Question 1: What are the Industry's Dominant Economic Characteristics?
- Market size and growth rate
- Number of rivals
- Scope of competitive rivalry
- Pace of technological change
- Degree of vertical integration
- Need for economies of scale
- Learning and experience curve effects
Question 2: How strong are the Industry's competitive forces?
- State of competition: where are we now?
o The dynamics of competition are not the same from on industry to another
- The five-forces Model of Competition
o Is the most powerful and widely used tool for assessing the strength of the competitive forces that affect an industry's attractiveness?
Competitive forces
1. Competitive pressures stemming from buyer bargaining power.
2. Competitive pressures coming from firms in other industries to win buyers over to substitute products
3. Competitive pressures stemming from supplier bargaining power
4. Competitive pressures associated with the threat of new entrants into the market
5. Competitive pressures associated with rivalry among competing sellers to attract customers
Question 3: What are the Industry's driving forces of change and what impact will they have? Driving forces analysis has three steps:
1. Identifying the present driving forces, as only 3-4 factors qualify as real drivers of change
2. Assessing how strongly the forces are, individually or collectively, impacting industry attractiveness by affecting demand, competition, and profitability
3. Determining what strategy changes are needed to prepare for the impact of the driving forces
Question 4: How are the industry rivals positions?
- Strategic group mapping
o Is a technique for graphically displaying the different market or competitive position that rival firms occupy in the industry?
- A Strategic Group
o Is a cluster of industry rivals that have similar competitive approaches and market positions?