(1) rivalry among current competitors,
(2) threat of new entrants,
1. Entrant faces high sunk costs
2. Incumbents have a competitive advantage.
3. Entrant faces retaliation.
(3) substitutes and complements,
1. cross-price elasticity of a potential substitute
2. substantial switching costs between products
(4) power of suppliers, and
1. availability of reliable information on suppliers
2. well-known information on supplier prices
3. suppliers cannot easily segment the market and thus struggle to price-discriminate
(5) power of buyers.
But duopolies are far less competitive—and typically far more profitable—than the alternative of many firms competing. Two additional considerations include whether (1) the incentives to “fight” are low and (2) coordination between competitors is possible.
Coordination that helps reduce pressures to engage in aggressive price cutting may be possible between competitors. In the extreme, firms may explicitly coordinate pricing and/or output. OPEC is a moderately successful cartel of oil-producing nations that tries to control the price of oil. (reduce prod. increase price.)
Environmental analysis (sometimes referred to as “environmental scanning”) is the analysis of factors in the larger competitive context that are currently affecting, or may in the future influence, the nature of competition within an industry.
Strategists should also pay attention to trends in the political and regulatory environment, as such factors can also impact a firm’s prospects in a substantial way. Government regulation and other forms of market intervention can directly affect a firm’s operations and strategic options, and therefore should be carefully considered when formulating and implementing a firm’s strategy.
Many tacit influences that can arise from geographic differences, cultural trends, and social norms.
1. Demographic trends
2. Socio-cultural influences:
3. Technological developments
4. Macroeconomic impacts
5. Political-legal pressures
6. Global trade issues:
An organization’s strategic goals, or objectives, refer to the organization’s mission, its unique purpose and scope. The strategic plan, sometimes called strategic intent, is how the organization tailors its offerings and develops and leverages internal resources and capabilities to accomplish strategic goals. Strategic actions are those tangible actions taken to operationalize the strategic plan in pursuit of the strategic goals of the business.
(1) an identification of the organization’s current competitive positioning and an assessment of the strengths and weaknesses of that position,
(2) a consideration of the pros and cons of a relatively small set of strategic actions to help improve that position, and
(3) the advancement of a set of recommendations based on this analysis.