strategic position: the environmentstaff.hamk.fi/~ivuorinen/eng/strategy_part02.pdf · strategic...
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Strategic Position:
The Environment
•Strategic Management (5 ECTS)
•Ismo Vuorinen
•Principal Lecturer
•Autumn 2010
2-2
Layers of the business environment
The
Organisation
2-3
The Macro-Environment
PESTEL
Scenarios
Key
drivers
2-4
PESTEL Framework
Political Economic
Technological
Environmental Legal
Social
2-5
What Are Key Drivers for Change?
Key drivers for change are
environmental factors that are likely
to have a high impact on the success
or failure of strategy.
Identification of Key Drivers for Change
Uncertainty of change
Low High
Effect on
branch or
company
BigKey Drivers of
Change
2-7
What is a Scenario?
Scenarios are detailed and plausible views
of how the business environment of an
organisation might develop in the future
based on key drivers for change about
which there is a high level of uncertainty.
2-8
Industries and Sectors
Competitive
forces
Competitive
cycles
Industry
life cycle
2-9
The Five Forces Framework (Porter)
Substitutes
Competitive
rivalry
Potential
entrants
BuyersSuppliers
2-10
The Threat of Entry: Barriers to Entry
Scale and experience
Access to supply and distribution channels
Expected retaliation
Legislation or government action
Differentiation
2-11
Why Are Substitutes a Threat?
Substitutes can reduce demand for a
particular class of products as
customers switch to alternatives.
• Price/performance ratio
• Extra-industry effects
2-12
The Power of Buyers
Are buyers concentrated?
What are the costs of switching?
Does backward vertical integration exist?
2-13
The Power of Suppliers
Are suppliers concentrated?
What are the costs of switching?
Does forward vertical integration exist?
2-14
Degree of Competitive Rivalry
Competitor balance
Industry growth rate
High fixed costs
High exit barriers
Low differentiation
2-15
Comparative Industry Structure Analysis
2-16
Cycles of Competition
2-17
What is Hypercompetition?
Hypercompetition occurs where the
frequency, boldness and aggressiveness
of dynamic movements by competitors
accelerate to create a condition of
constant disequilibrium and change.
2-18
Competitors and Markets
Strategic
groups
Strategic
customers
Market
segments
2-19
What are Strategic Groups?
Strategic groups are
organisations within an industry
with similar strategic characteristics,
following similar strategies or
competing on similar bases.
2-20
Characteristics for Identifying Strategic
Groups
Scope of activities
Extent of product diversity
Extent of geographic coverage
Number of segments served
Distribution channels
Resource commitment
Extent of branding
Marketing effort
Extent of vertical integration
Product quality
Technological leadership
Organisational size
2-21
Benefits of Identifying Strategic Groups
Understanding competition
Analysis of strategic opportunities
Analysis of mobility barriers
2-22
What is a Market Segment?
A market segment is a group of
customers who have similar needs that
are different from customer needs in
other parts of the market.
2-23
Some Bases of Market Segmentation
2-24
What is a Strategic Customer?
A strategic customer is the person(s)
at whom the strategy is primarily
addressed because they have the most
influence over which goods or services
are purchased.
2-25
What are Critical Success Factors?
Critical success factors (CSFs) are
those product features with which a
organisation must outperform the
competition because they are
particularly valued by a group of
customers.
2-26
Types of Opportunity
In substitute
industries
In other strategic
groups
In targeting
buyers
For complementary
products
In new market
segmentsOver time
7.11.2010 Ismo Vuorinen / syksy 2009 27