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					Environmental Scanning
What Tools Are Useful in Assessing Strengths
and Weaknesses i.e. Resources, Capabilities, and
Core Competencies?
   Goal: objective assessment of your
          strengths and weaknesses
    ◦ relative to competitors
    ◦ important to customers

                 Note: This is difficult to do well.
   Identifying, developing, protecting, and
    deploying resources, capabilities, and core
    competencies
   Inputs into a firm’s production process such
    as capital equipment, skill of individual
    employees, patents, finance, and talented
    managers
    ◦ Tangible Resources – Assets that can be seen and
      quantified
    ◦ Intangible Resources – Family commitment,
      networks, organizational culture, reputation,
      intellectual property rights, trademarks,
      copyrights
   By themselves, resources do not create a
    strategic advantage for the firm.
   Capacity to deploy resources that have been
    purposely integrated to achieve a desired
    end state.
   Primary base for the firm’s capabilities is the
    skills and knowledge of its employees.
   Just because the firm has a strong capacity
    for deploying resources does not mean it
    has a competitive advantage.
   Resources and capabilities serve as a source
    of competitive advantage for a firm over its
    rival.
   Not all resources and capabilities are core
    competencies.
   Many suggest that firms should identify and
    concentrate on only 3 or 4 core
    competencies.
   Core competencies must be distinctive.
    ◦ Capabilities that are done better than competitors
   Identifying core competencies is key to
    development of sound strategy.
   We use the value chain to help identify core
    competencies.
   A framework for identifying core
    competencies
    ◦ Inside the firm
    ◦ In the supply chain
   Can be used to
    ◦ Identify strengths and weaknesses
    ◦ Identify sources of competitive advantage
    ◦ Identify market opportunities
The Value Chain
               Firm Infrastructure
Supporting



                Human Resource Management
Activities




                Technological Development


               Procurement



              Inbound                          Outbound Marketing Service
                        Operations
              Logistics                        Logistics & Sales




             Relationship with Suppliers            Relationship with Buyers


             Elapsed Time - Value added time cost
   Inbound Logistics
    ◦ Materials handling, warehousing, inventory control used to
      receive, store and disseminate inputs to a product
    ◦ Fertilizer and chemical storage, delivery of inputs, application
      of inputs
   Operations
    ◦ Take inputs from inbound logistics and convert to final
      products
    ◦ Plowing, planting, spraying, harvesting, feeding, medicating,
      weighing,etc.
   Outbound Logistics
    ◦ Collecting, Storing, and physical distribution of the final
      product.
    ◦ Crop storage, finished hog handling, Processing and
      determining delivery dates, delivery to the packer or elevator
      etc.
   Marketing and Sales
    ◦ Provide means through which customers can purchase
      products and to induce them to do so
    ◦ Advertising, communicating with buyers, developing
      customer relationships, pricing products (futures, hedging,
      forward contracting, etc.), delivery scheduling
   Service
    ◦ Activities designed to enhance or maintain a product’s value
    ◦ Timely delivery, identity preservation, ISO9000, certifying as
      organic, etc.
                                                                              Procurement


                                                                     Human Resource management

                                                                              Human Resources


                                                                   Firm Infrastructure




                                                       Inbound                           Outbound    Marketing   Service
                                                                      Operations
                                                       Logistics                         Logistics   and Sales
                                                                          Procurement

                                                                                     Technological Development


                                                                                   Human Resources

                                                                              Firm Infrastructure




    Procurement
                                                                                                                    Service





                                                     Inbound                          Outbound          Marketing
                                                                 Operations
                                                     Logistics                        Logistics         and Sales




    ◦ Activities to purchase the inputs needed to produce products
    ◦ Negotiating with suppliers, standard timing of replenishing part
      and tools, setting up buying groups, etc.
   Technological Development
    ◦ Activities that improve the firm’s products and/or processes
    ◦ Volunteering for test plots, being a part of feeding trials,
      attending technology seminars/field days, designing equipment
      to make specific production tasks more efficient, etc.
   Human Resources
    ◦ Recruiting, hiring, training, developing, and compensating all
      personnel
                                                                 Human Resource management
                                                                      Procurement


