company analysis
rt1911
Tool8PerceptualMapping.pptxStrategic Management Tool Eight
MGT 4810
Tool Eight
An industry may be defined as a collection of firms that offer similar products or services, including substitutable products/services.
The purpose of Tool 8 is to lay the groundwork for easier identification of the firm’s key competitors in addition to illustrating the overall structure of the immediate environment in which the firm operates and the various segments that comprise the industry.
This is complicated by the fact industries constantly change and evolve over time.
Tool Eight
Defining an industry too narrowly can constrict strategic thinking, leads to missed opportunities as well as omitting the consideration of real competitors.
Defining an industry too broadly can lead to a lack of strategic focus and squandering resources on competitors that aren’t really competitors.
Tool Eight
Tool Eight
Tool Eight
Define the principal product of the firm in the largest segment as well as the major or key competitors in that product segment.
At this point, the industry dimensions named on the previous slide can be considered in depth.
The level of concentration may be defined along a continuum defined by the number of firms comprising the industry and their relative size.
Tool Eight
Economies of scale refer to the cost savings that a firm realizes from increased volume.
Average per unit production costs will decrease as production volume increases.
Although economies of scale often result from improved technologies, they may be due to:
Favorable supplier contracts
Improvements in the supply chain
Process and product R&D expenditures
High performing marketing and sales departments
Tool Eight
If the cost savings realized by a firm are passed onto the customer through price decreases, a significant barrier to entry to the industry (for competitors) is created, but ONLY if the price decreases are results of a lower cost structure.
Other barriers to entry may take form as:
Proprietary technologies
Creation of strategic alliances
Capital requirements
Industry rules and regulations by the government
Unique managerial skill sets required
Tool Eight
Product differentiation refers to the differences, either real or perceived, among the competing products offered by the various manufacturers.
Example – Apple laptop vs. Dell laptop
The importance of branding and building brand equity cannot be underestimated.
Additionally, since most competing products have differences, the important question from the consumer perspective is:
How different do the products in the choice set have to be in the mind of the consumer to create a positive (or negative) impression that sets the product apart from others?
Tool Eight
To present the results of this analysis, a GRAPHICAL representation of the industry showing the segments and key competitors in each segment is required.
The size of each segment and the product lines offered by the subject firm should also be included.
Tool Eight
Other sources:
Industry Trade Publications
Fortune and Business Week articles
USA Today Business Profiles
Wall Street Journal
