INDUSTRY/MARKET ANALYSIS

FIRMS WILL ONLY SUCCEED IF THEY EFFECTIVELY ANALYSE THEIR

COMPETITORSMUST FOLLOW THIS WITH AGGRESSIVE

STRATEGIES

SUSTAINABLE COMPETITIVE ADVANTAGE

THE REASON FOR COMPETITOR ANALYSIS

COMPETITIVE ADVANTAGE1. PRICE2. PRODUCT RANGE3. QUALITY4. SERVICE LEVELS………………

COMPETITIVE ADVANTAGE

MUST BE DEEPLY EMBEDDED IN THE FIRM OVER TIME

RESOURCES SKILLS CULTURE INVESTMENT

IT’S A DYNAMIC PROCESS NOT A STATIC ONE

SOURCES OF COMPETITIVE ADVANTAGE

LOW UNIT COST DIFFERENTIATIO

N NICHE MARKETS PERFORMANCE QUALITY SERVICE

VERTICAL INTEGRATION

SYNERGY TECHNOLOGY CULTURE &

LEADERSHIP

PORTER AGAIN

CONCENTRATES ON THREE KEY FACTORS

1. COST LEADERSHIP

UNIT COSTS KEPT AS LOW AS POSSIBLEWITHOUT REDUCING PRODUCT QUALITYACHIEVED BY economies of scale better training more investment in technology

PORTER

2. DIFFERENTIATION

MAKING PRODUCTS AS UNIQUE AS POSSIBLE (USP’s)

e.g. via product quality, customer service

THIS DIFFERENTIATES THEM IN THE CUSTOMERS MIND FROM THE OTHER FIRMS IN THE MARKET

PORTER

3. FOCUS STRATEGY

FOCUSSING THE MARKETING MIX ON A SPECIFIC SEGMENT OF THE MARKET - buyer group

NOT GOING FOR THE MARKET IN GENERAL BUT A PARTICULAR PART OF IT

e.g. Primark, Ryanair, Travel Lodge

ASSESSING THE DEGREE OF COMPETITION

PORTERS FIVE FORCES (previous presentation)

THE DEGREE OF CONCENTRATION OF FIRMS IN THE MARKET

THE RANGE OF AGGRESSIVE STRATEGIES OF COMPETITORS IN THE MARKET

DEGREE OF CONCENTRATION

LIES BETWEEN TWO EXTREMES i.e. perfect competition and monopoly

ADD TO THIS – CONTESTABLE MARKETS

CONTESTABLE MARKETS

WHAT IS A CONTESTABLE MARKET? (BAUMOL – 1982)

A MARKET WHERE THERE IS THE THREAT OF COMPETITION

WHERE THE BARRIERS TO ENTRY COULD BE OVERCOME

FEATURES OF CONTESTABILITY

ENTRY COSTS ARE LOW EXIT COSTS ARE LOW ENTRY & EXIT CAN BE MADE

SPEEDILY SUNK COSTS HIT & RUN TACTICS

CONTESTABLE MARKETS

WHERE CONTESTABILITY EXISTS THERE WILL BE MORE COMPETITION

AS EXISTING FIRMS WILL FEAR THE THREAT OF NEW FIRMS

THEY WILL BEHAVE MORE COMPETITIVELY

THE EFFECT LOWER PRICES HIGHER QUALITY MORE EFFICIENCY LOWER PROFITS

CONTESTABILITY IS POSSIBLE IF THE BARRIERS CAN BE

OVERCOME

THE RELEVANCE OF THE GOVERNMENT

KEY FACTOR INFLUENCINGA FIRMS COMPETITIVENESS

1. TAX POLICY 2. MONETARY POLICY3. SUBSIDIES, GRANTS, SUPPORT & HELP 4. CONTRACTS

5. LEGISLATION6. COMPETITION

POLICY7. INTERVENTION & BUREAUCRACY8. REGIONAL POLICY

THE INTERNATIONAL ENVIRONMENT

MUST ALSO BE ANALYSED DUE TO MULTINATIONALS & GLOBAL FIRMS GLOBAL ECONOMIC, SOCIAL,

TECHNOLOGICAL & POLITICAL CHANGE

KEY INTERNATIONAL ISSUES

LOW WAGE ECONOMIES OUTSOURCING TERRORISM/WAR/CRIME RESOURCE ACQUISITION

e.g. raw materials DEVELOPING COUNTRIES ENLARGEMENT OF THE

EU

EUROPEAN UNION STRATEGY e.g. the Euro

TECHNOLOGICAL ADVANCEMENT

TRADE ISSUES GLOBAL

BRANDING

COST MODELS

DIAGRAMS FOR KEY MARKET FORMS (see accompanying

text under this slide:17)

PERFECT COMPETITION

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OLIGOPOLY

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MONOPOLY

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PRICING PERFECT – ALL ARE PRICE TAKERS MONOPOLISTIC – SOME PRICE MAKERS

(via product diff) MOST ARE PRICE TAKERS

OLIGOPOLY – PRICE MATCHING & USUALLY A LEADER (price maker) OTHERS ARE PRICE TAKERS

MONOPOLY – PRICE MAKER USES DIFF PRICING DUE TO PED DIFFERENTIALS & ABILITY TO SEPARATE MARKETS