978-0136157397 Chapter 9 Lecture Notes

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Chapter 9: Competitive Analysis and Strategy

Learning Objectives

• Define strategy

• Describe the forces that influence industry competition

• Discuss the causes and effects of global competition

• Differentiate between broad market and narrow target strategies

• Describe the three classifications for strategic positions

• Explain how strategic intent facilitates competitive innovation

• Discuss the theory of hypercompetition

Chapter Overview

Today, many companies are discovering that industry competition is changing from a

purely domestic to a global phenomenon. Thus, competitive analysis must also be carried

out on a global scale. