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Industry Profile and Attractiveness Assignment
Industry Profile and Attractiveness Assignment
Introduction
Provide a brief overview of the mission, business, markets, products and scope of operations the company is in. The past/current strategic direction of the firm can be briefly summarized but the focus should be on the most recent events that will impact the decisions and future direction of the firm. Identify past strategic actions by the generic strategy or strategies.
This is NOT a long historical view. It shows how capable you are of describing the company’s business and current strategy using strategic vocabulary.
Common Errors
Focusing on history rather than the current situation.
Not using strategic vocabulary for strategies.
Giving too much detail about the case—assume I’ve read the case.
Strategic Issue
In one or two paragraphs, summarize the company and strategic situation. This should characterize the fundamental state of affairs that exists in the focus company and industry with enough background information to understand it. See page 80 & 81 in the textbook for a definition of strategic issue and review page 9 for the tests of a winning strategy.
This section MUST summarize the strategic situation the company faces. “Situation” means “state of affairs.” Summarize and connect to the key findings of each section. Weave these findings into a summary story leading to a clear and specific statement about the future prospects for strategic success for the company. Make a specific statement about whether the company’s prospects are good, indefinite, or poor.
The strategic issue must be a single, well-crafted sentence that captures the fundamental problems and concerns that came out of the analysis. This single sentence must be formed as a question and will end with a question mark. Write this in very specific terms addressing both the company’s short-term situation and the broader strategic situation. Incorporate the need to provide shareholder value, sales growth, profitability and sustained competitive advantage but incorporate the specific challenges with which the focus company must deal. Everything prior to this question is headed toward this one culminating formulation of the problem. This question forms the basis for the recommendations.
Do not make recommendations in this section. For example, a strategic issue for ZU could be “What degree programs should be offered to meet the labor needs of the UAE government? This can be followed up with more specific questions such as:
Should ZU offer degrees in engineering or medicine?
How can ZU differentiate their brand from other universities?
What degrees are desired by prospective students?
What degree programs are needed that are not offered by other universities?
What programs need to be in place so that students are prepared better for higher education?
Common Errors
Failure to introduce the key conditions or “givens” in a problem statement.
Addressing only the external or the internal situation rather than both.
Not addressing the major, strategic challenges that may significantly affect the company.
Making recommendations.
External Environment
Provide an introduction that characterizes the essence of the external environment and industry situation at the time of the case and sets the stage for the analysis that follows. ALL the discussion in this section relates to the INDUSTRY, not the focus company. You may use examples of the focus company or other competitors to justify your analysis.
Common Errors
Writing about historical events rather than the current state of the industry.
Identifying the topics you are about to discuss without discussing the state of the industry.
Not using the vocabulary and discussion in the textbook supported with facts from the case.
Porter’s 5 Forces Analysis. Use the Porter model to evaluate the strength of the five forces that affect the strategic choices of all firms in the industry. Discuss the balance of power in the industry. Relatively weak forces (low threats) place power in the hands of the firms that comprise the industry, and, therefore, broaden their freedom of choice of strategic actions. Relatively strong forces (high threats) reduce the power of the industry firms and limit their strategic choices. An industry with strong forces tends to be less attractive than an industry with weak forces.
Specifically state your assessment of the strength of each of the 5 forces—intense, strong, moderate or weak. Justify and show why you reached your conclusion. For example, it is not enough to write, “Competitive rivalry is strong because the number of competitors is high, barriers to entry are low and product differentiation is low.” A better explanation is, “The many competitors in this industry must aggressively battle for market share in this slow-growth market. They each have considerable investments in the physical plant, which makes it difficult to leave the industry. The products are difficult to distinguish from one another, so companies must focus on aggressive, marketing programs to win customers away from their competitors. All these factors contribute to a strong rivalry and continued downward pressure on profit margins.”
Put the actual diagram of the model in the APPENDIX and discuss each force in the body of this section. Include a closing paragraph on the implications of the analysis to the overall attractiveness of the industry and the potential for companies to be profitable.
Common Errors
Not identifying the strength of a force or the conditions that lead you to your finding of a force as being strong or weak.
Getting supplier, firm and buyer mixed up.
Overlooking key factors you previously identified in the external/industry analysis.
Not recognizing the strength of competitive rivalry.
Key Success Factors
Key success factors affect industry players’ ability to be competitive and successful. They are so important that firms must consider them in developing their strategy or risk significant loss of sales, profits, market standing, etc. Develop three key success factors for the focus industry and identify WHAT they are, WHY they are key success factors, and HOW they affect the industry. Finish each key success factor by discussing the strategic implication.
For example, it is not enough to say, “Distribution capabilities are essential for success in the online order fulfillment industry.” Go on to say why and present a convincing argument for your position. To illustrate, “A web site that is appealing and easy to navigate, coupled with fast order delivery is essential to customer satisfaction in internet selling. Today’s consumer, especially the younger consumer, is technically savvy and has a myriad of ways to access internet sales, e.g., ipads, computers, iphones. Brick and mortar retail stores provide buyers with a quick solution for their shopping needs but are not as convenient. In order to be competitive, companies must develop the ability to respond with fast delivery times or potentially lose sales to competitors who are able to provide high levels of customer service.”
Common Errors
Being too general.
Not specifically identifying why the factor force is important.
Failure to convince why the factor is important.
Industry Profile and Attractiveness. Summarize the characteristics of the industry. Draw together all of the key findings from each area of the external analysis. What conclusions can you draw about the nature of the industry? How attractive is it to its current incumbents? What are the future prospects for the industry? Why? What challenges does the industry face? Provide a summary statement about whether it is highly attractive, moderately attractive, etc., to current players re profits, sales and competitive intensity.
