INDUSTRY ANALYSIS, STRATEGY AND

PERFORMANCE [IASP]
Professor Ranjan Das
Professor of Strategy, Innovation, Entrepreneurship & Leadership
• 20 Years in Industry [pre and post PhD Program at IIMA]
• IIM Calcutta [ October 1994 onwards]
• The Strategy Academy [January 2008 onwards]
• UPH University – Jakarta [Visiting Sept 2014 - 16]
• IIM Ranchi [ Visiting: 2014-15]
• IIM Trichy [Visiting: 2014-17]
• Indian School of Business, Hyderabad [Visiting: 2008-09]
• Hong Kong University of Science and Technology, Hong Kong [Visiting: 2005-06]
The Strategy Academy
A Prof Ranjan Das Creation
Live the NOVELTY│ Feel the DIFFERENCE │Make an IMPACT
www.thestrategyacademy.org
M: 09830052722;
EMAIL: rdas@iimcal.ac.in ranjandas@thestrategyacademy.org
Future is NOW...Shape it
 IASP: CONTEXT & SCOPE OF THE
COURSE
1. CONTEXT
• One part of IASP is an important part of
strategy development process [viz.
Industry and competitive analysis -ICA]
and it also examines strategic choices
made out of such analyses and their
impact on performance
2. SCOPE
• As described in the schedule of
sessions
 INDUSTRY ANALYSIS, STRATEGY AND
PERFORMANCE [IASP]: Course Objectives
– To learn analytical frameworks and tools for analysing industry and
competition and understand how competitive forces shape industry
attractiveness
– To discuss how the general analytical frameworks and tools for analysing
industry and competition can be applied for understanding industry
attractiveness in different types of industry setting such as traditional brick
and mortar industries, global industries, information and information intensive
industries, converging industries and technology intensive industries
– To understand how does an industry evolve over time and strategic choices
available to a firm for exploiting industry context prevailing during different
stages of evolution
– To examine a variety of competitive choices available to a business, given its
unique industry and competitive context [such as those mentioned above]
and strategic resources at its disposal, to achieve sustainable competitive
advantage, earn above normal returns and attract high valuation
 IASP: CONTEXT OF THE COURSE
STRATEGY PROCESS
• STRATEGY DEVELOPMENT PROCESS
•STRATEGIC ANALYSIS
•DEVELOPMENT OF STRATEGIC
OPTIONS, EVALUATION AND
CHOICE
• STRATEGY IMPLEMENTATION
 IASP: CONTEXT OF THE COURSE
STRATEGIC ANALYSIS
• STRATEGY DEVELOPMENT PROCESS
• STRATEGIC ANALYSIS
» Political, Regulatory, Economic, Social,
Technological Analysis [PREST]
» Industry and Competitive Analysis [ICA]**
» Resources and Capability Analysis [RCA]
» Organization and Culture Analysis [OCA]
» Stakeholder Expectations Analysis [SEA]
** it is a part of IASP Course
 IASP: CONTEXT OF THE COURSE
FROM STRATEGIC ANALYSIS TO GENERATION OF STRATEGIC
OPTIONS TO EVALUATION & CHOICE
Stakeholder

Political,
SEA Expectation
Organization &
Analysis
Regulatory, Culture Analysis
Economic, Social [GOALS]
Technological
Analysis
FOCUS AREA
PREST OCA
[O&T] [S&W] Evaluation of
STRATEGIC strategic
FOCUS OPTIONS options &
AREA
Resources &
choice
Capability
Analysis
Strategy
Industry & ICA RCA Implementation
Competitive INPUTS
Analysis
[O&T] [S&W]
Business and
Financial goals
IASP: SCOPE OF THE COURSE SESSION-
WISE DETAILS
Topic
No.
IASP : Context & Overview

1  Strategy Development Process & IASP - An overview

 Structural Analysis of the industry
 Generic competitive strategies
 Competition analysis and Market signals

2  Strategy Development Process & IASP - An overview

 Structural analysis within the industry and Strategy Groups
 Industry evolution
 IASP: SESSION-WISE DETAILS
No. Topic

IASP - Brick and Mortar Industries

3  Presentation -1 by Students : [a] How Comp Forces Shape Strategy [HBR – July- Aug 1997] &
[b] How to Map Industry’s Profit Pool [HBR May-June 1998]
 READ: General Analytical techniques [Chapter 1 of Michael Porter’s book]
 Case-1: Air Asia HKU 833

4  Presentation – 2 : [a] Analysis of Competition, [b] Market Signals and Competitive moves
[Chapter 3, 4 and 5 of Michael Porter’s book]
 Case -2 : Coke vs. Pepsi – 9-706-447
5  Presentation – 3: Read: [A] MAPPING YOUR COMPETITIVE POSITION [HBR NOV 2007], [B]
Competitive pressure system mapping and managing multi-market contact [SMR 091]
 Case [Consumer Durable Industry]-3: Diaper War: Kimberly Clerk vs P&G 92M003
6  Presentation – 4: [a] Structural Analysis within industry [Chapter7 of Michael Porter’s book]
and [b] Achieving and sustaining superior profits 9-797-039 and [C] Impact of Industry and firm
factors on firm profitability [UV 1099]
 Case-4: Global Aircraft Manufacturing , 2002-11 KEL938
7 • Presentation – 5 : [A] How industries Change - HBR Oct 2004 plus [B] industry Evolution [
Chapter 8 Porter book]
 Case-5 How autonomous vehicles will change industries and strategies N1484-PDF-ENG
 SESSION-WISE DETAILS
No. Topic
IASP -Global industries
8  Presentation – 6: [A] Globalization of companies and industries [BEP 040] & [B] Global
gamesmanship - [strategic interdependence of markets] – HBR MAY 2003 & [C] [Chapter 13 of
Michael Porter’s book
 Case-6 : Global Oil and Gas Industry TB0443
 Case -7: TCS – Globalization of IT Services IB-79
9  Presentation -7: [A] INTRODUCTION TO GLOBAL STRATEGY [9-706-448] & [B] The New Rules of
Globalization [January- February 2014]
 Case-8: Methanex [commodity/ global industry] W13238
IASP- Information and Information Intensive Industries
10  Presentation -8 : Indian Information Technology Industry – Past, Present and Future [students
to do research and also use article/ links in the schedule] ]
 Case [ITES industry] – 9-In Class Group work -1: Indian IT Services Industry –PG0003
11  Presentation - 9: Future of Commerce – 4 articles [1] The future of Shopping HBR Dec 2011 [2] Omni- channel
retailing H03D7A-PDF-ENG, [3] Welcome to the New World of Merchandising R0110K-PDF-ENG[4] Five rules for retailing
in recession R0904E-PDF-ENG
 Case-10: – In Class Group work -2: Carrefour China HKU 670
 SESSION-WISE DETAILS
No. Topic
IASP - Information and Information Intensive Industries
12  Presentation -10: Online retailers 9-801-306 [ based on 6 articles and links mentioned in the schedule ]
 Case-11– In Class Group work -3: Amazon.com 9-809-014
13  Presentation -11: Financial Services Industry [student researched presentation plus article/ links in schedule]
 Case-12 – In Class Group work -4:ICICI Bank’s Credit Card HKU 935