                                                                      Technology


                                                                  Firm Infrastructure



                                                                                                                Service
                                                     Inbound                            Outbound    Marketing
                                                                   Operations
                                                     Logistics                          Logistics   and Sales




   Firm Infrastructure
    ◦ General Management, planning, finance, accounting, legal
      support, governmental relations, etc.
    ◦ Establishment of accounting practices, management
      information systems, compliance with environmental
      regulations, tracking and reporting for government
      programs, etc.
    ◦ Where strategy development takes place identifying
      opportunities and threats, resources and capabilities, and
      support of core competencies
   Margins
    ◦ Capture the value from performing value-
      creating activities as cheaply as possible
    ◦ The basic idea is that the consumer is willing
      to pay a certain amount for the value you
      create. This is depicted as the size of the
      overall pentagon.
    ◦ The size of the individual activity boxes
      represents the cost of performing those
      particular activities.
    ◦ Thus, the smaller the size of the individual
      activity boxes relative to the value the
      consumer is willing to pay, the greater the
      MARGIN will be for the firm.
   A firm’s value chain must be compared to
    competitors’ value chains to determine
    where competitive advantages exist.
   To be a source of competitive advantage
    a resource or capability must allow a firm
    to:
    ◦ Perform an activity in a manner that is superior
      to competitor’s performances
    ◦ Perform a value-creating activity that
      competitors cannot complete
   SWOT analysis is a tool for helping assess
    the current situation for the firm.
   However, we need to be able to combine
    the information in the SWOT analysis in a
    meaningful way to generate alternative
    strategies that we might pursue.
   The TOWS matrix is a tool designed to
    match external opportunities and threats
    with our internal strengths and
    weaknesses
              Strengths       Weaknesses
  Internal    1.              1.
Environment   2.              2.
              3.              3.


              Opportunities   Threats
  External    1.              1.
Environment   2.              2.
              3.              3.
   Technique used in strategy formulation for
    combining
    ◦ External analysis
      Opportunities
      Threats
    ◦ Internal analysis
      Strengths
      Weaknesses
              Opportunities:            Threats:
              1.                        1.
              2.                        2.
              3.                        3.

                                            ST Strategies
Strengths:          SO Strategies
                                          Take advantage of
1.                 Use strengths to
                                             Strengths to
2.                 take advantage
                                                 avoid
3.                  of opportunities
                                                threats

                                           WT Strategies
Weaknesses:
                   WO Strategies         Defensive strategies
1.
                 Use Opportunities to        to minimize
2.
                overcome weaknesses       weaknesses and
3.
                                            avoid threats
                                                   Source: Weihrich
A continuous process which includes

   Scanning: Identifying early signals of environmental
    changes and trends
   Monitoring: Detecting meaning through ongoing
    observations of environmental changes and trends
   Forecasting: Developing projections of anticipated
    outcomes based on monitored changes and trends
   Assessing: Determining the timing and importance of
    environmental changes and trends for firms’ strategies and
    their management
         Analysis of general environment
               Analysis of industry environment
                     Analysis of competitor environment


The External
Environment
                                     Strategic Intent
                                    Strategic Mission
Analysis of general environment



      POLITICAL
      ECONOMIC
      SOCIAL/CULTURAL
      TECHNOLOGICAL
Analysis of general environment



      SOCIAL/CULTURAL
      LEGAL
      ECONOMIC
      POLITICAL
      TECHNOLOGICAL
Analysis of general environment



      POLITICAL
      ECONOMIC
      SOCIAL/CULTURAL
      TECHNOLOGICAL
      LEGAL
      ENVIRONMENTAL/ECOLOGICAL
   A set of factors that directly influences a
    company and its competitive actions and
    responses
   Interaction among these factors determine an
    industry’s profit potential

