Industry and Competitive

Landscape Analysis
(ICLA)
20th October 2020

Dr Divakar Kamath
 Agenda
• Intro to Strategy
• External Environment vs
Internal Environment

• Industry structure
• Porter’s 5 forces
• industry boundaries and
Industry Attractiveness

• Industry Dynamics and

Competition
• Competitor Analysis

• Case studies, Articles,pre-

read and Class
discussions
• Project Work
 Frameworks for Strategic Management
1. Strategic Intent :Mission and Vision Statements
2. Environment assessment- PESTEL
3. Industry Assessment-Porter’s 5 Forces Model
4. Organization Assessment
5. 5 Ps of Strategy
6. Michael Porter’s Value Chain Framework
7. Igor Ansoff’s Product/ Market Expansion Grid
8. Sustainable Competitive advantage
9. 5 Generic competitive strategies
10. Business Strategy vs Corporate Strategy
11. M&A
12. Diversification Strategy
13. Change Management
14. Leadership and Innovation
 Definition of Strategy

• comes from the Greek word “ Strategos” – meaning “ Art

of the general”

• Military used the word “ strategy” to mean grand plans

made in the light of what it is believed an adversary
might or might not do.
 What is Strategy

• What is strategy?
“A game of deception” (Suntzu, B.C.400)?

• It should respond to two questions:

1. Where do you want to go? &

2. How do you (want to) get there?
------McCarthy, Minichiello & Curran)
 Definition of Strategy

Strategy is the direction and scope of an organization over the

long term, which achieves advantage in a changing environment
through its configuration of resources and competences with the
aim of fulfilling stakeholder expectations.
Michael Porter

Strategy is about
making choices and
trade offs: its about
deliberately
choosing to be
different
Michael Porter

The essence of
Strategy is
choosing what not
to do.
Strategy is about making
choices…

❑ Who will you target as customers

and who will you not?
❑ What will you offer these
customers and what will you not
offer them?
❑ How will you do all this? – What
activities will you perform; which
will you not?
3 Stages of the Strategic Management Process

1. Strategy formulation

2. Strategy Implementation/Execution

3. Strategy evaluation and Control

 Strategic Management Process
1. Establishing Strategic Intent- Vision (direction), Mission ( purpose of
existence) and core values (for guiding conduct, behaviour & beliefs)

2. Setting Objectives as yardstick for measuring company's performance

and progress ( both financial objectives and strategic objectives)

3. Crafting strategy to achieve objectives including evaluating

alternatives/options ( macro environment assessment , industry
assessment / Competition assessment and organization assessment)

4. Implementation /execution of strategies

5. Strategic Evaluation and control : Monitoring development, evaluating

performance and initiate corrective adjustments in light of actual
experience, changing conditions, new ideas and new opportunities.
• Intended strategy vs Emergent strategy vs Realized Strategy
 External Environment Analysis

• 4 components of Environmental Analysis

– Scanning

– Monitoring

– Forecasting

– Assessing
 Industry

Industry
A group of firms producing a similar product or service,
or
Group of firms producing products that are close
substitutes
• Industry
• Understanding the Industry Structure
and Industry Participants
• Industry Attractiveness and Industry’s
Profit Potential
• Industry Boundaries
• Industry boundaries expanded?
• Industry boundaries shrunk?
 Industry Analysis

 What is the structure of the industry in which the

business unit operates?

 How should the business unit exploit the

industry structure?

 What will be the basis of the business unit’s

competitive advantage?