14  Presentation -12 : [1] PORTER - HOW SMART CONNECTED PRODUCT & IMPLICATIONS FOR STRATEGY ..HBR NOV
14 3] DIGITAL UBIQUITY - HBR NOV 14
 Case:-13 Appirio: New Venture on a Cloud BAB 694
IASP - Converging Industries & Industries Subject To Network Effects
15  Presentation - 13: [1] Six converging digital technology trends - KPMG-NASSCOM Report & [2] Convergence in
communication and content– The Economist Intelligence Unit 2004
 Case -14-In Class Group work -5: TiVO- 2007 9-708-401
16  Presentation - 14: [1]industry Convergence And Transformation Of Mobile Communication System Of
Innovation, [2] Strategic management in Converging Industries [Research paper 1998] OR [3] Implication of
digital convergence on strategic management [research paper ]
 Case -15-In Class Group work -6: iPod vs. Cell Phone – 9-707-419

17 • Presentation 15: Media convergence and business ecosystem, Global Media Journal, Fall 2011, vol 11, issue 19
 Case-16 In Class Group work -7: Microsoft Search 709-461
 SESSION-WISE DETAILS
No. Topic
IASP - Technology Intensive industries
18  Presentation – 16 : Group 9: Competency Destroying Technology Transition
 CASE-17: Apple 2012 [ 9-712-490]
 Case-18- In Class Group work -8: Sun Micro system 906M23
19  Case- 19- In Class Group work -9: Daktronics (A): Digital Signage industry
NA0232
20  Case -20-- In Class Group work -10: Intel Research 9-605-051

GROUPS: 2 TYPES
1. For Presentations: 16 PRESENTATIONS [16 groups – 1 presentation each ]
2. For In-Class Group work on cases [ 10 groups; all 10 groups will participate in 10 IN-CLASS
EXERCISES during specific sessions as indicated]

EVALUATION: Presentation : 10% ; Engagement: 15% [as measured through 2 surprise

attendance and CPs made either in writing or through audio system] ; In-Class Group work on
cases: 40% ; End Term Exam: 35%
 CASE DISCUSSIONS
THAT FOCUSED ON:
• Brick and mortar industries
• Global industries
• Information and information intensive
industries
• Converging Industries & Industries Subject To
Network Effects
• Technology Intensive industries
CLASS PRESENTATION GROUPS

