Contents
Contents.........................................................................................................................................
... [Show More].......................................................................................................... 1
1. Porter’s 5 competitive forces........................................................................................................................................................................................................... 2
1.1. Use of 5 forces (strategy in practice)....................................................................................................................................................................................... 3
1.2. Steps in Industry Analysis......................................................................................................................................................................................................... 3
1.3. Avoid Pitfalls............................................................................................................................................................................................................................. 3
2. New Game Strategies - Roberto Buaron - Mckinsey ....................................................................................................................................................................... 4
2.1. The Business System................................................................................................................................................................................................................ 4
3. Competitive Advantage – Nature and Sources – Robert Grant....................................................................................................................................................... 5
3.1. Sustaining competitive advantage – mitigating competition imitation .................................................................................................................................. 5
3.2. Porter’s Generic Strategies – source of competitive advantage ............................................................................................................................................. 6
4. VRIO - Looking inside for competitive advantage – Jay Barney....................................................................................................................................................... 7
5. How Industries Change – Anita McGahan ....................................................................................................................................................................................... 9
5.1. Four Trajectories of change ..................................................................................................................................................................................................... 9
Unsolicited Gyaan
Understand this – There is no textbook approach. Each of the methods given are models made by different management gurus for no one single task
What can be suggested for understanding competitive scenario is as follows:
1. Dissect industry structure – Porter baba’s 5 pandavas. Do not think about firm but industry. Focus on what’s important – mind charts can help
2. Dissect VRIO – Ask each question at each step. What’s your mojo?
3. Dissect business system and look for sources of competitive advantage – (cost/ differentiation) – Who’s the gabru?
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Page 2
1. Porter’s 5 competitive forces1
1 NOT FORCES – Industry growth, Technology, Government, Complementary products – these affect 5 forces – evaluate how.
Threat - New Entrant
• Barriers to entry:
1. Supply side EOS -
low costs.
2. Demand side EOS -
Network effects. eg. FB
3. Customer Switching
cost eg. SAP ERP
4. Capital requirement
- incl credit, inventory,
advertisement
5. Incumbency
advantage - cumulative
experience, brand
identity
6. Distribution access
blocked - Eg. shelf
space displacement
7. Government policy -
eg. Liquor license
8. Expected retaliation
- history of pushback,
substantial resources,
likely price war
Supplier Bargaining
Power
• High Costs
• Factors:
1. Concentrates/
Monopoly - Eg.
Microsoft
2. Supplier not
dependent on industry
3. Switching costs of
firm. eg. SAP
4. Differentiated
product. Eg. Pharma
5. No substitute. Eg.
Pilots
6. Forward integration
threat
Threat - Substitute
• Eg. Video > Travel,
Plastic > Metal, Email >
mail, Online > Agents
• Sources of force to
change customer
preference:
1. Lower prices
2. Low cost of
switching. eg. Burger
near Pizza store
• Mitigation - Look for
tech advancements
Buyer Bargaining power
• Lowers Prices
• Customer negotiating
leverage:
1. Few buyers/ large
buyer
2. undifferentiated
product/ Commodity
3. Low switching cost
4. Backward
integration threat. eg.
Pepsi
5. Intermediate -
influence final
customer. Eg. Retailer
• Customer Price
Sensitive:
1. Significant fraction
of spend
2. Low profit/ low cash
3. Quality indifferent
4. Low effect on
buyer's other costs.
Existing Rivalry
• A. Competition
Intensity
1. Numerous
competitors
2. High exit barriers
3. Slow industry
growth
4. Rivals are highly
committed. Eg. Ego,
govt org, growth
targets
5. Firms cannot read
each other
• B1. Competition
Dimension - Price
1. Identical product or [Show Less]