       Threat Of New Entrants
       Power Of Suppliers
       Power Of Buyers
       Product Substitutes
       Intensity Of Rivalry
   Identify current and potential competitors
    and determine which firms serve them
   Conduct competitive analysis
   Recognize that suppliers and buyers can
    become competitors
   Recognize that producers of potential
    substitutes may become competitors
Five Forces of
 Competition


Bargaining Power of
      Buyers
   Barriers to entry

        Economies of scale
        Product differentiation
        Capital requirements
        Switching costs
        Access to distribution channels
        Cost disadvantages independent of scale
        Government policy
        Expected retaliation
   A supplier group is powerful when:
        it is dominated by a few large companies
        satisfactory substitute products are not available to industry
         firms
        industry firms are not a significant customer for the
         supplier group
        suppliers’ goods are critical to buyers’ marketplace success
        effectiveness of suppliers’ products has created high
         switching costs
        suppliers are a credible threat to integrate forward into the
         buyers’ industry
   Buyers (customers) are powerful when:
        they purchase a large portion of an industry’s total output
        the sales of the product being purchased account for a
         significant portion of the seller’s annual revenues
        they could easily switch to another product
        the industry’s products are undifferentiated or
         standardized, and buyers pose a credible threat if they
         were to integrate backward into the seller’s industry
   Product substitutes are strong threat when:
       customers face few switching costs
       substitute product’s price is lower
       substitute product’s quality and performance capabilities
        are equal to or greater than those of the competing product
   Intensity of rivalry is stronger when
    competitors:
        are numerous or equally balanced
        experience slow industry growth
        have high fixed costs or high storage costs
        lack differentiation or low switching costs
        experience high strategic stakes
        have high exit barriers
   Common exit barriers include:
       specialized assets (assets with values linked to a
        particular business or location)
       fixed costs of exit such as labor agreements
       strategic interrelationships (relationships of mutual
        dependence between one business and other parts of a
        company’s operation, such as shared facilities and access
        to financial markets)
       emotional barriers (career concerns, loyalty to employees,
        etc.)
       government and social restrictions
Competitor intelligence is the ethical gathering
of needed information and data about
competitors’ objectives, strategies,
assumptions, and capabilities
   what drives the competitor as shown by its future objectives
   what the competitor is doing and can do as revealed by its
    current strategy
   What the competitor believes about itself and the industry,
    as shown by its assumptions
   What the the competitor may be able to do, as shown by its
    capabilities
                    Future Objectives:
Future objectives
                       How do our goals compare with
                        our competitors’ goals?
                       Where will the emphasis be
                        placed in the future?
                       What is the attitude toward
                        risk?
                    Current Strategy:
Future objectives
                       How are we currently
                        competing?
                       Does this strategy support
Current strategy
                        changes in the competitive
                        structure?
                    Assumptions:
Future objectives
                       Do we assume the future will
                        be volatile?
                       Are we operating under a status
Current strategy
                        quo?
                       What assumptions do our
                        competitors hold about the
  Assumptions
                        industry and themselves?
                    Capabilities:
Future objectives
                       What are our strengths and
                        weaknesses?
Current strategy       How do we rate compared to
                        our competitors?


  Assumptions


  Capabilities
Future objectives                Response

                    Response:
Current strategy       What will our competitors do in
                        the future?
                       Where do we hold an
  Assumptions           advantage over our
                        competitors?
                       How will this change our
  Capabilities          relationship with our
                        competitors?
Components of the General Environment
                  Economic


   Demographic
                                 Sociocultural
                   Industry
                 Environment

                 Competitive
                 Environment
   Political/
    Legal                          Global


