A strategicgroup isanalyzed inthe hope that thefirms it comprises are enough alike to reactessentially the same to environmental change.Themorecommonelements used (often incombination)as the basisfor identifying strategicgroups are market served,products/product line,and distributionIndustryanalysisAnumber of questionsneed tobeansweredinmaking an industryanalysis.The most importantonesare:
◼ A strategic group is analyzed in the hope that the firms it comprises are enough alike to react essentially the same to environmental change. The more common elements used (often in combination) as the basis for identifying strategic groups are market served, products/product line, and distribution. ◼ Industry analysis ◼ A number of questions need to be answered in making an industry analysis. The most important ones are:
1.How profitable is the industry likely to be short-term? Long-term? An attractiveindustry plays alarge role in determining a firm's strategy---particularly its aggressiveness.An unattractiveindustry,on the other hand,could lead the firminto withdrawal strategies or an attempt to forman alliance witha competitors.2. What are the more important industry'scharacteristics?In answering this question,thefollowing factors should be considered---marketsize and growth rate, number of firms,geographicalscope,degree of verticalintegration,ease of entry and exit,channels ofdistribution,customers,technology,andscale/learningeffects
1. How profitable is the industry likely to be shortterm? Long-term? An attractive industry plays a large role in determining a firm’s strategy- particularly its aggressiveness. An unattractive industry, on the other hand, could lead the firm into withdrawal strategies or an attempt to form an alliance with a competitors. 2. What are the more important industry’s characteristics? In answering this question, the following factors should be considered- market size and growth rate, number of firms, geographical scope, degree of vertical integration, ease of entry and exit, channels of distribution, customers, technology, and scale/learning effects
3.What are the industry's driving forces?MichaelPorter identifies a number of driving forces thatto a greater or lesser degree are present in theevolution of any industry.These include (1)changes in the market long-term growth ratewhichdirectly affect investment decisionsandintensityof competition;(2)changesin buyerssegments,which affect demand and strategicmarketingprograms;(3)diffusionof proprietaryknowledge,which controls boththe rate at whichproducts becomemore alikeand entry of newfirms;
3. What are the industry’s driving forces? Michael Porter identifies a number of driving forces that to a greater or lesser degree are present in the evolution of any industry. These include (1) changes in the market long-term growth rate, which directly affect investment decisions and intensity of competition; (2) changes in buyers segments, which affect demand and strategic marketing programs; (3) diffusion of proprietary knowledge, which controls both the rate at which products become more alike and entry of new firms;
(4)changesin cost and efficiency,derived fromscale and learning effects, which have the potentialofmakingentrymoredifficult;and (5)changesingovernment regulations,which can affect entry,costs,bases of competition,and profitability4. What are the essential determinants of success?These are capabilities a firm must have orbe abletoachieve inorder to be competitive and viablefinancially
◼ (4) changes in cost and efficiency, derived from scale and learning effects, which have the potential of making entry more difficult; and (5) changes in government regulations, which can affect entry, costs, bases of competition, and profitability. 4. What are the essential determinants of success? These are capabilities a firm must have or be able to achieve in order to be competitive and viable financially
Some of the more common determinants areconcerned with the major elements in themarketing mix ---product (generate successfulnewproducts),price(bealowcostproducer)channels,(obtain widespreadproductavailability),and personalselling(servicelargecustomers)
◼ Some of the more common determinants are concerned with the major elements in the marketing mix -product (generate successful new products), price (be a low cost producer), channels, (obtain widespread product availability), and personal selling (service large customers)