16 GROUPS OF 6-7 MEMBERS EACH

Sl. No. Reg. No. Name GROUP NUMBER

1 0055/56 SALONI TOMAR 1

2 0228/56 SOUJANYA SAMANTA 1

3 0089/56 AKSHAT DUBEY 1

4 0128/56 NIMIT SINHA 1

5 0165/56 ANIMESH GUPTA 1

6 0194/56 MD SHARIQUE BIN MANSOOR 1

7 0112/56 IPSITA UMESH CHOUDHARY 2

8 0177/56 BIBHU PRASAD DAS 2

9 0134/56 PILLARISETTI BHARGAV 2

10 0382/56 SAMARTH JAISWAL 2

11 0360/56 LEWIS NIKITA GERALD 2

12 0275/56 KAVERI RAKESH SHARMA 2

13 0311/56 SRISHTI 3

14 0087/56 AGRIMA SINGH 3

15 0338/56 D V MADHUMITHA 3

16 0420/56 DESHPANDE GORAKSH VYANKATESH 3

17 0013/56 ARIN LAHA 3

18 0185/56 HARSHIT CHANDAK 3

19 0392/56 SOUMIK ROY 4

20 0031/56 JOY BHATTACHARYA 4

21 0393/56 SRIDHAR SIRUGUDI 4

22 0325/56 AMIT KUMAR 4

23 0121/56 MADARAM NIKHIL CHAITANYA 4

24 0441/56 MD NAZIMUDDIN 4
25 0239/56 YUGESH KUMAR 5

26 0373/56 RASHMI SHARMA 5

27 0150/56 SRAVYA CHANDRIKA J 5

28 0447/56 NATRA SANJAY 5

29 0073/56 USURUMARTHI VIJAY KUMAR 5

30 0342/56 EMANI PHANI DEEP 5

31 0154/56 VASTVIK AMERA 6

32 0294/56 RISHABH BHATTI 6

33 0436/56 KUMUD ACHARYA 6

34 0397/56 TRIPTABALA KHARAT 6

35 0389/56 SHWETA SHRIVASTAVA 6

36 0330/56 ASHAY SHASHIKUMAR BORKAR 6

37 0202/56 PARMESH GUPTA 7

38 0437/56 LAKSHAY GARG 7

39 0377/56 RISHABH CHOURDIA 7

40 0098/56 ARPIT GOKHROO 7

41 0355/56 KASI SASIDHAR 7

42 0283/56 NUTHALAPATI SURYA VARMA 7

43 0465/56 SHIVANGI CHAUHAN 8

44 0476/56 VAISHNAVI DEVARAKONDA 8

45 0301/56 SAMEER NAMDEO 8

46 0290/56 RAHUL KUMAR YADAV 8

47 0364/56 NAVNEET SINGH 8

48 0050/56 ROHIT 8
49 0353/56 JAYESH K NEWAL 9

50 0254/56 AKSHITA SHARMA 9

51 0109/56 HARSH WARDHAN 9

52 0366/56 NEHA YADAV 9

53 0158/56 VRISHABH TAYADE 9

54 0305/56 SARTHAK DANGWAL 9

55 0015/56 ARUSHI GOEL 10

56 0221/56 SATYAKSHI SHARMA 10

57 0475/56 VAIBHAV SINGH 10

58 0159/56 WAGH TRUPTESH RAJESH 10

59 0312/56 SURBHI GARG 10

60 0402/56 ADITYA GUPTA 10

61 0277/56 KOLAWALE ADITYA BHIMRAO 11

62 0188/56 KARAN GARG 11

63 0313/56 SWANAND ANANDRAO SHINDE 11

64 0117/56 KARTIK SINGHAL 11

65 0428/56 KANIKA DEV 11

66 0395/56 SUMAIYA BEGAM A 11

67 0406/56 ANKIT JALGAONKAR 12

68 0176/56 BIBEK KUMAR 12

69 0231/56 TARANG JAIN 12

70 0452/56 PATHULOTH PRIYANKA 12

71 0072/56 SUVIDHA KEDIA 12

72 0316/56 UNNATI MAHAJAN 12

73 0321/56 ABHILASH PATI 13

74 0396/56 TANUJ JAIN 13

75 0468/56 SHRINIVAS PULI 13

76 0201/56 NIHAR SHERWAL 13

77 0358/56 KUMAVATH VARSHINI 13

78 0266/56 GAWANDE ANJALI KISHOR 13

79 0388/56 SHUVANG JANDIYAL 14

80 0403/56 AKANSHA KASHYAP 14

81 0079/56 WAZALWAR CHINMAY ARVIND 14

82 0138/56 RANANAVARE RUCHIRA ASHOK 14

83 0328/56 ANUJ RAJ SHARMA 14

84 0223/56 SHANTANU JAIN 14

85 0332/56 AYUSH SAINI 15

86 0145/56 SHIVANGI PANCHOLI 15

87 0414/56 BHAGAT AMIT VIJAYKUMAR 15

88 0247/56 ABIR CHOUDHURY 15

89 0083/56 AAKASH DAS 15

90 0456/56 PRANJAL AGRAWAL 15

91 0088/56 AKASH VERMA 15

92 0129/56 ONKAR GARG 16

93 0435/56 KUMAR SHIVAM 16

94 0439/56 MANSAN KHARUMNUID 16

95 0446/56 N VIGNESH 16

96 0126/56 NIKITA 16

97 0422/56 HANURAM T 16

98 0137/56 PUSHKAR PRADIP BHATTACHARYA 16

IN-CLASS EXERCISE GROUPS

10 GROUPS OF 9-10 MEMBERS EACH

Sl. No. Reg. No. Name GROUP LETTER

1 0311/56 SRISHTI A

2 0154/56 VASTVIK AMERA A

3 0202/56 PARMESH GUPTA A

4 0465/56 SHIVANGI CHAUHAN A

5 0353/56 JAYESH K NEWAL A

6 0277/56 KOLAWALE ADITYA BHIMRAO A

7 0406/56 ANKIT JALGAONKAR A

8 0321/56 ABHILASH PATI A

9 0388/56 SHUVANG JANDIYAL A

10 0129/56 ONKAR GARG A

11 0055/56 SALONI TOMAR B

12 0087/56 AGRIMA SINGH B

13 0294/56 RISHABH BHATTI B

14 0437/56 LAKSHAY GARG B

15 0476/56 VAISHNAVI DEVARAKONDA B

16 0254/56 AKSHITA SHARMA B

17 0015/56 ARUSHI GOEL B

18 0188/56 KARAN GARG B

19 0176/56 BIBEK KUMAR B

20 0228/56 SOUJANYA SAMANTA C

21 0112/56 IPSITA UMESH CHOUDHARY C

22 0177/56 BIBHU PRASAD DAS C

23 0392/56 SOUMIK ROY C

24 0239/56 YUGESH KUMAR C

25 0373/56 RASHMI SHARMA C

26 0109/56 HARSH WARDHAN C

27 0366/56 NEHA YADAV C

28 0332/56 AYUSH SAINI C

29 0435/56 KUMAR SHIVAM C

30 0089/56 AKSHAT DUBEY D

31 0134/56 PILLARISETTI BHARGAV D

32 0382/56 SAMARTH JAISWAL D

33 0338/56 D V MADHUMITHA D

34 0377/56 RISHABH CHOURDIA D

35 0158/56 VRISHABH TAYADE D

36 0221/56 SATYAKSHI SHARMA D

37 0313/56 SWANAND ANANDRAO SHINDE D

38 0403/56 AKANSHA KASHYAP D

39 0145/56 SHIVANGI PANCHOLI D

40 0128/56 NIMIT SINHA E

41 0165/56 ANIMESH GUPTA E

42 0360/56 LEWIS NIKITA GERALD E

43 0420/56 DESHPANDE GORAKSH VYANKATESH E

44 0436/56 KUMUD ACHARYA E

45 0301/56 SAMEER NAMDEO E

46 0475/56 VAIBHAV SINGH E

47 0396/56 TANUJ JAIN E

48 0079/56 WAZALWAR CHINMAY ARVIND E

49 0439/56 MANSAN KHARUMNUID E

50 0031/56 JOY BHATTACHARYA F

51 0150/56 SRAVYA CHANDRIKA J F

52 0397/56 TRIPTABALA KHARAT F

53 0098/56 ARPIT GOKHROO F

54 0355/56 KASI SASIDHAR F

55 0290/56 RAHUL KUMAR YADAV F

56 0231/56 TARANG JAIN F

57 0452/56 PATHULOTH PRIYANKA F

58 0414/56 BHAGAT AMIT VIJAYKUMAR F

59 0446/56 N VIGNESH F
60 0275/56 KAVERI RAKESH SHARMA G

61 0393/56 SRIDHAR SIRUGUDI G

62 0447/56 NATRA SANJAY G

63 0364/56 NAVNEET SINGH G

64 0159/56 WAGH TRUPTESH RAJESH G

65 0117/56 KARTIK SINGHAL G

66 0428/56 KANIKA DEV G