                 Technological
(a) Competitors, industry size and
     competitiveness, related issues                                                             (g) Recession, unemployment rate,
(b) Suppliers,                                                                                      inflation rate, rate of investment,
     manufacturers, real                                         (j)          (a)                                   economics, growth
                                                           International   Industry
     estate, services                                         Sector        Sector
                                                                                                           (h) City, state, federal laws
(c) Labor market,                                                                                               and regulations, taxes,
     employment agencies,                       (i)                  DOMAIN                (b)                  services, court system,
                                          Socio-cultural                              Raw Materials                  political processes
     universities, training                  Sector                                      Sector
     schools, employees                                                                                        (i) Age, values, beliefs,
     in other companies,                                                                                            education, religion,
                                             (h)                                                 (c)             work ethic, consumer
     unions                              Government                                      Human Resources
(d) Stock markets,                         Sector                  ORGANIZATION                Sector                          and green
     banks, savings and                                                                                                      movements
     loans, private                             (g)                                          (d)                  (j) Competition from
     investors                              Economic                                     Financial                   and acquisition by
                                            Conditions                                   Resources                        foreign firms,
(e) Customers, clients,                       Sector                                       Sector
                                                               (f)            (e)                                    entry into overseas
     potential users of products                           Technology       Market
     and services                                            Sector         Sector                                     markets, foreign
(f) Techniques of production, science,                                                                            customs, regulations,
     research centers, automation new                                                                                    exchange rates
     materials
Components of the General Environment
   Demographic        Population size                   Ethnic mix
   Segment
                      Age structure                     Income distribution
                      Geographic distribution
   Economic             Inflation rates                 Personal savings rate
   Segment              Interest rates                  Business savings rates
                        Trade deficits or surpluses     Gross domestic product
                        Budget deficits or surpluses
   Political/Legal    Antitrust laws                    Labor training laws
   Segment            Taxation laws                     Educational philosophies and
                      Deregulation philosophies          policies

   Sociocultural      Women in the workforce            Concerns about the
   Segment            Workforce diversity                environment
                      Attitudes about work life         Shifts in work and career
                       quality                            preferences
                                                         Shifts in preferences regarding
                                                          product and service
                                                          characteristics
   Technological      Product innovations               Focus of private and
   Segment            Applications of knowledge          government-supported R&D
                                                          expenditures
                                                         New communication
                                                          technologies
   Global             Important political events        Newly industrialized countries
   Segment
                      Critical global markets           Different cultural and
                                                          institutional attributes
  External Environmental Analysis
The external environmental analysis process should be
conducted on a continuous basis. This process includes
four activities:

Scanning      Identifying early signals of environmental
              changes and trends

Monitoring Detecting meaning through ongoing observations
              of environmental changes and trends

Forecasting Developing projections of anticipated outcomes
              based on monitored changes and trends

Assessing     Determining the timing and importance of
              environmental changes and trends for firms'
              strategies and their management
                 Industry’s
                 dominant
                 economic
                 traits
   Competitive
   forces and              Drivers of
   strength of each        change in the
   force                   industry


                                           Conclusions:
Predicting the        Key success
                                           Industry
moves of              factors
                                           attractiveness
competitors
   Market size and growth rate
   Scope of competitive rivalry
   Number of competitors and their relative sizes
   Prevalence of backward/forward integration
   Entry/exit barriers
   Nature and pace of technological change
   Product and customer characteristics
   Scale economies and experience curve effects
   Capacity utilization and resource requirements
   Industry profitability
    Economic                                        Strategic Importance
     Feature
Market Size              Small markets don’t tend to attract new firms; large markets attract firms
                         looking to acquire rivals with established positions in attractive industries
Market growth rate       Fast growth breeds new entry; slow growth spawns increased rivalry & shake-
                         out of weak rivals
Capacity                 Surpluses push prices & profit margins down; shortages pull them up
surpluses/shortages
Industry profitability   High-profit industries attract new entrants; depressed conditions lead to exit

