: Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (): Arthur A. Thompson Jr, Margaret. Become aware of factors in a company’s broad macro-environment that may have strategic significance. Gain command of the basic concepts and analytical. Develop an awareness of the five most basic strategic approaches for winning a sustainable competitive advantage. Understand that a company’s strategy tends .

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Step 2 Evaluate how strong the pressures stemming from each of the five forces are strong, moderate to normal, or weak. Is the collective impact of the drivers of change making competition more or less intense? Learn how to diagnose the factors shaping industry dynamics and to forecast their effects on future industry profitability. Does the industry offer attractive opportunities for growth?

A Key Analytical Tool 3—10 Using the Five-Forces Model of Competition Step 1 For each of the five forces, identify the different parties involved, and the specific factors that bring about competitive pressures. Growth does not strxtegy profitability.

Profit prospects vary from strategic group to strategic group.

Will the combined impacts of the change drivers lead to higher or lower industry profitability? The Most Common Drivers of Industry Change Changes in the long-term industry growth rate Increasing globalization Changes in who buys the product and how they use it Technological change Emerging new Internet capabilities and applications Product and marketing innovation Entry or exit of major firms Diffusion of technical know-how across companies and countries Improvements in efficiency in adjacent markets Reductions in uncertainty and business risk Regulatory influences and government policy changes Changing societal concerns, attitudes, and lifestyles 3—27 Assessing the Impact of the Factors Driving Industry Change 1.


Become adept at mapping the market positions of key groups of industry rivals. It includes the geographic distribution of the population, the distribution of income across the population, and trends in these factors. Documents Flashcards Grammar checker. Evaluating a company’s external environment.

Assessing whether the drivers of change are, individually or collectively, acting to make the industry more or less attractive.

Social forces Societal values, attitudes, cultural factors, and lifestyles that impact businesses. What market positions do industry rivals occupy—who is strongly positioned and who is not? General economic conditions Rates of economic growth, unemployment, inflation, interest, trade deficits or surpluses, savings, per capita domestic product, and conditions in the markets for stocks and bonds affecting consumer confidence and discretionary income.

Crafting & Executing Strategy 18e

Technological factors The pace of technological change and technical developments that have the potential for wide-ranging effects on society, such as genetic engineering, the rise of the Internet, changes in communication technologies, and knowledge and controlling the use of technology, Global forces Conditions and changes in global markets, including political events and policies toward international trade, sociocultural practices and the institutional environment in which global markets operate.

Spotting attractive arenas for expansion, where competitive pressures in the industry are somewhat weaker. Which rivals are financially able and looking to make an acquisition?

Social forces vary by locale and change over time.

What product attributes and service features buyers strongly affect buyers when choosing between the competing brands of sellers? What shortcomings will put a firm at a significant competitive disadvantage?


Does the industry offer good prospects for attractive profits? What are the key factors for competitive success in the industry?

Identifying the drivers of change. Step 3 Determine whether the strength of the five competitive forces, overall, is conducive to earning attractive profits in the industry.

Forecasting and demand measurement Is the ability. Prevailing competitive pressures in the industry and drivers of change favor some strategic groups and hurt others. What resources and competitive capabilities are required for a firm to execute a successful strategy in the marketplace?

Crafting & Executing Strategy 18e

What strategic moves executint rivals likely to make next? Industry’s dominant economic traits Competitive forces and strength. Determining what strategy changes are needed to prepare for the impacts of the anticipated change. Pursuing avenues that shield the firm from as many competitive pressures as possible.

What factors are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability? Which group is in the most favorable position? What kinds of competitive forces are industry members facing, and how strong is each force? Political, legal, Political policies and craffting, as well as the regulations and laws with which and regulatory companies must comply—labor laws, antitrust laws, tax policy, regulatory policies, the political climate, and the strength of institutions such as the court system.