs
Concentration and balance
Informal complexity
Diversity of competitors
Corporate stakes
Exit barriers
Determinants of supplier powerDifferentiation of inputs
Switching costs of suppliers and firms in the industry
Presence if substituent costs
Supplier concentration
Importance of volume to supplier
Cost relative to total purchases in the industry
Impact of inputs on cost or differentiation
Threat of forward integration
relative to threat of background integration by firms in the industry
Determination of buyer powerBargaining Leverage
Buyer concentration
versus firm concentration
Buyer volume
Buyer switching costs relative
to firm switching costs
Buyer information
Ability to backward- integrate
Substitute products
Pull-through
Price Sensitivity
Price/total purchases
Product differences
Brand identity
Impact on quality/performance
Buyer profits
Decision-makers’ incentives
Determinants of substitution threatRelative price performance of substitutesSwitching costs
Buyer propensity to substitute
New entrants
Substitutes
SuppliersBuyers
Threat of new entrants
Bargaining power of suppliers Bargaining power of buyers
Threat of substitutes
Industry Competitors
Insensitivity
of rivalry
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Competitor analysis
1. Who are our competitors?
2. What are their strengths and weaknesses?
3. What are their strategic objectives and thrust?
4. What are their strategies?
5. What are their response patterns?
Competitor analysis
seeks to answer five
key questions
3
Competitor analysis
Identifying competitorsProduct form Product substitutes Generics New Entrants
Audit competitor capabilitiesFinancial Technical Managerial Marketing assets
Strengths and weaknesses
Infer competitor objectives and strategic thrustBuild Hold Harvest Growth directions
Deduce competitor strategiesTarget segments Differential advantages
Competitive scope Cost leadership
Estimate competitor response patternsRetaliator Complacent Hemmed-in
Selective Unpredictable
4
Competitor identification
The Competitive Arena
Product form competitors
Technically similar products
Product substitutes
Technically dissimilar products
Generic competitors
Products that solve the problem or eliminate it in a dissimilar way
Potential new entrants
With technically similar products
With technically dissimilar products
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Company capability profiles
1 2 3 4 5
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Key success factor
Innovativeness
Financial strengths
Technical assistance to customers
Product Quality
Well-qualified workforce
Access to international distribution channels
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Our company Competitor 1 Competitor 2
6
Apple
The design of Apple’s Store in
Shanghai reflects the
innovativeness of its products.
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Competitive Strategy Options
Competitive base
Scope
Broad
Narrow
Differentiation Cost
Differentiation
leader
Differentiation
focuser
Cost
focuser
Cost
leader
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Sources of competitive advantage
• Superior skills.
• Superior resources.
• Core competences.
• Value chain.
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Nespresso
Nespresso aims to retain its competitive advantage in the coffee capsule market by using celebrity endorsement of
the brand.
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The value chain
Procurement
Technology development
Human resource management
Firm infrastructure
Inbound
logisticsOperations Outbound
logistics
Marketing & Sales Services
Margin through value
Primary activities
Support activities
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Value chain reconfiguration
No-frills
(e.g. easyjet, Ryanair)
Reduce costs and prices
Online retailers
(e.g. Amazon)
Provide wider choice, and reduce costs and
prices)
No-frills hotels
(e.g. Travelodge, Premier lodge)
reduce costs and prices)
Direct marketers
(e.g. Dell Computers)
Provide customization and reduce costs
and prices
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Creating a differential advantage
Product
Price
Distribution PromotionDifferential
Advantage
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Bang & Olufsen
Bang & Olufsen's stylish audio and television equipment.
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Cost drivers
Economies of scales
Capacity utilizationLearning
Linkages
Integration
Policy
decisionsInstitutional
factors
Interrelationships
Timing
Location
Costs
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Core reading to support this topic can be found in
Chapter 19of your
recommended text
Core Reading
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