Presentation on CSA

8/3/2019 Presentation on CSA

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Presentation

On

Group Members:

Structural Analysis Within Industries

MD. AZAD MIA

MD. RAFIQUL ISLAM

MD. ASADUZZAMAN HEMEL

MD. HASAN SOHEL

MD. SAIFUL ISLAM


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Industry and Competitive Strategy

Industry:In the language of Economics- Industry is an organized

economic activity concerned with manufacture, extractionand processing of raw materials or constriction.

In the language of business or commerce a branch ofeconomical or commercial enterprise concerned with theoutput of a specified product or service.

Some other definitions of industry:Commercial and sale of goods

A specific branch of manufacture and tradeThe sector of economy made up of manufacturingenterprises.


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Industry and Competitive Strategy

Competitive strategy:

Competitive strategy refers to how a

company competes in a particularbusiness.

It is concerned with how a

company can gain a competitive

advantage through a distinctive way

of competing.


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The five competitive forces


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Dimensions of competitive strategy

Specialization

Brand identification

Push VS pull

Channel selection

product quality

Technological leadership

Vertical integration

Cost position

Service Price policy Leverage

Relationship with parent company

Relationship to home and host government


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Strategic Groups

A strategic group is the group of firms in an

industry following the same or a similar

strategy along the strategic dimensions.

An industry could have only one

strategic group if all the firms followed

essentially the same strategy. At the other

extreme group, usually however there are

a small number of strategic groups which

capture the essential strategic differences

among firms in the industry.


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Possible Strategic Groups

In the major appliance industry some possible groups are:

Group A: Broad product line, heavynational advertising, extensive integrationand captive distribution and service.

Group B: Specialist producers, highquality, high price segment with selectivedistribution.

Group C: Produces unadvertised products

for private level.One or two additional groups might beidentified as well.


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Strategic group formation process(through a conceptual map in hypothetical industry)

Group A Full line,

vertically, integrate,

low manufacturing

cost low service,

moderate quality

Group B Moderate line,

assembler, medium

price, very high

customer service, low

quality, low price

Group B Narrow line,

assembler, high

price, high

technology, high

qualityGroup D Narrow line,

highly automated,

low price, low

service

Full line

Spe

cialization

Narrow line

High vertical integration AssemblerVertical Integration


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How the profitability of an

individual firm is affected

(If only one or several strategic group exist in a given industry)For the existence of several strategicgroups in an industry the underlyingdeterminants of a firms profitability are asfollows:

(a) Common industry characteristics:

The rate of growth of industry demand.

Overall potential for product

differentiation.

Structure of supplier industries

Aspects of technology.


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Cont.

(b) Characteristics of strategic group:

The height of mobility barriers protecting

the firms strategic group.The bargaining power of the firms strategicgroup with customers and suppliers.

The vulnerability of the firm strategic group

to substitute products.The exposure of the firms strategic groupto rivalry from other group.


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Cont.

(c) Firms Position within its strategicgroup:

The degree of competition within thestrategic group.

The scale of the firm relative to others in itsgroup.

Costs of entry into the group execute orimplement its chosen strategy in anoperational sense.


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Are large firms more profitable

than small firms?

There is an argument that the firm with the largestmarket share will be the most profitable than smallone.

This argument is true or not depends on the

following circumstances:

If large firms in an industry compete in strategicgroups that are more protected by mobility barriersthan smaller firms in stranger positions relative tocustomers and suppliers, more insulated fromrevelry with other group, and so on, then the largefirms will indeed be more profitable than smallerfirms.


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Implications for formulation of

strategy

Formulation of strategy is stated in

terms of matching a firms strengths

and weakness, particularly its

distinctive competence to the

opportunities and risk its environment.


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Cont.

Strengths:Factors that build the mobility barriers

Factors enhancing the bargaining power ofits group Vise-Versa buyers and suppliers.

Greater scale relative to its strategic group.

Factors insulating its group from rivalry

from other firms.Factors allowing lower costs of entry intoits strategic group than others.


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Cont.

Weakness:Factors that lower the mobility barriers.

Factors worsening the bargaining power ofits group Vise-Versa buyers and suppliers.

Factors exposing its group to rivalry from

other firms.

Smaller scale relative to its strategic group.

Factors causing higher costs of entry.


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Cont.

Opportunities:Create a new strategic group.

Shift to a more favorable situatedstrategic group.

Strengthen the structural position ofthe existing group.

Shift to a new group and strengthenthe structural position of that group.


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Cont.

Threats or Risks:Risks of other firms entering its strategicgroup.

Risk of factors reducing the mobilitybarriers of the firms strategic group.

Risk that accompanies investmentsdesigned to improve the firms position by

increasing mobility barriers.Risks of attempting to overcome mobilitybarriers.


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Significance of forming strategic

group

Strategic group and mobility barriers.

Mobility barriers and group formationStrategic group and barging power

Strategic group and threat of

substitutes.Strategic group and revelry among

firms.


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The analytical tools constructing

a strategic group map in an

industry

Identifying mobility barriers

Identifying marginal groupCharting directions of strategic

movement.

Analyzing trendsPredicting reactions

Presentation on CSA

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