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Strategic Management
Industry Analysis –
Holistic Thinking and
Predictive Intelligence
* * *
A wise strategist reads the
forest before studying the
trees.
~
KoRe proverb
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Yin-Yang of
Strategic Business Success
Yin: Look at your
business from the outside-in,
work towards satisfying needs of
all stakeholders.
Yang: stand-out from the
competition, create customers,
formulate and implement venture
and differentiation strategies.
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Outside-In Strategies (Yin)
Strategic analysis of the of the
industries, competitors, and markets in
which your company operates to identify
trends and those markets in which your
company's capabilities can become your
sustainable competitive advantage (SCA)
and may lead to
exponential growth.
Inside-Out
Strategies (Yang)
Strategic analysis
of the characteristic of your company to
identify your
distinctive capabilities and surround them
with a collection of reproducible capabilities,
or complementary assets, which enable your
company to sell its distinctive capabilities in
the market it operates.
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Porter's
Model: 35 Forces Model for Industry Analysis
Environmental Factors
that Determine Competitiveness within an Industry
Porter's model outlines
the primary forces that determine competitiveness within
an industry and illustrates how those forces are
related. The model suggests that in
order to
develop effective organizational strategies,
managers must understand and react to those external
forces within an industry that determine an
organization's level of
competitiveness within an industry.
Determinants of Substitution Threat
▪ Relative
price performance of substitutes
▪ Switching costs
▪ Buyer propensity to
substitute
Five
Major Elements of Strategic Business Planning
① An analysis of the
industry in which the firm competes
②
Sources of competitive advantage...
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Limitations of the Porter's Model
The new era of rapid,
systemic and radical change requires more flexible,
systemic and dynamic approaches to strategy formulation.
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Thus today, corporate
strategy formulation should be a combination of
different currently practiced approaches – judgmental
designing, intuitive
visioning, and emergent learning; it should be about
transformation as well as perpetuation; it has to
involve individual cognition and social interaction,
co-operative as well as conflictive. |
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Corporate strategy
formulation must include
analyzing before and programming after as well as
negotiating during; and all of this must be in
response to what can be a demanding
environment.
Traditional strategy
models, such as Michael Porter's five forces model,
focus on the company's external competitive environment.
Most of them do not attempt to look inside the company.
In contrast, the
resource-based perspective highlights the need for a
fit between the external market context in which a
company operates and its internal
capabilities.
In contrast to the Input /
Output Model (I/O model), the resource-based view is
grounded in the perspective that a firm's internal
environment, in terms of its resources and capabilities,
is more critical to the determination of
strategic
action than is the external environment. |
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