Entry/exit barriers      High barriers protect positions and profits of existing firms; low barriers make
                         existing firms vulnerable to entry
Product is big-ticket    More buyers will shop for lowest price
item for buyers
Standard products        Buyers have more power because it’s easier to switch from seller to seller
Rapid technological      Raises risk; investments in technology facilities/equipment may become
change                   obsolete before they wear out
Capital requirements     Big requirements make investment decisions critical; timing becomes
                         important; creates a barrier to entry and exit
Vertical integration     Raises capital requirements; often creates competitive & cost differences
                         among fully vs. partially vs. non-integrated firms
Economies of scale       Increases volume & market share needed to be cost competitive
Rapid product            Shortens product life cycle; increases risk because of opportunities for
innovation               leapfrogging
Porter’s Five Forces
Model of Competition
      Threat of
       Threat of
        New
         New
      Entrants
       Entrants
       Threat of New Entrants
                 Economies of Scale

Barriers to      Product Differentiation
  Entry          Capital Requirements

                 Switching Costs
                 Access to Distribution Channels

                 Cost Disadvantages Independent
                 of Scale
                 Government Policy

                 Expected Retaliation
   An experience curve exists when unit costs
    decline as cumulative production volume
    increases because of
     ◦   Accumulating production know-how
     ◦   Growing mastery of the technology
     ◦   Substitution of capital for labor
   The bigger the experience curve effect, the
    bigger the cost advantage of the firm with
    the largest cumulative production volume
FIGURE 5.2
                     $1
                $1            .90
Cost per Unit




                              .80        .81
                                                   .729 10% Cost
                              .70        .64              Reduction
                                                   .512
                                         .49              20% Cost
                                                          Reduction
                                                   .343
                                                          30% Cost
                                                          Reduction




                    1       2          4          8
                 Million Million    Million    Million
                 Units Units        Units      Units
         Porter’s Five Forces
         Model of Competition
               Threat of
                Threat of
                 New
                  New
               Entrants
                Entrants


Bargaining
 Power of
 Suppliers
          Bargaining Power of Suppliers
                                Suppliers are likely to be powerful if:

                                  Supplier industry is dominated by a
Suppliers exert power
                                  few firms
in the industry by:
                                  Suppliers’ products have few substitutes
* Threatening to raise
  prices or to reduce quality     Buyer is not an important customer to
                                  supplier
Powerful suppliers
can squeeze industry              Suppliers’ product is an important
profitability if firms            input to buyers’ product
are unable to recover
cost increases                    Suppliers’ products are differentiated
                                  Suppliers’ products have high
                                  switching costs
                                  Supplier poses credible threat of
                                  forward integration
         Porter’s Five Forces
         Model of Competition
               Threat of
                Threat of
                 New
                  New
               Entrants
                Entrants



Bargaining                  Bargaining
 Power of                    Power of
 Suppliers                    Buyers
         Bargaining Power of Buyers
Buyer groups are likely to be powerful if:

  Buyers are concentrated or purchases
  are large relative to seller’s sales            Buyers compete
  Purchase accounts for a significant           with the supplying
  fraction of supplier’s sales                        industry by:

  Products are undifferentiated              * Bargaining down prices

  Buyers face few switching costs             * Forcing higher quality
                                                 * Playing firms off of
  Buyers’ industry earns low profits                        each other
  Buyer presents a credible threat of
  backward integration
  Product unimportant to quality
  Buyer has full information
      Porter’s Five Forces
      Model of Competition
             Threat of
              Threat of
               New
                New
             Entrants
              Entrants


Bargaining                Bargaining
 Power of                  Power of
 Suppliers                  Buyers



             Threat of
             Substitute
             Products
    Threat of Substitute Products
               Keys to evaluate substitute products:

Products            Products with improving
with similar        price/performance tradeoffs
function            relative to present industry
limit the           products
prices firms
can charge          Example:
                          Electronic security systems in
                          place of security guards
                          Fax machines in place of
                          overnight mail delivery
      Porter’s Five Forces
      Model of Competition
               Threat of
                Threat of
                 New
                  New
               Entrants
                Entrants


Bargaining    Rivalry Among    Bargaining
 Power of    Competing Firms    Power of
 Suppliers     in Industry       Buyers



                Threat of
                Substitute
                Products
  Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
    Jockeying for strategic position
    Using price competition
    Staging advertising battles
    Increasing consumer warranties or service
    Making new product introductions

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
Rivalry Among Existing Competitors
Cutthroat competition is more likely to occur when:
     Numerous or equally balanced competitors
     Slow growth industry
     High fixed costs
     High storage costs
     Lack of differentiation or switching costs
     Capacity added in large increments
     Diverse competitors
     High strategic stakes
     High exit barriers
Rivalry Among Existing Competitors
High exit barriers are economic, strategic and
emotional factors which cause companies to remain
in an industry even when future profitability is
questionable.

