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Competitors Analysis
Threat of
new entrants
Threat of
substitute
Elements of industry structure
Entry Barriers
Economies of scale Rivalry determinants
Proprietary product differences Industry growth
Brand identity Fixed (or storage costs)/Value added
Switching costs Overcapacity
Capital requirements Product differences
Access to distribution Threat of Brand identity
Cost advantage new entrants Switching costs
Access to necessary inputs Diversity of competitors
Proprietary low-cost design Corporate stakes
Government policy Exit Barrier
Expected retaliation
Bargaining
Bargaining Rivalry among power of
power of Industry Customers
Suppliers
Determinants of Supplier Power Determinants of Buyer Power
Differentiation of inputs Buyer concentration
Switching costs of suppliers and firms in Buyer volume
the industry Threat of Buyer swithching costs
Presence of substitute inputs substitute Buyer information
Supplier concentration Ability to backward integrate
Importance of volume to supplier Substitute products
Determinants of
Cost relative to total purchases in the
Substitution Threat Price Sensitivity
industry
Relative price performance of Price/Total purchases
Impact of inputs on cost or differentiation
substitutes Product differences
Threat of forward integration relative to
Switching costs Brand identity
threat of backward integration by firms in
Buyer propensity to substitute Impact on quality/performance
the industry
Buyer profits
Competitive Industry Threat to Industry Profitability
Low Medium High
Threat of substitute
•Positioning determines –
Firm’s profitability above or below industry average
Strategic Advantage
Uniqueness Low cost
perceived by Position
the customer
Particular Focus
Segment only
Low Cost
Primary Activities
• Valuable
• Rare
• Hard to copy
• Non sustainable
ATTRIBUTES OF STRATEGIC
RESOURCES
Strategic Resources:
• Strategic resources create competitive advantage.
• Distinction between strategic and non strategic
resources.
• Not all capital resources are strategically important
because they are necessary for carrying out firm's day to
day activities. E.g. desks, chairs, office furniture etc.
• Strategic resources are beneficial strategies that bind the
entrepreneur to alternative possibilities.
ATTRIBUTES OF STRATEGIC RESOURCES
Competitive Advantage V Sustained Competitive
Advantage
• Competitive advantage occurs when entrepreneur is
implementing a value creating strategy not implemented by
and current or potential competitors.
• Value creation refers to normal gain or growth.
• Sustained competitive advantage is a competitive
advantage with a very important addition. Other firms are
not able to duplicate the benefits of the strategy.
ATTRIBUTES OF STRATEGIC
RESOURCES
Three characteristics of resources to create SCA
1. Valuable Resources
2. Rare Resources
3. Hard to copy Resources (Inimitable)
4. Non-substitutable Resources (Substitutability)
ATTRIBUTES OF STRATEGIC
RESOURCES
1. Valuable Resources:
Resources are valuable when they help the organization
implement its strategy effectively and efficiently. e.g. a
valuable resource exploits opportunities or minimizes
threats in the firm’s environment.
e.g. property, equipment, people, skills like marketing,
financing, accounting etc.
ATTRIBUTES OF STRATEGIC
RESOURCES
2. Rare Resources:
• Valuable resources shared by a large number of firms
cannot be a source of competitive advantage or SCA
because of their wide spread availability.
• A resource is considered rare as long as its not widely
available to all competitor.
e.g. good, location, managers who are considered good
leaders, oil resources etc.
ATTRIBUTES OF STRATEGIC
RESOURCES
3. Hard to Copy Resources:
4. Financial Resources:
They represents money assets. Financial resources are
generally the firm’s borrowing capacity, the ability to raise
new equity and the amount of cash generated by
operations.
Start-up entrepreneurs see that access to financial
resources is the key to getting into business and are a
source of sustainable competitive advantage.
RESOURCE TYPES
READING ASSIGNMENT
RESOURCE TYPES
Emerging Industries:
Mature Industry:
Global Industries:
Competitors Factors
Product Features
Compatibility of Products
Quality of Products
Ease of Use
Price