STRABA- 18

Self- Study Questions

1. From Table 3.1, select a high‐profit industry and a low‐profit industry. From what
you know of the structure of your selected industries, use the five forces framework
to explain why profitability has been high in one industry and low in the other.
Potential Industry
Suppliers Substitutes Buyers
Entrants Competitors
New
Entrants
No need
will have a
suppliers for
Computer Cellphone, Computer hard time Apple,
software. The
Software Tablet Literate because Linux
industry itself
Windows is
is a supplier.
well
known.
Many
Many
companies
Needs companies
can still
Electroni Screen, Laptop, within one
Suitable to enter. Most
c Battery, Desktop industry;
all ages notably,
Products Processor, PC, Tablet Samsung,
cheap fake
Camera LG, Apple,
phones are
Xiaomi.
out.

In the Computer Software market- the top companies like Microsoft are
those within power because it has been widely used wherein within the Electronic
Products space- it has become so saturated that it is very hard to dominate. To add
that, there are many aspects that the Electronic Products need to consider
(electronic parts, advertising, etc.) to reach their goods available for sale whereas
for a Software- it is basically the service put into application.
2. With reference to Strategy Capsule 3.1, use the five forces framework to explain
why profitability has been so high in the US market for smokeless tobacco.
Profitability is a major key in determining if an industry dominates the
market. For the smokeless tobacco industry, this has become true because of
several reasons. Their suppliers are one of their long-established partners and
brands. Buyers looking for substitutes are basically just considering their sub-
products. US Smokeless Tobacco Company have their products circulating around
the country with their thousands of local outlets- reaching most of the
demographics as well as their buyers. Now, because of how strict United States is,
with its current government policies on advertising tobacco, new entrants are
having a hard time to comply thus making quite the hurdle for them- while those
already within the market are enjoying the monopoly. In the case for industry
competitors, investors are not too keen in financing other companies as the
reputation of US Smokeless Tobacco Company is well proven. All in all- this makes
up for why their industry is an all-time high in profits.

3. The major forces shaping the business environment of the fixed‐line telecom
industry are technology and government policy. The industry has been influenced
by fiber optics (greatly increasing transmission capacity), new modes of
telecommunication (wireless and internet telephony), the convergence of telecom
and cable TV, and regulatory change (including the opening of fixed‐line
infrastructures to “virtual operators”). Using the five forces of competition
framework, predict how each of these developments has influenced competition
and profitability in the fixed‐line telecom industry.

As technology continues to exponentially grows and more people are

interconnected, the fixed-line telecom industry could possibly become more
profitable in the next years. These developments influenced suppliers as demand
for cell-towers and satellites are increasing. In this line of industry, substitutes are
not practical- as only a few individuals use radios nowadays. Consumers are
increasing by the day, more as well, companies are shifting to home-based work
and more jobs are becoming digital. In this market, monopoly exists as starting up
 like potential entrants are, is hard because of the huge capital and losses needed for
the first few years of operation. The current competitors have about 50-50 market
share because individuals want to make use of every sim promos available.
Therefore, the fixed-line telecom industry is to be seen profitable in the upcoming
years.

4. By 2018, the online travel agency industry had consolidated around two leaders:
Expedia (which had acquired Travelocity, Lastminute.com, Hotels.com, Trivago,
and Orbitz) and Priceline (which owned booking.com, Kayak, Rentalcars.com, and
OpenTable). These two market leaders competed with numerous smaller online
travel agents (e.g., TripAdvisor, Travelzoo, Skyscanner, Ctrip), with traditional
travel agencies (e.g., Carlson Wagonlit, TUI, American Express—all of which had
adopted a “bricks ‘n’ clicks” business model), and with direct online sales by
airlines, hotel chains, and car rental companies. Amazon and Google were both
potential entrants to the market. The online travel agents are dependent upon
computerized airline reservation systems such as Sabre, Amadeus, and Travelport.
Use Porter's five forces framework to predict the likely profitability of the online
travel agency industry over the next ten years.
The online travel agency industry in the coming years might not see good
results. As Amazon and Google are preparing to enter this type of business. The two
top dogs are widely known for their use online marketing and sophisticated search
engine. Proving this; the suppliers for an online agency are heavily reliant on
Google’s search engine- they depend on advertisements that Google specializes.
Substitutes are those within the airplane industry- already including travel
packages in their flights. This type of industry is also expensive for those not
earning beyond the minimum wage. New Entrants like Google and Amazon can
dictate how well information is available for potential customers and competitors
within the space are getting too crowded.
5. Walmart (like Carrefour, Ahold, and Tesco) competes in several countries of the
world, yet most shoppers choose between retailers within a radius of a few miles.
For the purposes of analyzing profitability and competitive strategy, should
Walmart consider the discount retailing industry to be global, national, or local?

National. This can be done by placing one large branch in each main city of a
country. Doing so, this will publicize Walmart’s name and from thereon; each
national branch could set-up smaller branches in neighboring cities. As it is now,
Walmart’s reputation and name are widely known to people even those nations
currently without a branch- credits given to United States’ influence over media
and coverage.

6. What do you think are key success factors in:

1. the pizza delivery industry?

 Delivery Time- able to deliver pizza that is fresh and hot

 Quality of Products- do not compromise on volume and ingredients
 Selection of Products- having a large selection that caters
accommodates all price range can lure more buyers
 Scope of Location- the wider the scope of delivery; the more
customers to be catered.
 Use of 3rd Party Software- for convenience and more customers; using
applications like Grab, food panda and Lala food could bring publicity
and buyers.

Making use of these options could potentially be the key aspect for a
pizza industry to flourish. Although, the start-up is difficult, slowly by slowly
thru the word-of-mouth a local pizza place can be a national one.
2. the credit card industry (where the world's biggest issuers are: Bank of
America, JPMorgan Chase, Citibank, American Express, Capital One, HSBC,
and ICBC)?

 Good Background Check- able to check their customer’s credit

background
 High Capital- to lend more means to have more available cash flows
 Best cybersecurity- hackers could potentially bring this type of
industry down easily if they are breached
 Legal team- must have a lawful team for probable legal issues
The credit card industry clearly fits the quote; “the higher the risk, the
greater the reward.” This is true in all sense because this type of
industry needs to be monitored frequently and carefully for possible
loopholes. A certain attack breach can theoretically cost millions.