 Industries transformation and how industries

change?
Structural Attractiveness of Industries
Using Porter’s 5 Forces Framework
 Attractive Industry

vs

Unattractive Industry?
 Interpreting Industry Analyses

Low entry
barriers
Suppliers and
buyers have strong
positions Unattractive
Strong threats Industry
from substitute
products
Intense rivalry
Low profit potential
among
competitors
 Interpreting Industry Analyses (cont’d)

High entry
barriers
Suppliers and
buyers have weak
positions Attractive
Few threats from Industry
substitute
products
Moderate rivalry
High profit potential
among
competitors
 “Intensity of industry competition and
industry’s profit potential are a function of
5 forces”
 Strategy can be viewed as “building defenses against
competitive forces”
OR
“ finding a position in the industry where the forces are
weakest”
 Industrial
Organizationa
l (I/O) Model
of
Above-
Average
Returns
(AAR)
 The
Resource-
Based
Model of
AAR
 FIVE FORCES ANALYSIS: KEY
QUESTIONS AND IMPLICATIONS

• Are some industries more attractive than others? (weaker forces)

• What underlying forces in the macro-environment drive the
competitive forces?
• Will competitive forces change?
• What are the strengths and weaknesses of the competitors in
relation to the competitive forces?
• Can competitive strategy influence competitive forces? (e.g. build
barriers to entry)
 Structural Attractiveness of industry

• Understanding industry structure is essential for effective

strategic positioning.

• Porter helped firms look at industries to determine

1. if we should or should not invest

2. How can we react to these forces
3. How can we shape the forces?
4. How can we use them for competitive advantage.
 Strategic Analysis

1. Know yourself !

2. What is it that you do best ?

3. What is it that you do better than others ?

4. Are there activities that you perform poorly ? worse than others ?)

5. Know your –environment, Demographics ,The economy,

Laws/regulations , Stakeholders And The competition
How Do You Reshape The Forces In Your
Favor?
PORTER’S Competitive strategy -
5 Generic Competitive Strategies
 Business-Level Strategies

Who will be
served?

Key Issues
in What needs will
Business-level be satisfied?
Strategy

How will those

needs be satisfied?
 Michael Porter’s Value chain

• 2 Major avenues for achieving Competitive advantages:

• Do a better job than rivals of performing value chain activities

more effectively

• Revamp the firm’s overall value chain to eliminate or bypass

some cost –producing activities.
 Assessment of Competitive Landscape

1. Identify direct and indirect competition to a set of given products/

industries

2. Assess short and long term threats from such competition as well as
their impact on the industry
From Competitors to Competitive Dynamics
 Assessment of Competitive Landscape

• Do you know who are your competitors?

❖ existing and potential ( todays as well as tomorrow’s) /
❖ direct vs indirect?

• How much do you know about your competitors?- Their strengths and
weaknesses/ develop a relative strength table And their ability to capture parts of
the market

• Are you aware of emerging arenas of competition?

• What objectives are your competitor pursuing ?

• Positioning map?

• How will your competitors react to moves by you and other firms (slow to react,
aggressive in the offense, fight hard to defend its turf) ?
 Concept of Strategic Groups
Defined:

A set of business units or firms that pursue similar

strategies with similar resources.

Set of firms emphasizing similar strategic

dimensions , may use similar strategy

Implications
1. Because firms within a group compete (offer similar
products) rivalry can be intense –
2. the greater the rivalry the greater the threat to each
firm’s profitability
3. Strengths of the 5 forces differs across strategic
groups
4. The closer the strategic groups, in terms of strategy,
the greater the likelihood of rivalry
 Drivers of Competitive action and
reaction
Likelyhood of attack and response

• Awareness

• Motivation

• Ability
 Inter firm Rivalry: Likelihood of Attack

1 :Three possible ‘likelihood of attack’ actions

– First Mover

– Second Movers

– Late Movers

2. Organizational Size

3. Quality/ Impact
 Competitive Strategy- 5 Ps
Mintzberg (1987):

1. Plan:

2. Ploy:

3. Pattern:

4. Position:

5. Perspective:
 Competitor Analysis

• In a competitor analysis, the firm seeks to understand the

following:

1. What drives the competitor, ? as shown by its future

objectives

2. What the competitor is doing and can do? as revealed by its

current strategy

3. What the competitor believes about the industry? as shown

by its assumptions

4. What the competitor’s capabilities are? as shown by its

strengths and weaknesses
 Competitor Analysis

• Market Commonality

• Resource Similarity
A Model of Competitive Rivalry