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DipSI
Dr Pegram Harrison University of Oxford 26 Jan 2011
Threat of entry
Intensity of Rivalry
Threat of Substitution
Dr Pegram Harrison
DipSI
Which of the 5-forces is the biggest constraint on profits? Would you advise fighting or exiting? to BSB? to Sky?
Dr Pegram Harrison
DipSI
Was Sky an obvious potential entrant? How does one identify potential competitors? Look beyond position to resources (5-Forces + expanded framework)
resources
capabilities
actions
Dr Pegram Harrison DipSI
goals
4
Was Sky an obvious potential entrant? How does one identify potential competitors? Look beyond position to resources (5-Forces + expanded framework) Skys resources and capabilities 2nd largest media conglomerate in the world (film library, production facilities, studios, papers) Strong cash flow Cosy with Thatcher government Skys recent actions Move from print to electronic media (esp satellite) elsewhere English speaking focus, but print only in 2nd biggest market (UK) British market knowledge (ITV in mid-1970s, DBS bid) Skys goals and assumptions Murdoch is a megalomaniac, not classy, boxing without gloves
Dr Pegram Harrison DipSI 5
Sky (News Corp) was a HUGE potential competitor displaying all sorts of pre-dispositions to enter, with enormous resources at its disposal. Larger Lesson: Think of potential entrants. How will they behave, and why?
(Nahapiet and Goshal, 1998)
Can you identify those at head of queue, before they declare their intentions?
Locking up film rights before a competitive bidder arrives Marketing efforts to differentiate BSB, esp from BBC Accelerating launch date Cutting costs (Marco Polo house?) Pre-selling satellites Leasing space on Astra instead of launching own satellites Better partners?
Larger lessons: Beware narrowing options. Early defence is more effective. Strategic analysis brings real pay-offs.
Dr Pegram Harrison DipSI 7
BSB made some important strategic errors: Assumed entry barriers were higher than Sky did, or than they actually were Didnt raise those barriers Now, both are losing money! What do you recommend?
Dr Pegram Harrison
DipSI
Final Lessons
Dr Pegram Harrison
DipSI
Score Cuml
A B B A A B B A B B
-20 -10 -10 -30 -30 -10 -10 -50 -10 100
-20 -30 -40 -70 -100 -110 -120 -170 -180 -80
B B B B B B B A B A
20 10 0 10 100 90 80 30 20 -280
A B B B A B B B B B
B B B B A B B A B B
Dr Pegram Harrison
DipSI
10