Competitive Strategy

MBA-Day
 Context in which Competitive Strategy is Formulated

Company Industry
S&W O&T

External
Internal factors
Competitive
factors
strategy

Personal Broader
Values of Societal
C.E.O. Expectations
Process for formulating C.S.
What is the business doing now?
-identification, implied assumptions
What is happening in the environment?

-industry analysis, competitor analysis,

societal analysis, strengths & weaknesses
What should the business be doing?

-tests of assumptions and strategy,strategic

alternatives, strategic choice
 Potential Entrants
Potential entrants

Threat of
new entrants

Bargaining Industry Competitors

Power of
buyers
Buyers
suppliers
Suppliers suppliers
Bargaining power
Rivalry among of buyers
Existing firms

Threat of substitute
products &services

substitutes
Substitutes
Threat of New EntryBarriers to
entry
Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of scale
Government policy
Barriers to entry
Expected retaliation
The entry deterring price
Intensity of Rivalry among
existing competitors
Numerous or equally balanced
competitors
Slow industry growth
High fixed or storage costs
Lack of differentiation or switching costs
Capacity augmented in large increments
Intensity of Rivalry.
High strategic stakes
High exit barriers
Pressure from substitute products
Advantageous price-performance tradeoff
with industrys product
Substitutes industries earning high profits
Bargaining Power of Buyers
It is concentrated or purchases large
volumes relative to seller sales
The products it purchases from the
industry represent a significant fraction of
the buyers costs or purchases
The product it purchases from the industry
are standard or undifferentiated
It faces few switching costs
Bargaining Power of buyers.
It earns low profits
Buyers pose a credible threat of backward
integration
The industrys product is unimportant to
the quality of the buyers product or
services
The buyer has full information
Bargaining Power of Suppliers
Dominated by few cos. and is more conc.
than the industry it sells to
It is not obliged to contend with substitutes
The industry is not an imp. customer of
the supplier group
The suppliers product is an imp. input to
the buyers business
Bargaining power of suppliers-----
The suppliers products are differentiated
or it has built up switching costs
The supplier group poses a credible threat
of forward integration