     Specialized assets
     Fixed cost of exit (e.g., labor agreements)
     Strategic interrelationships
     Emotional barriers
     Government and social restrictions
   Objective is to craft a strategy
    that will:
    ◦ Insulate firm from competitive
      forces
    ◦ Influence competitive pressures in
      ways that favor company
    ◦ Build a sustainable competitive
      advantage
  Effects of Entry Barriers and Exit
     Barriers on Industry Profits
                    Exit Barriers
              Low                   High



       Low

 Entry
Barriers

       High
  Effects of Entry Barriers and Exit
     Barriers on Industry Profits
                        Exit Barriers
                  Low                   High


              Low, Stable
       Low
               Returns
 Entry
Barriers

       High
  Effects of Entry Barriers and Exit
     Barriers on Industry Profits
                        Exit Barriers
                  Low                   High


              Low, Stable
       Low
               Returns
 Entry
Barriers

              High, Stable
       High
                Returns
  Effects of Entry Barriers and Exit
     Barriers on Industry Profits
                        Exit Barriers
                  Low                   High


              Low, Stable         Low, Risky
       Low
               Returns             Returns
 Entry
Barriers

              High, Stable
       High
                Returns
  Effects of Entry Barriers and Exit
     Barriers on Industry Profits
                        Exit Barriers
                  Low                   High


              Low, Stable         Low, Risky
       Low
               Returns             Returns
 Entry
Barriers

              High, Stable       High, Risky
       High
                Returns           Returns
     Competitor Analysis
  The follow-up to Industry Analysis is
effective analysis of a firm’s Competitors