67 0468/56 SHRINIVAS PULI G

68 0138/56 RANANAVARE RUCHIRA ASHOK G

69 0328/56 ANUJ RAJ SHARMA G

70 0013/56 ARIN LAHA H

71 0185/56 HARSHIT CHANDAK H

72 0325/56 AMIT KUMAR H

73 0050/56 ROHIT H

74 0072/56 SUVIDHA KEDIA H

75 0201/56 NIHAR SHERWAL H

76 0358/56 KUMAVATH VARSHINI H

77 0247/56 ABIR CHOUDHURY H

78 0126/56 NIKITA H

79 0422/56 HANURAM T H
80 0121/56 MADARAM NIKHIL CHAITANYA I

81 0441/56 MD NAZIMUDDIN I

82 0389/56 SHWETA SHRIVASTAVA I

83 0283/56 NUTHALAPATI SURYA VARMA I

84 0305/56 SARTHAK DANGWAL I

85 0266/56 GAWANDE ANJALI KISHOR I

86 0083/56 AAKASH DAS I

87 0456/56 PRANJAL AGRAWAL I

88 0137/56 PUSHKAR PRADIP BHATTACHARYA I

89 0194/56 MD SHARIQUE BIN MANSOOR J

90 0073/56 USURUMARTHI VIJAY KUMAR J

91 0342/56 EMANI PHANI DEEP J

92 0330/56 ASHAY SHASHIKUMAR BORKAR J

93 0312/56 SURBHI GARG J

94 0402/56 ADITYA GUPTA J

95 0395/56 SUMAIYA BEGAM A J

96 0316/56 UNNATI MAHAJAN J

97 0223/56 SHANTANU JAIN J

98 0088/56 AKASH VERMA J

 INDUSTRY AND COMPETITIVE
ANALYSIS
HOW COMPETITVE FORCES
SHAPE INDUSTRY, INDUSTRY
ECONOMICS AND FIRM LEVEL
STRATEGY
 INDUSTRY STRUCTURE AND INDUSTRY
ECONOMICS [I.E. PROFIT POTENTIAL]
 INDUSTRY ECONOMICS AND NATURE OF
COMPETITION ARE INFLUENCED BY THE
COLLECTIVE STRENGTHS OF FIVE
COMPETITIVE FORCES:
▪ POWER OF CUSTOMERS
▪ POWER OF SUPPLIER
▪ THREATS OF SUBSTITUTE
▪ THREATS OF NEW ENTRANTS
▪ JOCKEYING AMONG CURRENT PLAYERS
STRUCTURAL ATTRACTIVENESS OF AN
INDUSTRY
• An industry is called structurally
attractive [i.e. High profit potential] if
all or most of the forces are weak
• An industry is called structurally
unattractive [i.e. Low profit
potential] of all or most of the forces
are strong
 Summary of 5 Forces
1. If the Threat of New Entrants is High, prices can be bid down and/or
incumbents' costs inflated, reducing profitability.
2. If the Intensity of Rivalry Among Existing Competitors is High, tactics like
price competition, advertising battles, product introductions, and increased
customer service or warranties are common, having noticeable effects on all
competitors.
3. If the Pressure from Substitute Products is High, it limits the potential
returns by placing a ceiling on the prices firms in the industry can profitably
charge. The more attractive the alternative, the firmer the lid on industry
profits.
4. If the Bargaining Power of Buyers is High, Buyers compete by forcing down
prices, bargaining for higher quality or more services, playing competitors
against each other, reducing profitability.
5. If the Bargaining Power of Suppliers is High, Suppliers can exert bargaining
power over participants in an industry by threatening to raise prices or
reduce the quality of purchased goods/services.
 VIDEO – PORTER ON 5 FORCES & AIRLINE INDUSTRY
PLUS PHARMA PLUS NETFLIX

1. 5 forces - https://www.youtube.com/watch?v=XCWHSeDU-zk
[1.5]
2. 5 forces – how it shapes industry profits [with airlines ind as
example] https://www.youtube.com/watch?v=tRKl1QP-654
3. DO – Pharma example [ 2.02 mins]
https://www.youtube.com/watch?v=IhEsjpd5sT0
4. Do-pay tv https://www.youtube.com/watch?v=KRUJ8sPR5ZE
2.55
5. 5 forces – Netflix
https://www.youtube.com/watch?v=KRUJ8sPR5ZE [ 2.9 min]
Generic Competitive strategies
Competitive strategy :
• - Taking offensive or defensive action to create
defendable position in industry
• - To cope with 5 forces and yield superior ROI over
the years
Three Generic strategies ( Can be used alone or in
combination )
• Overall cost leadership
• Differentiation
• Focus
Combination of strategies is possible but
• Difficult to implement
• Potential risk of Dilution of objectives
 VIDEO ON GENERIC COMP
STRATEGIES
• https://www.youtube.com/watch?v=inI47ezIL
oI brief overview of SCA and generic comp
strategy [2.58]
• Comp strategy -
https://www.youtube.com/watch?v=xUW6_N
be8d0 [2.5]
 ANALYSIS OF
COMPETITION
 ANALYSIS OF COMPETITION
 Competition in an industry cannot be fully
appreciated by looking at the strategies of
individual players. Actions and relative power
of other 4 forces shape competitive dynamics
and firm level strategic choices
 Developments in adjacent industries and
strategic choices made by customers,
suppliers, new entrants and companies
offering substitute products affect the rivalry
and relative power of various competitors
ANALYSIS OF COMPETITORS: KEY COMPONENTS
[ANALYSIS IS A MUST BEFORE DEVELOPMENT OF BUSINESS STRATEGY]

FUTURE
GOALS

COMPETITOR’S
CURRENT
RESPONSE ASSUMPTIONS
STRATEGY PROFILE

CAPABILITIES
ANALYSIS OF COMPETITORS: KEY COMPONENTS
[ANALYSIS IS A MUST BEFORE DEVELOPMENT OF BUSINESS STRATEGY]

• FUTURE GOALS OF COMPETITORS

• What drives the competitor –overall and at all levels of
management and in multiple dimensions
• CURRENT STRATEGY OF COMPETITORS
• What the competitor is currently doing and can do
• ASSUMPTIONS MADE BY COMPETITORS
• Held about itself and the industry [as assessed by the
competitor]
• CAPABILITIES OF COMPETITORS
• Both strengths and weaknesses [as assessed by us]
ANALYSIS OF COMPETITORS: KEY COMPONENTS
[ANALYSIS IS A MUST BEFORE DEVELOPMENT OF BUSINESS STRATEGY]

