02 BUS 444 Chap 2

good industry analysis looks rigorously at the

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Unformatted text preview: aveats • Managers must not always avoid low profit industries Can still yield high returns for players with sound strategies • Implicitly assumes a zero-sum game, determining how a firm can enhance its position relative to the forces • Five Forces analysis is essentially a static analysis 35 of 40 Using Industry Analysis: A Few Caveats (cont.) • Good industry analysis looks rigorously at the structural underpinnings of profitability. A first step is to understand the time horizon • The point of industry analysis is not to declare the industry attractive or unattractive but to understand the underpinnings of competition and the root causes of profitability. 36 of 40 The Value Net 37 of 40 Strategic Groups within Industries • Two unassailable assumptions in industry analysis No two firms are totally different No two firms are exactly the same • Strategic groups • Cluster of firms that share similar strategies Breadth of product and geographic scope Price/quality Degree of vertical integration Type of distribution system 38 of 40 Strategic Groups within Industries • Value of strategic groups as an analytical tool Identify barriers to mobility that protect a group from attacks by other groups Identify groups whose competitive position may be marginal or tenuous Chart the future direction of firms’ strategies Thinking through the implications of each industry trend for the strategic group as a whole 39 of 40 Assignment • Read Chapter 3 • Come to class Thursday prepared to recommend a class project. 40 of 40...
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