industries and business industries –primary industries –secondary industries –tertiary...
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Industries and Business
• Industries – Primary industries – Secondary industries – Tertiary industries – Quaternary industries
• Business: – Tertiary industries – Quaternary industries
Rationale for the Internal AnalysisRationale for the Internal Analysis
• When the external environment is subject to rapid change, internal resources and capabilities offer a more secure basis for strategy than market focus.
• Resources and capabilities are the primary sources of profitability
Strength and Weakness
• Resource-Based View of the Firm
1.Resource 2. Capabilities
3. Core competences
4. Competitive advantages5. Strategy
6. ResourceGaps
7. Strategies to
Obtain Competitive
Advantages:
Strategic Alliances;
JV; M&A;
Diversification
Resources
• Tangible resources
–Financial assets (cash, debt, equity)
–Physical assets (buildings, equipment,
inventory, land, raw materials)
•Intangible resources
Such as: patent, human assets, relational assets, goodwill, brand loyalty, know-how,etc.
•To create competitive advantages resources
must be Rare / Uniqueness and Valuable
Capability
A company’s skill at coordinating its resources and putting them to productive use.
Structure / Process - Centralization vs Decentralization - Coordination - Control - Communication Capabilities Culture - Corporate culture - Value systems - Innovation & Learning
The Things a Firm Do (verb)
Resources Internal process
Efficiency Effectiveness
Sustainability of Competitive Advantage
In-imitability
Non-Transferability
Non-Transparency
Non-Replicability
Porter’s Value Chain: A Tool for Internal AnalysisPorter’s Value Chain: A Tool for Internal Analysis
Firm Infrastructure
Human Resource Management
Technology Development (R&D)
Procurement
Inbound Operations Outbound Marketing Service
Logistics Manufacturing Logistics & Sales
PRIMARY ACTIVITIES
SUPPORTACTIVITIES
Porter’s Five Forces of Competition FrameworkPorter’s Five Forces of Competition Framework
SUPPLIERS
POTENTIALENTRANTS SUBSTITUTES
BUYERS
INDUSTRYCOMPETITORS
Rivalry amongexisting firms
Bargaining power of suppliers
Bargaining power of buyers
Threat of
new entrants
Threat of
substitutes
1.RIVALRY AMONG ESTABLISHED FIRMS
(1) Industrial Competitive Structure
Perfect Competition
Oligopoly
Monopoly
(2) Exit Barriers
What Causes the Exit Barriers?
Why Firms Still in the Industry Even When Not
Profitable?
(3) Demand Conditions
Growing Demand
Declining Demand
2.RISK OF ENTRY OF POTENTIAL COMPETITORS
Entry Barriers
(1) Capital requirement
(2) Brand Loyalty
(3) Absolute Cost Advantages
(4) Economies of Scale
(5) Learning Effect/Experience Curves
(6) Legal and Government Regulation
3.THREAT OF SUBSTITUTE PRODUCTS
Substitute Elasticity
4. BARGAINING POWER OF SUPPLIERS
(1) Few Substitute
(2) Critical to the Company
(3) The Company’s Industry Not Important to Suppliers
(4) High Switch (Supplier) Cost for the Company
(5) High Possibility of Suppliers Forward Integration
(6)Low Possibility of Buying Company Backward
Integration
5. BARGAINING POWER OF BUYERS
(1) Few Number of Large Buyers
(2) Possibly of Purchasing from Many Companies
(3) Purchase in Large Quantity
(4) Low Switch (Order) Costs for Buyers
(5) High Possibility of Buyer Background Integration.
Business Chain
• Regular Chain, RC
• Voluntary Chain, VC
• Franchise Chain, FC
• Cooperation Chain, CC
• Value Chain, VC
Efficient Consumer Response (ECR)/Quick Response (QR)
• Used in grocery industry and by mass merchandisers
• POS data used to trigger order• Keyed to more orderly, regular flow of prod
uct, smaller inventory
Benchmarking
• The search for the best practices among competitors and noncompetitors that lead to their superior performance.
• By analyzing and copying these practices, firms can improve their performance.
Steps in Benchmarking
Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,” Long Range Planning. February 1993, p. 42.
Customer Service Strategies
• Giving the customers what they want.
• Communicating effectively with them.
• Providing employees with customer service training.
Current Trends and Issues (Cont’d)
• E-Business (Electronic Business)
– The work preformed by an organization using electronic linkages to its key constituencies
– E-commerce: the sales and marketing component of an e-business
• Categories of E-Businesses
– E-business enhanced organization
– E-business enabled organization
– Total e-business organization
Real-Time e-Business (1)
• Business Process Management (BPM)
• Business- to- Business Integration (B2Bi)
• Best-in-class Enterprise Application Integration (EAI)
• Real-Time Process Analysis (RTA)
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