• COMPETITOR’S RESPONSE PROFILE

• Is the competitor satisfied with its current
position?
• What likely moves or strategy shifts will the
competitor make?
• Where is the competitor vulnerable?
• What will provoke the greatest and most
effective retaliation by the competitor?
 COMPETITOR ANALYSIS
 CHECK SPECIFICALLY:
▪ Core capabilities across value network
▪ Ability to grow [resources/ skill/ intent]
▪ Quick response ability
▪ Ability to adapt to changes
▪ Staying power
 IDENTIFY CHANCE OF ANY OFFENSIVE MOVE
▪ How satisfied with current position?
▪ Probable moves
▪ Changes being contemplated in internal operations
▪ Strengths and seriousness of each move
 COMPETITOR ANALYSIS
 DEFENSIVE CAPABILITY OF THE COMPETITOR
▪ Extent of vulnerability to strategic moves / government
policy/ industry events
▪ Which move competitor cannot retaliate
▪ What action will provoke maximum retaliation?
▪ How effective the retaliation going to be given its
strengths
 PICKING THE BATTLE GROUND:
▪ Where the competitor is ill prepared [from strategy,
organization and resource point of view]
▪ Where retaliation, even if effective, will cause resource
reallocation/ diversion from other priorities
 VIDEOS -ANALYSIS OF
COMPETITION
• Competitor analysis
https://www.youtube.com/watch?v=e8Mymz
F6CPU&t=69s [2.4]
• Renault doing competitor analysis
https://www.youtube.com/watch?v=YUc-
c2kjYgI [2.36 min]
 MARKET SIGNALS
AND
COMPETITVE MOVES
 Market Signals
Competitor’s behaviour can carry information that will
aid us in our analysis and strategy

A competitor’s action can give information about its

Intentions, Goals, Motives, Internal Situation

Indirect way of communicating in the marketplace

Implications are that these signals could be a bluff,

warning or a commitment to a course of action

58
 Market Signals
Prerequisites for understanding market signals

 Understanding of competitor's future goals

 Assumptions about the market and themselves,
current strategies and capabilities

Subtle judgements based on comparing the

known aspects of their situation with their
behaviour
Forms of market signals based on the particular
competitor behaviour involved and the medium
involved
59
 Prior Announcement of Moves

A formal communication made well in

advance.

Firm may or may not take actions based

on the announcements.

Announcement can be nullified by

another announcement.
60
 Public Discussions of the Industry by
Competitors
Comment on industry conditions including forecasts of demand,
prices, future capacity, material costs increases..etc

Conscious or Unconscious attempt to get other firms to operate

under the same assumptions (such as a price discipline)

Firms making the comments may be seeking to interpret industry

conditions in such a way as to improve its own position

Competitors may comment on the rival’s moves directly – signal of

pleasure or displeasure with a move. Can have alternative
interpretations.

Firms may praise competitors by name or the industry generally –

reduce tensions or ending undesirable practices. In industries
where all firms are affected by industry’s collective image.
61
Competitors Discussions in Public and Forums

Discuss own moves in public or in

forum to reach other firms

 Attempt to get others to follow

 Preemptive gestures
 Attempt to communicate commitment

62
Competitors Tactics Selected
Competitor have many feasible options
regarding prices and advertising levels, size of
capacity additions, specific product
characteristics

Choice of Strategic variables that worst affect

other firms – Strong aggressive signal
Choices that affect competitors less –
Conciliation signal

63
 Divergence From Past Goals
Competitor’s move to shift from a well practiced
strategy of past

 Move from high end product spectrum to a significantly

low end product

Indicates potential major strategic realignment

Leads to a period of intense attention to signaling

and competitor analysis

64
Divergence From Industry Precedent
Competitor’s move that diverges from
industry norms

Usually gives an aggressive signal

 Discounting products for the first time in the
industry

 Plant construction in an entirely new

geographic area

65
 Private Antitrust Suits
Mild Signal of displeasure/ delaying tactic

Can be dropped any time

When a weaker firm sues a stronger firm, it

preempts the latter from any aggressive actions while
the suit is on [Neutralization]

When a stronger firm sues a weaker firm, it makes

the latter firm absorb high legal costs over time
thereby causing distraction / also could be a warning
to the latter
66
Use of history to identify signal
Possible signals
 Certain Sales activities that precede a new product
launch

 Price changes on exiting products before new

products are launched

 Announcing capacity addition when firm’s reach a

certain level of utilization

67
 Competitive Moves
• Right competitive move:
– Outcome is quickly determined
– Outcome is skewed towards firm’s interests
 Use of superior resources/capabilities
 Competitors don’t retaliate heavily
• Types:
– Cooperative moves
– Non Threatening moves
– Threatening moves
– Defensive Moves
 Commitment
• Competitors face uncertainty about a firm intention and
extent of its resources.
• Communicating commitment reduces this uncertainty
• Commitment that firm is unequivocally sticking with a move
its is making
• Commitment that a firm will retaliate and continue to
retaliate if a competitor makes a certain movies
• Commitment that a firm will take no action or forgo action
 Communicating Commitment
• Building a credible commitment
– Mechanisms: Visible assets (e.g. strong
distribution network) & less visible assets
(un-introduced new product)
– Not only possess but also increase visibility
of assets.
 Communicating Commitment
• Strong intention to carry out the commitment
– Pattern of consistent behaviors
– Show preparedness to retaliate
• Inability to withdraw
– Long term contracts and significant fixed cost
indicate embedded stakes
• Ability to detect compliance/non-compliance
COMPETITIVE THREATS AND OPTIONS
 SUBSTITUTION – B&N SUBSTITUTED BY AMAZON
 IMITATION – AMAZON ITSELF GETS ATTACKED BY
IMITATORS
 POSSIBLE RESPONSES TO SUBSTITUTION:
▪ NO RESPONSE [extreme option]
▪ HARVESTING [extreme option]
▪ FIGHTING [remain focused and fight substitution ]
▪ SWITCHING [ exit from the present and switch to substitution]
▪ STRADDLING [ do both present and substitution]
▪ RECOMBINING [ do both but get the best practices and
resources from the present mode to substitution item]
COMPETITIVE THREATS AND OPTIONS
 IMITATORS WILL HAVE TO OVERCOME ADVANTAGES OF THE
INCUMBENT:
 Brand name
 Ability to offer industry-first products
 Superior infrastructure
 Customer loyalty and retention
 Entry barriers built by the incumbent such as long term contracts with
suppliers and customers
 Access to privileged resources
 Ability to reduce prices to stop imitators
 Scale economies and economies of scope
 Marketing spend
 Tacit knowledge of the business
 Ability to step up investments thereby making cost of imitation
higher
COMPETITIVE THREATS AND OPTIONS
• SOMETIMES, INCUMBENTS WHO MAY NOT BE
THAT MUCH AFECTED BY IMITATORS CAN
FACE PROBLEMS OF SUSTAINABILITY
RESULTING FROM:
• Substitution - threat of being displaced by different business
model rather than being imitated by look-alike imitators
• Hold up - diversion of value to complementors and business
associates and also key employees leaving the organization with
knowhow
• Slack – persistent sub optimization by employees who spend time
on issues not related to customer value creation
 HOW DOES AN INDUSTRY EVOLVE? THINGS TO
UNDERSTAND
• Long term changes
• DEMOGRAPHICS,
• LIFESTYLE AND SOCIAL CONCERNS,
• TRENDS IN RELATION TO SHIFTS IN CUSTOMER
NEEDS
• EMERGENCE OF SUBSTITUTE AND
COMPLIMENTARY PRODUCTS
• Changes in adjacent industries/ buyer segments/
learning by buyers
 HOW DOES AN INDUSTRY EVOLVE? THINGS TO
UNDERSTAND
• Reduction in uncertainty/ diffusion of proprietary knowledge
• Accumulation of experience
• Innovations across value network – product and process
• Changes in government policies
• Entry and exit
• NOTE: Definition of INDUSTRY DRIVERS that helps an industry grow or
decline
– Developments in an industry that trigger one or more of the following
three items at least in short and medium term:
• Change in basic need
• Need is same but the process of delivering the need has changed
• Need and process of delivering the need is same but cost of
delivered product or service has sharply got reduced due to
technological or process innovation
 Key Relationships in Industry Evolution

