Awareness of Competitive Forces Can Help A

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Two Key Questions

1. How structurally attractive is

the industry?

2. What is the company’s relative

position within the industry?



Key Industry Analysis Factors

• Collecting a great deal of data.

• Determining which data is crucial.

• Selecting an appropriate overall approach.

• Deciding on the logical starting point.



Basic Objectives of the SBU

1. To create effective links with

buyers and suppliers.

2. To build barriers to new entrants

and substitute products.



Porter Competitive Model

Intra-Industry RivalryStrategic Business Unit

Bargaining

Power of Buyers

BargainingPower

of Suppliers

Substitute

Products

and Services

PotentialNew

Entrants



Competitive Strategy

• What is driving competition in my current or

future industry?

• What are my current or future competitors

likely to do and how will we respond?

• How can we best posture ourselves to achieve

and sustain a competitive advantage?



Strategy Options

According to Michael Porter

Primary Strategies

1. Differentiation

2. Least Cost

Supporting Strategies

1. Innovation2. Growth

3. Alliance



Can Information Systems:

1. Build barriers to prevent a company from entering

an industry?

2. Build in costs that would make it difficult for a

customer to switch to another supplier?3. Change the basis for competition within the

industry?

4. Change the balance of power in the relationship

that a company has with customers or suppliers?

5. Provide the basis for new products and services,

new markets or other new business opportunities?




Intra-Industry RivalryLarge Retailers

BargainingPower of Buyers

BargainingPower

of Suppliers

Substitute

Products

and Services

Potential

NewEntrants

• Consumers in Small Towns .

• Consumers in Metro Areas

• Foreign Consumers

• Mail Order

• Home Shopping Network

• Electronic Shopping

• Product Manufacturers

• Foreign Manufacturers

• Local Governments

• Foreign General Merchandisers or

Discounters

• Established Retailer Shifting Strategyto Discounting or Megastores

• Telemarketing

• Buying Clubs

• Door-to-door Sales




Education Industry

Intra-Industry RivalryStrategic Business Unit

Bargaining

Power of Buyers

BargainingPower

of Suppliers

Substitute

Products

and Services

Potential

New Entrants

• Faculty

• Staff

• Equipment andService Suppliers

• Alumni

• Foundations

• Business

• Government

• Books and Videotapes

• Computer-Based Training

• Training Companies

• Consulting Firms

• Students

• Parents

• Business• Employers

• Legislators

• Foreign Universities

• Distance Learning

• Motorola U.

• National Technical Universities



Manufacturing IndustryValue Chain

Research and

DevelopmentEngineering

Production

and

Manufacturing

Marketing ServiceSales and

Distribution

Product and Service Flow

Administrative and Other Indirect Value Added



Generic Value Chain

INBOUND

LOGISTICSOPERATIONS OUTBOUND

LOGISTICS

MARKETING

AND SALESSERVICE

PRIMARY ACTIVITIES

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE MANAGEMENT

FIRM INFRASTRUCTURE

S U P P O R T A C T I V I T I E

S



Property and Casualty Industry Value Chain

INBOUND

LOGISTICS

OPERATIONS OUTBOUND

LOGISTICS

MARKETING

AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY

DEVELOPMENT

HUMAN

RESOURCE

MANAGEMENT

FIRM

INFRASTRUCTURE -Financial Policy -Regulatory Compliance - Legal - Accounting

Actuary

Training

Agent

Training

Claims

Training

Claims

Procedures

•Claims Settlement

•Loss Control

•Policy Sales

•Policy Renewal

•Agent Manage-

ment

•Advertising

•Independent

Agent Network

•Billing and

Collections

• Underwriting

• Investment

•Policy Rating

Actuarial Methods

Investment

Practices

I/T

Communications

Product

Development

Market Research



Technologies in the Value Chain

INBOUND

LOGISTICS

OPERATIONS OUTBOUND

LOGISTICS

MARKETING

AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY

DEVELOPMENT

HUMAN

RESOURCE

MANAGEMENT

FIRM

INFRASTRUCTURE

Information System Technology

Planning and Budgeting TechnologyOffice Technology

Training Technology

Motivation Research

Information Technology

Product Technology

Computer-Aided Design

Pilot Plant Technology

•Diagnostic and

Testing Technology

•Communications

Technology

•Information

Technology

•Transportation

Technology

•Material Handling

Technology

•Storage and

Preservation

Technology

•Communication

SystemTechnology

•Testing Technology

•Information

Technology

Information Systems Technology

Communication System Technology

Transportation System Technology

Software Development Tools

Information Systems Technology

•Basic Process

Technology

•Materials

Technology

•Machine Tools

Technology

•Materials Handling

Technology

•PackagingTechnology

•Testing Technology

•I/nformation Tech.

•Transportation

Technology

•Material Handling

Technology

•Packaging

Technology

•Communications

Technology

•InformationTechnology

•Multi-Media

Technology

•Communication

Technology

•Information

Technology

Awareness of Competitive Forces Can Help A

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