Module 3 Strategy Planning Industry Analysis Module 03 Industry Analysis To prepare for this assignment, review Figures 3.1, 3.2, 3.3, and 3.5 from your

Module 3 Strategy Planning Industry Analysis Module 03

Industry Analysis

To prepare for this assignment, review Figures 3.1, 3.2, 3.3, and 3.5 from your textbook. Select a Middle Eastern company of your choosing and complete an Industry Analysis by answering the following questions.

Analyze and predict industry profitability:
How have structural changes created uncertainty and what is the outlook for profitability in the future?
Apply and detail Porter’s 5 forces framework with a graphic representation (Figure 3.3) and written explanation for your selected company.
Explain profitability differences to other industries (Chapter 3, Table 3.1) and then predict future profitably.
Drawing industry boundaries:
What industry is it in?
Who is competing with whom?
Are the boundaries of the industry clear?cut?
Implications for strategy:
What strategies can companies adopt to reduce competitive pressure and improve industry profitability?
Which strategies might work for your organization?
Identifying Key Success Factors (KSFs):
What are the KSFs of your company?
How do customers choose between rival offerings?
Examine the competition (Figure 3.6).
Have your companies KSFs changed over time?

Your well-written paper should meet the following requirements:

Be 6 to 7 pages in length, which does not include the required title and reference pages, which are never a part of the content minimum requirements.
Use academic writing standards and APA style guidelines.
Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles unless the assignment calls for more.

Check the page 68 in the book (Dropbox)

for the book: https://www.dropbox.com/s/d7agx67zlpzclt2/Th.Editi… CHAPTER 3 INDUSTRY ANALYSIS: THE FUNDAMENTALS 69
FIGURE 3.2 Porter’s five forces of competition framework
SUPPLIERS
Bargaining power of suppliers
INDUSTRY
COMPETITORS
POTENTIAL
ENTRANTS
Threat of
new entrants
Threat of
substitutes
SUBSTITUTES
Rivalry among
existing firms
Bargaining power of buyers
BUYERS
FIGURE 3.3 The structural determinants of the five forces of competition
SUPPLIER POWER
• Buyers’ price sensitivity
• Relative bargaining power
(See Buyer Power for detail)
.
.
THREAT OF ENTRY
• Capital requirements
• Economies of scale
• Absolute cost
advantages
– Product differentiation
– Access to distribution
Legal barriers
• Retaliation
INDUSTRY RIVALRY
• Concentration
Diversity of competitors
• Product differentiation
• Excess capacity and
exit barriers
• Cost conditions
SUBSTITUTE
COMPETITION
• Buyers’ propensity to
substitute
• Relative prices and
performance of
substitutes
Price sensitivity
• Cost of product
relative to total cost
• Product
differentiation
Competition
between buyers
BUYER POWER
Bargaining power
– Size and concentration
of buyers relative to producers
– Buyers’ switching costs
– Buyers’ information
– Buyers’ ability to
backward integrate
FIGURE 3.1
From environmental analysis to industry analysis
The national/
international
economy
The natural
environment
THE INDUSTRY
ENVIRONMENT
Technology
Demographics
– • Suppliers
– Competitors
• • Customers
Government
and political
forces
Social forces
FIGURE 3.1
From environmental analysis to industry analysis
The national/
international
economy
The natural
environment
THE INDUSTRY
ENVIRONMENT
Technology
Demographics
– • Suppliers
– Competitors
• • Customers
Government
and political
forces
Social forces
74 PART II THE TOOLS OF STRATEGY ANALYSIS
FIGURE 3.4 The impact of growth on profitability
2.5
Return on investment
Return on sales
2
1.5
1
Impact on rate of profit (96)
0.5
0
-0.5
-1
-1.5
-6%
4%
-2%
10%
12%
0% 296 49 6% 8%
Rate of market growth (in real terms)
Source: Based upon the PIMS multiple regression equation. See R.M. Grant Contemporary Strategy Analysis,
5th edition (Blackwell, 2005): 491.

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