Week 2 Chapter 2 Managing Industry Competition

Week 2 Chapter 2 Managing Industry Competition - Global...

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Click to edit Master subtitle style Global Strategy Managing Industry Competition
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Defining Industry Competition Industry: A group of firms producing products (goods and/or services) that  are similar to each other Industrial organization (IO) economics model Industry structure determines strategy and firm performance (SCP  model)   Original goal-help regulators minimize firm’s excess profits Strategists use the IO model to try to earn excess profits
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5 Forces Framework:   Industries vary in profitability potential Strategists use 5 forces model as a tool to estimate  industry’s likely profit potential 5 forces model can serve as a positioning tool
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5 Forces Framework
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Rivalry A large number of competing firms R ivals are similar in size, influence, and product  offerings H igh-price, low-frequency purchases Capacity is added in large increments Industry slow growth or decline High exit costs
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