工商管理专业MBALectureLectu(3).ppt

Lecture Eight Dr Ita ODonovan Dr Ita ODonovan Beechgrove Associates1 Dr Ita ODonovan Beechgrove Associates2 The natural EnvironmentTh Demographic Structure Social Structure The Natural Environment Demographic Structure Social Structure The National/ International economy Technology Government and politics The Industry Environment Suppliers Competitors Customers Perfect Competition OligopolyDuopolyMonopoly Dr Ita ODonovan Beechgrove Associates3 ConcentrationMany FirmsA few FirmsTwo FirmsOne firm Entry and Exit Barriers No BarriersSignificant BarriersHigh Barriers Product Differentiation Homogeneous Product ( commodity) Potential for Product Differentiation Information Availability No impediments to information flow Imperfect availability of Information Dr Ita ODonovan Beechgrove Associates4 SUPPLIERS INDUSTRY COMPETITORS Rivalry among existing firms POTENTIAL ENTRANTS SUBSTITUTES BUYERS Threat of new Entrants Threat of new substitutes Bargaining power of buyers Bargaining power of suppliers Dr Ita ODonovan Beechgrove Associates5 SUPPLIER POWER Factors determining power of suppliers relative to producers; same as those determining power of producers relative to buyers- see Buyer Power Box INDUSTRY RIVALRY Concentration Diversity of competitors Product differentiation Excess capacity and exit barriers Cost conditions THREAT OF SUBSTITUTES Buyer propensity to substitute Relative prices and performance of substitutes THREAT OF ENTRY Capital Requirements Economies of scale Absolute cost advantage Product differentiation Access to distribution channels Government and legal barriers Retaliation by established producers BUYER POWER Price Sensitivity Bargaining Power Cost of product relative to total cost Size and concentration of buyers relative to producers Product differentiation, competition between Buyers switching costs; Buyers Information Buyers Buyers ability to backward integrate There are two key perspectives in the debate about influence in the industrial sector Those who believe that the industry shapes the firm And Those who believe that the firm can shape the industry. Essentially this is an environmental question How malleable is the industrial environment ? Another way of looking at this is to say does a firm comply with existing rules or choose to influence and create new conditions? We can take an evolutionary perspective and say that individual firms cannot shape the industry they inhabit. They adapt to survive Survival of the fittest Darwins theory Dr Ita ODonovan Beechgrove Associates7 The Industry creation perspective says that the environment can be manipulated. Rules can be altered more flexibility than seems apparent, Pressure can be applied by those who know how. Advocates of the creation perspective do not deny evolution exists in industry, but they say that is because firms did not challenge and innovative enough. Dr Ita ODonovan Beechgrove Associates8 Industry EvolutionIndustry creation Emphasis onCompliance over choiceChoice over compliance Industry ChangesUncontrollable evolutionary processes Controllable creation processes Change DynamicsEnvironment selects fit firmsFirms create fitting environment Firm success due toFitness to industry demandsManipulation of industry demands Industry malleabilityLow, slowHigh, fast Normative applicationPlay by the rules (adapt)Change the rules (innovate) Firm profitabilityIndustry- dependentFirm-dependent Point of viewDeterministicVoluntaristic Dr Ita ODonovan Beechgrove Associates9 Industry Rules: these are the demands dictated to the organisation by the industry context, that limit the scope of economically rational behaviour. Industry recipes: is a cognitive map that people have about the structure and demands of the industry. Dr Ita ODonovan Beechgrove Associates10 IntroductionGrowthMaturityDecline Buyers and Buyer behaviour High Income purchaser; Buyer inertia, Buyer must be convinced to try product Widening buyer group. Consumer will accept uneven quality Mass market, Saturation, Repeat buying, Choosing among brands is the rule Customers are sophisticated Buyers of the product Products and product change Poor quality, product development and design are key, different design variations, frequent changes Products have technical and performance differentiation. Reliability key for complex products. Competitive improvements Superior quality, less product differentiation, less rapid changes. Standardisation Trade-ins become significant. Little product differentiation. Product quality becomes variable. MarketingVery high marketing costs Costs are high for sales Creaming price strategy Still high advertising costs but lower costs on sales. Advertising and distribution key for nontechnical products. Market segmentation Extend life cycle. Broaden line Service and deals more prevalent. Packaging important Low advert/sales and other marketing Manufacturing and Distribution Overcapacity, short- production runs. High skilled labour content High production costs Under capacity, shift towards mass production, Scramble for distribution, Mass channels Some over capacity, Increase in the stability of manufacturing process. Lower labour skills. Long production runs with known techniques. Distribution is streamlined and effective Mass channels. Mass production Substantial over capacity Speciality channels Dr Ita ODonovan Beechgrove Associates11 IntroductionGrowthMaturityDecline R and DChanging Production techniques Foreign TradeSome ExportsSignificant exports, Few Imports Falling exports, significant imports No exports, significant imports Overall StrategyBest period to increase mkt. share . Rand D, engineering are key functions Practical to change price or quality image. Marketing the key function Bad time to increase market share, particularly if low share company. Having competitive costs becomes key. Bad time to change price image or quality image. Marketing is key CompetitionFew companiesEntry. Many competitors. Lots of mergers and casualties Price competition, Shakeout Increase in private brands Exits, fewer competitors RiskHigh RiskRisks can be taken because growth covers them up Cyclicality sets in Margins and ProfitsHigh prices and margins Low profits Price elasticity to individual seller not as great as in maturity High profits, highest profits, fairly high prices. Lower prices than introductory phase. Recession resistant. Good acquisition climate Falling prices, lower profits and margins. Lower dealer margins. Increased stability of market shares and price structure. Poor acquisition climate- tough to sell companies. Low prices and margins. Falling prices Prices might rise in late decline Dr Ita ODonovan Beechgrove Associates12 An industry is an interrelated whole. Change in one part will have an effect on the whole system. For example one firm introduces a new product that has a knock on effect on the industry. Consideration needs to be given to the following factors when thinking about industry development: Industry Consolidation High mobility/increases consolidation Relationship between Industry Concentration and Mobility Barriers Low or falling mobility/ no concentration Dr Ita ODonovan Beechgrove Associates13 Exit Barriers and Consolidation Exit barriers are an inhibitor to consolidation Long Run profit potential and future structure Phases occur in relation to profit margins, transitions occur during leveling out of growth. Rivalry means weaker firms may exit. Changes in Industry Boundaries Structural changes in industry such as innovations, suppliers might become competitors for example ( forward integration) Firms and their influence on Industry Structure When firms understand their enviro