• Industries do not change in a piecemeal

fashion.

• Change in one element of an industry's

structure tends to trigger changes in other areas
- Chain Reaction

• No one way in which industries evolve.

 Will the Industry Consolidate?

Industry Concentration and Mobility barriers

move together
Mobility barriers: Structural factors that protect
successful firms from invasion by adjacent competitors
High mobility barriers, High Concentration

No concentration takes place if Mobility barriers

are low or falling
Low barriers, unsuccessful firms exit and are replaced
by new firms
 Will the Industry Consolidate?

• Exit Barriers deter Consolidation

– High exit barriers keep companies operating in an
industry even with subnormal returns

• Long run profit potential depends on future

structure
 Changes in Industry Boundaries

Potential
Entrants

Suppliers Industry Buyers

Competitors

Firms Producing
Substitute Products
 Firms can Influence Industry Structure

Firm's strategic behaviour can influence the

industry – reaction or action
Trade associations

Industry evolution should not be greeted as a fait

accompli, to be reacted to, but as an opportunity
INDUSTRY ANALYSIS & STRATEGY

Industry Analysis Strategy

 Attractiveness  Strategic Posture

 Balance of Power  Influencing the Balance
 Structure  Exploiting Change
VIDEOS ON INDUSTRY EVOLUTION
• How industries change
https://www.youtube.com/watch?v=U2CO4p_prsY [ 2.5]
• Ind drivers –Why we need to understand
https://www.youtube.com/watch?v=m9wguLR78t0 [2.25]
• Ind driving forces – video game consoles
https://www.youtube.com/watch?v=F8Cio-ANYPc [1.20]
• Ind evolution – auto ind
https://www.youtube.com/watch?v=CXxXgAOFmfg [3 mins]
•STRUCTURAL
ANALYSIS WITHIN
THE INDUSTRY
•STRATEGIC GROUPS
 Explain the difference in
performance of firms in same
Industry!
Competitive Strategy
 Competitive Strategy
• COMPETITIVE STRATEGY:
• Competitive strategy usually looks at a “single” business unit focusing on specific
product [service]- market and examines whether the business has competitive
advantage or disadvantage
• Competitive Strategy essentially involves making three CHOICES – with reference
to 3 questions, that together determine the POSITIONING being aimed as the
FUTURE unfolds :
1. Where will we compete? – Choice of buyer segments and identification
of competitor[s] to be hedged against
2. How will we compete? – Choice of core value propositions [ such as
Cost Leadership and Differentiation] that will be valued by prospective
customers [Q1] vs. competition [Q1]
3. How will we deliver? – Choices made regarding the mix of in-house and
outsourced activities and their inter-relationships that [a] competition
[Q1] will find it difficult to imitate and that [b]optimizes investments in
assets and people in a way that help create and deliver the value [Q2]
to targeted buyers [Q1] at desired margin
 Competitive Strategy
• The CHOICES in above mentioned 3 areas, along with supportive cross-functional
decisions and actions - need to be:
A. Different ref the Value proposition [Q 2] – in the eyes of customers [Q1]
relative to competition [Q2] and
B. Smart – ref optimized investments in Assets and People for ensuring the
desired operating excellence and earning targeted returns [Q 3]

If ‘RIGHT’
choices are Success in
Strategic made, it will Achieving
Analysis of Sustainable
Choices – make the business
business Competitive
answers to business look and
context Advantage
Q1, 2 & 3 and perform financial
DIFFERENTLY goals
& SMARTLY

BUSINESS CONTEXT [MACRO-ECONOMIC + INDUSTRY ENVIRONMENT]

 Competitive Strategy
• If the CHOICES made with regard to Q1, 2 and 3 ensure [A] and [B], the
same will help the business achieve SUSTAINABLE COMPETITIVE
ADVANTAGES – vis-à-vis Customers, Suppliers, Substitutes, New Entrants,
Complements and of course Competition, which in turn will help the
business achieve its long term market and financial goals
• Thus, a RIGHT competitive strategy – comprising CHOICES made by
managers with regard to Q1, 2 and 3 mentioned above, against the
backdrop of their unique external and internal context, and rolled out
through an integrated set of cross-functional decisions and activities– will
make the business look and perform DIFFERENTLY & SMARTLY which will
help the business develop SUSTANTABLE COMPETITIVE ADVANTAGE
leading to achievement of its LONG TERM MARKET AND FINANCIAL
GOALS
 Business or competitive strategy:
SOME SPECIFICS TO BE ARTICULATED
• Where and how the firm wishes to compete
• How does it wish to capture a part of the value to
be created
• What delivery model will be used to create,
communicate and deliver the proposed value
• What underlying capabilities are to be developed
and harnessed to make the value creation
process wealth creating and
• What results – in financial and non-financial
terms are to be achieved following the choices
made
COMPETITIVE STRATEGY AND PERFORMANCE
 COMPETITIVE STRATEGY AND
PERFORMANCE
RE-IMAGINE VALUE PROPOSITIONS

CHANGING
BUSINESS
CONTEXT

RE-INVENT RE-ENERGISE
OPERATIONAL CUSTOMER
EXCELEENCE INTIMACY
 Dimensions of Competitive Strategy
[Come under the 3 questions]
Strategic dimensions Description
Specialization Focus on the width of its line, target customer segments and
geographic markets served

Brand Identification Brand Identification over competition based on price, etc.

