Chapter 2 The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis Michael A.. Bargaining Power of SuppliersSuppliers exert power in the indust
Trang 1Chapter 2
The External Environment:
Opportunities, Threats, Industry
Competition, and Competitor
Analysis
Michael A Hitt
R Duane Ireland Robert E Hoskisson
©2000 South-Western College Publishing
Trang 2The Strategic Management
Process
The Strategic Management
Process
Chapter 3
Internal Environment
Chapter 2
External Environment
Chapter 6
Corporate-Level Strategy
Chapter 8
International Strategy
Chapter 9
Cooperative Strategies
Trang 3Industry Environment
Components of the General Environment
Trang 4Components of the General Environment
Trang 5External Environmental Analysis
The external environmental analysis process should be conducted on a continuous basis This process includes four activities:
Detecting meaning through ongoing observations
of environmental changes and trends
Developing projections of anticipated outcomes based on monitored changes and trends
Determining the timing and importance of
Determining the timing and importance of
environmental changes and trends for firms' strategies and their management
Trang 6Top 10 U.S States Moving Toward Digital Economy
States in the top 10 of
those that are trying to
transform themselves to
the realities and needs of
a digital economy may
experience an influx of
high-tech companies and
skilled workers as well as
increases in tax revenues
External Environmental Analysis
Trang 7Threat of New Entrants
Threat of New Entrants
Porter’s Five Forces
Model of Competition
Trang 8Threat of New Entrants
Access to Distribution Channels Cost Disadvantages Independent
of Scale
Trang 9Threat of New Entrants
Porter’s Five Forces Model of Competition
Trang 10Bargaining Power of Suppliers
Suppliers exert power
in the industry by:
Suppliers are likely to be powerful if:
Supplier industry is dominated by a few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to supplier
Suppliers’ product is an important input to buyers’ product
Suppliers’ products are differentiatedSuppliers’ products have high
switching costsSupplier poses credible threat of forward integration
Trang 11Bargaining Power of Buyers
Threat of New Entrants
Threat of New Entrants
Trang 12Bargaining Power of Buyers
Buyers compete with the supplying
industry by:
* Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to seller’s sales
Purchase accounts for a significant
fraction of supplier’s sales
Products are undifferentiated
Buyers face few switching costs
Buyers’ industry earns low profits
Buyer presents a credible threat of
backward integration
Product unimportant to quality
Buyer has full information
Trang 13Threat of Substitute Products
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Buyers
Trang 14Threat of Substitute Products
Keys to evaluate substitute products:
Products with improving price/performance tradeoffs relative to present industry products
Trang 15Threat of Substitute Products
Threat of New Entrants
Threat of New Entrants
Rivalry Among Competing Firms
in Industry
Bargaining Power of Buyers
Trang 16Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
Trang 17Rivalry Among Existing Competitors
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
Lack of differentiation or switching costs
High storage costs
Capacity added in large increments
High strategic stakes
High exit barriers
Diverse competitors
Trang 18High exit barriers are economic, strategic and
emotional factors which cause companies to remain
in an industry even when future profitability is
Trang 19Effects of Entry Barriers and Exit
Barriers on Industry Profits
Trang 20Low, Stable Returns
Effects of Entry Barriers and Exit
Barriers on Industry Profits
Trang 21High, Stable Returns
Low, Stable Returns
Effects of Entry Barriers and Exit
Barriers on Industry Profits
Trang 22Low, Risky Returns
Low, Stable Returns
High, Stable Returns
Effects of Entry Barriers and Exit
Barriers on Industry Profits
Trang 23High, Risky Returns
Low, Stable Returns
High, Stable Returns
Low, Risky Returns
Effects of Entry Barriers and Exit
Barriers on Industry Profits
Trang 24Competitor Analysis
The follow-up to Industry Analysis is
effective analysis of a firm’s Competitors
Competitive Environment
Industry Environment
Trang 25Competitor Analysis
Assumptions
What assumptions do our
competitors hold about the future
of industry and themselves?
Current Strategy
Does our current strategy support
changes in the competitive
Where do we have a competitive
advantage?
How will this change our relationship with our competition?
Trang 26Future Objectives
How do our goals
compare to our
competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
toward risk?
What Drives the competitor?
Competitor Analysis
Trang 27What is the competitor doing?
What can the competitor do?
Future Objectives
How do our goals
compare to our
competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
Competitor Analysis
Trang 28What does the competitor believe about itself and the industry?
Future Objectives
How do our goals
compare to our
competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
Do we assume the future will be volatile?
Are we assuming stable competitive conditions?
What assumptions do our competitors hold about the industry and themselves?
Assumptions
Competitor Analysis
Trang 29Where will emphasis be
placed in the future?
What is the attitude
Do we assume the future will be volatile?
Are we operating under
a status quo?
What assumptions do our competitors hold about the industry and themselves?
Assumptions
What are my competitors’
strengths and weaknesses?
How do our capabilities compare to our
competitors?
Capabilities Competitor Analysis
Trang 30Future Objectives
How do our goals
compare to our
competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
Do we assume the future will be volatile?
Are we operating under
a status quo?
What assumptions do our competitors hold about the industry and themselves?
Capabilities
What are my competitors’
strengths and weaknesses?
How do our capabilities compare to our
competitors?
Competitor Analysis