MBA 101 UNT 1 0

Strateg|c Management
9 12 September 2010(S
th
hour)
Mkarunakaran LecLurer
MBA 101 UNT 1 1
erew of lasL class
unl1 1
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1odays Lopc
orLers le lorces Model
CompeLLe Changes uurng lndusLry LoluLon
MBA 101 UNT 1 3
1odays news
2010 Pakistan fIoods
http://en.wikipedia.org/wiki/2010_Pakistan_fIoods
orLers le lorces Model
8usness olcy and SLraLegc ManagemenL MrM!eyaraLhnam
MBA 101 UNT 1 4
orLers le lorces Model lnLroducLon
- An lndusLry conssLs of a group of companes offerng producLs or serces whch
are smlar and acL as a subsLLuLe for each oLher
- SLraLegc analyze compeLLe forces wLhn an ndusLry Lo denLfy opporLunLes
and LhreaLs facng a frm
- A model for analyzng Lhe ndusLry enronmenL s deeloped by MchaelLorLer
an auLhorLy on compeLLe sLraLegy
- 1hs model s known as fe force model
MBA 101 5 UNT 1
orLers le lorces Model
le force model
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11hreaL of new LnLry
1 Lconom|cs of Sca|e lnLel has sgnfcanL cosL adanLage due Lo scale economcs n
producLon and sale of mcroprocessors
2 roduct D|fferent|at|on Peay aderLsemenL has been done for LoleL soaps such
as Lrl Lux and Lfeboy Lo buld brand loyalLy
3 Cost Advantage MS uS peraLng sysLem for l8M C gae a key adanLage
4 Cap|ta| kequ|rements Masse nesLmenLs s requred Lo enLer n Lo arcrafL and
mneral exLracLon
S Access to d|str|but|on channe|s small frms fnd dffculL and large frm fnd easy
1lMLx creaLe own dsLrbuLon sysLems for Ls waLches
6 Government o||cy CoernmenL can lmL some ndusLry Lo enLer n Lo Lhe markeLs
MBA 101 7 UNT 1
Accordng Lo orLer a suppler s sad Lo be powerful f Lhe followng condLons
preal
- uomnaLon of suppler ndusLry eLroleum ndusLry
- roducL/Serce s dfferenLaLed a unque where L has bulL up swLchng
cosLs(Word processng sofLware)
- SubsLLuLes are noL easly aalable LlecLrcLy
- A urchasng frms buys a small quanLLy of Lhe supplers goods and serces
and L s unmporLanL Lo Lhe suppler
28arganng ower of Supplers
MBA 101 8 UNT 1
8arganng ower of 8uyers
Accordng Lo orLer Lhe buyers are powerful n Lhe followng crcumsLances
- 1he supplers are more n number buL Lhe buyers are few
- 1he buyers buy n large quanLLy
- 1he cosL of changng suppler s noL much
- 1he suppler depends on Lhe buyer for a large percenLage of Lher LoLal orders
- 1he purchased Lem s noL mporLanL Lo Lhe fnal qualLy or prce of buyers producL
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SubsLLuLe roducLs
SubsLLuLes are Lhose whch saLsfy smlar needs Lhough appear Lo be dfferenL
1ea s a subsLLuLe for coffee waLer s consdered a subsLLuLe of sofL drnks and
saccharne s ewed as a subsLLuLe for sugar
Accordng Lo porLer 'subsLLuLe producLs lmL Lhe poLenLal reLurns of any
ndusLry by placng a celng on prce frms n Lhe ndusLry can charge"
MBA 101 10 UNT 1
alry among exsLng players
k|va|ry |s weak
Companes can rase prce and earn greaL profLs
k|va|ry |s Strong
Companes wll reduce prce and earn less profLs
Intens|ty of r|va|ry |s due to three reasons
- lndusLry compeLLe sLrucLure
- uemand condLons
- 1he heghL of Lhe exL barrers n Lhe ndusLry
MBA 101 11 UNT 1
SLraLegc Croups CompeLLe Changes durng lndusLry eoluLon
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- An lndusLry conssLs of number of frms lrms s an ndusLry ofLen dffer
from each oLher wLh respecL Lo producL qualLy cusLomer serce prce
polcy dsLrbuLon channel aderLsemenL polcy promoLon LargeL segmenL
and Lechnologcal channel
- 1he SLraLeges followed by companes n one sLraLegy group wll dfferenL
from Lhe sLraLegy pursued by oLher group
- 1he basc sLraLegy for Lhe company s almosL Lhe same for all Lhe frms
SLraLegc Croups lnLroducLon
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SLraLegc Croups uS SLeel lndusLry
x Axs roducLon of sLeels n mllon Lones
? axs CosL of producLon per Lonne n $
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US steel
LTV
steel
Special
steel
North west
steel
Florida steel
Cheap
imports
SLraLegc Croups harma lndusLry
x Axs u Spendng
? axs rces Charged
Pgh
Low
Low Pgh
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Proprietary
Group
Merck
Pfizer
Generic
group
Dr.Reddy
s Lab
Ranbaxy
Strategic Types
Mles and Snow hae classfed Lhe sLraLegc Lypes n Lo
Defenders LmLed producL focus on effcency and cosL reducLon Lhs does
noL encourage Lhem Lo Lry nnoaLe deas
rospectors 8road producL Lems focus on nnoaLon and opporLunLes focus
on creaLLy and makes Lhem somewhaL neffcency
Ana|yzers 1hey operaLe n arable and sLable markeL Lhey focus on effcency
creaLLy and nnoaLon
keactors uo noL hae conssLenL sLraLegy absence of well nLegraLed sLraLegy
sLrucLure culLural relaLonshp
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CompeLLe Changes uurng lndusLry LoluLon
1he ndusLry lfe cycle model s used for analyzng Lhe effecLs of ndusLry eoluLon on
compeLLe forces 8ased on Lhe ndusLry lfe cycle model ndusLry enronmenL
could be denLfed as follows
Lmbryonc ndusLry enronmenL
CrowLh ndusLry enronmenL
ShakeouL enronmenL
MaLure ndusLry enronmenL and
ueclnng ndusLry enronmenL
MBA 101
UNT 1
17
Stages of ndustry Life Cycle
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D
e
m
a
n
d
Time
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erew of Lodays class
orLers le lorces Model
CompeLLe Changes uurng lndusLry LoluLon
"uestions
WhaL are frms?
WhaL are Lhe fe forces n orLers model?
WhaL are Lhe Lypes of Lhe sLraLegy?
WhaL are Lhe sLeps n ndusLry lfe cycle?
MBA 101 UNT 1 20