Push Vs. Pull Using distribution channels for sales or directly developing
brand identification with the end customer

Channel Selection Choice of distribution channels ranging from company -owned

to specialty outlets to broad-line outlets

Product Quality Quality in terms of raw material, specification, features etc

Technological Leadership Technology Leader vs. Imitator/Follower

Vertical Integration Extent to which value added is reflected in level of

Backward/Forward Integration
 Dimensions of Competitive Strategy
Strategy Description
Cost Position Invests in cost minimizing facilities & equipment

Service Ancillary services like engineering assistance, credit etc.

Price Policy Price is a distinct strategic variable

Leverage Financial & Operating Leverage it bears

Relationship w/ Parent Nature of relationship with parent firm influences the objectives
Company of the firm, resources available etc.

Relationship with Home & Whether Home/Host Governments, provide resources/assistance

Host Government to firm or regulate the firms.
 Strategic Groups
• Analytical Tool designed to aid in structural analysis

• Group of firms in an industry which follow same/similar

strategy along strategic dimensions [that determines
competitive success vs other firms]

• Industry can have one or many strategic groups

• Strategic groups differ in their product or marketing

approach but not always
 Mapping the Strategic Groups &
concept of Mobility Barriers
• Strategic group map is an analytical tool since the map displays graphically
competition in an industry and to see how industry changes or trends
might affect it
• Strategic Group Map is thus a map of strategy space instead of price and
volume
• Selection of 2 strategic variables, to be used as axes of the map, must be
carefully selected by the analyst. Some principles for selection of these 2
strategic variable out of so many possibilities are:
– The best strategic variables to use as axes are those that determine the “key mobility
barriers” in the industry[say brand equity and reach of distribution channel in many
FMCG industries]
– In mapping strategy groups, it is important to select strategic variables that do not move
together [for examples, high product differentiation and breadth of product lines should
not serve as axis on the map]
– One can draw strategy map for the same industry, using various combinations of
strategic variables, to get insights on key competitive issues. Hence there is no RIGHT
approach
Mobility Barriers and Group Formation
Why firms belong to certain strategic groups –

– Difference in Skills or resources leading to selecting

different strategies

– Difference in Goals or risk posture

– Historical development of the industry –

– Late Entrants  Costly barriers  Different strategy

than that of incumbents
 VIDEOS ON STRATEGIC GROUPS
• Strategy groups
https://www.youtube.com/watch?v=ek1nlDJj
UWg
• Strategic group mapping
https://www.youtube.com/watch?v=CcF3ZMg
XQrA [5.41 mins]
Characteristics of a Strategic Group [that helps in earning higher
profit vs other players]

Height of
Mobility
Barriers

Higher Entry Barrier to SG

Higher
Far lower rivalry
from firms outside Powers of
SG Higher SG Firms
Rivalry from Bargaining
Other Profit Power vs.
Groups Supp &Cust
potential

Low vulnerability of SG Firms vs substitutes

Vulnerability
to
substitutes
 Strategic Groups and a Firm’s
Profitability: Three Dimensions
• COMMON INDUSTRY CHARACTERISTICS
• Industry wide elements of structure that determine the strength of 5
forces and that apply equally to all firms; some examples of such common
elements are: rate of industry growth, overall potential for product
differentiation, structure of supplier and customer industries, aspects of
technology etc
• CHARACTERISTICS OF THE SPECIFIC STRATEGIC GROUP
• Height of mobility barriers protecting the strategic group
• Bargaining power of the strategic group vs. suppliers and customers
• Vulnerability of the strategic groups to substitutes
• Exposure of the strategic group to rivalry from other strategic groups
• FIRM’S POSITION WITHIN THE STRATEGY GROUP
• See the next slide
 PositionofofFirms
Position Firm within
withinthe
theStrategy
Strategy
Group
Group
• High Competition • If EOS causes cost
affects Profits to reduce, small
firms have lower
profit potential