                 Industry
               Environment

               Competitive
               Environment
   Successful strategists take great pains in scouting
    competitors
     ◦   Understanding their strategies
     ◦   Watching their actions
     ◦   Evaluating their vulnerability to driving forces and
         competitive pressures
     ◦   Sizing up their resource strengths and weaknesses
         and their capabilities
     ◦   Trying to anticipate rivals’ next moves
 Competitive       Strategic      Market Share       Competitive       Strategic       Competitive
   Scope            Intent         Objective          Position         Posture          Strategy
                                  • Aggressive      •Getting                          •Striving for
                 • Be dominant                                       •Mostly
• Local                           expansion via     stronger; on                      low-cost
                 leader                                              offensive
                                  acquisition &     the move                          leadership
                 • Overtake       internal                                            •Mostly
                                  growth            •Well-           •Mostly
• Regional       industry                                                             focusing on a
                                                    entrenched       defensive
                 leader                                                               market niche
                 • Be among       • Expansion       •Stuck in the    •Combination     •Pursuing
• National       industry         via internal      middle of the    of offensive &   differentiation
                 leaders          growth            pack             defensive        based on
                                                    •Going after a                    – Quality
                 • Move into      • Expansion                        •Aggressive      – Service
• Multicountry                                      different
                 top 10           via acquisition
                                                    position
                                                                     risk-taker       – Technology
                                                                                      superiority
                 • Move up a                                                          – Breadth of
                                  • Hold on to      •Struggling;     •Conservative
• Global         notch in                                                             product line
                                  present share     losing ground    follower
                 rankings                                                             – Image &
                 • Maintain       •Give up                                            reputation
                 current          present share                                       – More value
Transnational                                       •Retrenching
                 position         to achieve                                          for the money
                                                    to a position
                                  short-term                                          – Other
                                                    that can be
                                  profits                                             attributes
                 • Just survive                     defended
   Predicting rivals’ next moves involves
     ◦   Analyzing their current competitive positions
     ◦   Examining public pronouncements about what it
         will take to be successful in industry
     ◦   Gathering information from grapevine about
         current activities and potential changes
     ◦   Studying past actions and leadership
     ◦   Determining who has flexibility to make major
         strategic changes and who is locked into
         pursuing same basic strategy
                Competitor Analysis
Assumptions
  What assumptions do our
  competitors hold about the future        Response
  of industry and themselves?
                                      What will our
Current Strategy                      competitors do in the
 Does our current strategy support    future?
 changes in the competitive           Where do we have a
 environment?                         competitive
Future Objectives                     advantage?
  How do our goals compare to our     How will this change
  competitors’ goals?                 our relationship with
                                      our competition?
Capabilities
 How do our capabilities compare
 to our competitors?
                  Competitor Analysis
Future Objectives             What Drives the competitor?
 How do our goals compare
 to our competitors’ goals?
 Where will emphasis be
 placed in the future?
 What is the attitude
 toward risk?
                  Competitor Analysis
Future Objectives                  What is the competitor doing?
 How do our goals compare          What can the competitor do?
 to our competitors’ goals?
 Where Current Strategy
         will emphasis be
 placed in the future? currently
          How are we
 What is the attitude
          competing?
 toward risk?
          Does this strategy
          support changes in the
          competitive structure?
                   Competitor Analysis
Future Objectives                     What does the competitor believe
 How do our goals compare             about itself and the industry?
 to our competitors’ goals?
 Where Current Strategy
         will emphasis be
 placed in the future?
          How are we currently
 What is the attitude
          competing?
 toward risk?       Assumptions
          Does this strategy
                   Do we assume the future
          support changes in the
                   will be volatile?
          competition structure?
                   What assumptions do our
                   competitors hold about the
                   industry and themselves?
                  Are we assuming stable
                  competitive conditions?
                  Competitor Analysis
Future Objectives                        What are the competitor’s
 How do our goals compare                capabilities?
 to our competitors’ goals?
 Where Current Strategy
         will emphasis be
 placed in the future?
          How are we currently
 What is the attitude
          competing?
 toward risk?      Assumptions
          Does this strategy
                  Do we assume the future
                   changes in the
          supportwill be volatile?
          competition structure?
                  What assumptions do our
                            Capabilities
                  competitors hold about the
                  industry and themselves?
                           What are my competitors’
                  Are we operating under
                           strengths and weaknesses?
                  a status quo?
                         How do our capabilities
                         compare to our
                         competitors?
                  Competitor Analysis
Future Objectives                                            Response
 How do our goals compare                              What will our competitors
 to our competitors’ goals?                            do in the future?
 Where Current Strategy
         will emphasis be                              Where do we have a
 placed in the future?                                 competitive advantage?
          How are we currently
 What is the attitude
          competing?                                   How will this change our
 toward risk?      Assumptions                         relationship with our
          Does this strategy
                  Do we assume the future              competition?
                   changes in the
          supportwill be volatile?
          competition structure?
                  What assumptions do our
                             Capabilities
                  competitors hold about the
                  industry and themselves?
                           What are my competitors’
                  Are we operating under
                           strengths and weaknesses?
                  a status quo?
                         How do our capabilities
                         compare to our
                         competitors?
   Industry’s market size and growth potential
   Whether competitive conditions are conducive to
    rising/falling industry profitability
   Will competitive forces become stronger or weaker
   Whether industry will be favorably or unfavorably
    impacted by driving forces
   Potential for entry/exit of major firms
   Stability/dependability of demand
   Severity of problems facing industry
   Degree of risk and uncertainty in industry’s future
   Two things to keep in mind:
    1. Evaluating industry and competitive conditions
        cannot be reduced to a formula-like exercise--
        thoughtful analysis is essential
    2. Sweeping industry and competitive analyses need to
        done every 1 to 3 years

				
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