Degree of Economy of
Competition Scale & Cost
Within position
Firms Within
Strategy Group
Ability to
implement Cost of Entry
its Strategy
• Manage operations • Easy availability of
[order to delivery] skills and resources
• Superior • Time of Entry
Technology/ R&D
 Strategic Groups and Cost Position
• Low cost within group may be crucial but low
cost position overall not sustainable
• If the difference between low cost strategic
groups and those competing on other areas
(such as differentiation, technology) is not large
enough, consumers may switch to other strategic
group
• Relative cost position among groups is key
variable
 SOME BROAD CONCLUSIONS
• Firm’s skills, resources and successful history determine its position
• Strategic group with high mobility barriers have high profit potential
• Existence of multiple strategic groups usually means that the forces of competitive
rivalry are not faced equally by all firms in the industry.
• More the number of strategic groups, more the diversity or asymmetry among firms in
the industry along such parameters as risk taking, time horizon, price levels, quality
levels and so on. These differences will complicate each firm’s understanding of other
firms’ intentions implying chances of repeated outbreaks of warfare.
• Four factors determine how strongly the strategic groups in the industry will interact
in competing for the customers:
– The market interdependence among groups, or to which their customer targets
overlap
– The product differentiation achieved by the groups
– The number of strategic groups and their relative sizes
– The strategic distance among groups, or the extent to which strategies diverge
 Strategic Group As An Analytical Tool
• Assess the height and composition of mobility barriers
• Research and identify the mobility barriers that protect each distinct
strategic groups from attacks from other groups.
• Collate the threats to various strategic groups and try to figure out any
probable shifts in position among firms.
• Identify Marginal Groups who do not belong to any clearly defined
strategic groups and hence may need to think about either exit or enter
another group with supporting actions
• Chart the Directions of Strategic Movement- the map can give insights on
current direction of strategic moves by different firms and probable shifts
by each in the future; arrows can be used to show the general direction of
movement of a strategy group or specific firms within a strategic group
• Identify and Analyze Trends – for example, one can ask questions such as
future viability of some particular strategic groups, directions of
movement of firms of such groups in the future, will the relative gaps
along traditional strategic variables will diminish over time, etc; can help in
predicting future industry evolution.
 STRATEGIC CHOICES
 STRATEGIC CHOICES INVOLVE:
▪ Positioning, based on company’s capabilities,
that helps in defending against competitive
forces[ all 5 competitive forces]
▪ Influencing the balance of forces trough
offensive strategic moves thereby improving
company’s positioning
▪ Anticipating shift in factors underlying the 5
forces and responding to them ahead of
opponents
 STRATEGIC CHOICES
• POSITIONING vis-à-vis current five forces
is the business model of the firm that
and reflects choices regarding:
• TARGET CUSTOMERS
• TARGET COMPETITION
• VALUE PROPOSITION
• VALUE DELIVERY MODEL
 STRATEGIC CHOICES
• Objective of POSITIONING is to either
defend against competitive forces or find
position in the industry where the forces
are weakest.
• INFLUENCING goes beyond defending
and is offensive enough to alter the
relative power of 5 forces
 STRATEGIC CHOICES
 ANTICIPATING takes into account the future
changes in the power of 5 competitive forces
caused by developments in macro-economic
environment, technology, regulations, social
concerns, life style, innovations etc and their
impact on the future profit potential of the
industry [which can be very different from the
present one]
 Such an anticipation goes beyond scenario
building and requires managers to build a Point
Of View [POV] on future industry evolution
 STRATEGIC CHOICES
 The key to survival and growth in an industry is to stake
a position that is less vulnerable to attack from head-to-
head opponents, whether established or new, and less
vulnerable to erosion from the direction of buyers,
suppliers and substitute goods
 Establishing such a position can take many forms viz.:
▪ Building relationship with customers
▪ Product/service differentiation[either substantively
or psychologically]
▪ Integrating forward or backward
▪ Establishing technological leadership and so on
 CONCLUDING REMARKS ON INDUSTRY
ANALYSIS AND COMPETITIVE ADVANTAGE
 Industry economics and nature of competition
are influenced by the collective strengths of five
competitive forces
 Development of sustainable competitive
advantage requires deep understanding of
industry and also the concept of customer value
and strategic options available to competitors
 Sustainability of competitive advantage will
depend on uniqueness of positioning or
strategic posture that is ensured at any point of
time based on the underlying capabilities the
firm has put in place across the value network
 INDUSTRY ANALYSIS REPORT
1. Definition of the industry selected [including subspaces] and logic used to
define the industry; specify other ways to define but not considered
2. History of development of the Industry as defined in 1 above
3. Regulatory and technological forces operating on the industry, pattern of
their past evolution and changes expected in the next 5 years
4. Analysis using Porter’s framework [during the year of analysis]
– Industry economics – Average of all industry players - EBITDA as % of
Sales, ROCE [ considering all players coming under industry definition]
– Bargaining power of suppliers [including consolidation of suppliers]
– Bargaining Power of Buyers [including customer buying processes,
consolidation of buyers, emergence of new channels of distribution
that are leading to re-segmentation of buyers and implications for
industry]
– Bargaining power of complements, considering value each
complement is brining to different players of the industry in terms of
creating competitive advantage
 INDUSTRY ANALYSIS REPORT
4. Analysis using Porter’s framework [during year of analysis]
– Threat of Substitutes [to list important substitutes and their impact as already
visible]
– Industry Rivalry [to provide list of all possible players]
• Observations on intensity of industry-wide rivalry - covering impact on
prices, level of advertisement/ promotion, market share margins etc
• Generic competitive strategies – grouping of strategies made by different
players under 3 categories of generic strategies
• Strategy groups [identify at least 3 strategy groups] and mobility barriers
– Rivalry among competitors within each strategy group and also across
• Specific discussion on:
– Most Successful Companies and their strategy to deal with competitive
force [best 2]
– Least Successful companies and their strategy to deal with competitive
forces [worst 2]
– Any company or companies investing in areas that are likely to help
them build new capabilities or open new areas of value creation not
exploited till the year of analysis
 INDUSTRY ANALYSIS REPORT
- Threat of New Entrants [to list type of organizations that are likely to
enter]
- Most Successful and unsuccessful Companies as on date and their
current strategies to respond to competitive forces
5. Analysis using Porter’s framework [subsections same as item 4]; time line
will be past 5 to 10 years; aim will be to identify key industry drivers that
shaped the industry evolution in the past till the year of analysis]
6. Analysis using Porter’s framework [subsections same as item 4]; time
line will be next 5 to 10 years; aim will be to identify key industry drivers
that will shape the future industry evolution particularly during the next
5 years beginning the year of analysis]
– Special focus on:
• Views on future industry drivers and pattern of industry evolution
as collectively held by most industry players & rationale thereof
• Any independent Point of View [POV] of any key player intending
to shape future industry evolution and rationale there of
 INDUSTRY ANALYSIS REPORT
7. Strategic choices - during the next 5 years beginning the year of analysis -
in respect of following categories of companies:
- Which companies are likely to be most successful during the next 5 years and
what will be their future strategies for expansion and growth [ ref choice of
segments, segment—wise value propositions and segment—wise value
delivery model and possible organic/ inorganic growth model] to deal with
emerging nature of competitive forces ; to examine how the strategies likely
to be chosen by each will shape the future industry evolution or adapt to
future industry evolution or reserve the right to play in the future
– Which companies are likely to be least successful during the next 5 years and
why: what should be their strategies to survive and grow in the future
8. Analysis form Investors perspective (from fund manager's perspective on
the date of the report) - buy, hold, sell stocks in various types of
companies of the industry duly considering future industry evolution
during the next 5 years and relative strengths and preparedness of and
strategic choices made by [or likely to be made] different companies
9. References [detailed references will be needed]
 CASE DISCUSSIONS
THAT FOCUSED ON:
• Brick and mortar industries
• Global industries
• Information and information intensive
industries
• Converging Industries & Industries Subject To
Network Effects
• Technology Intensive industries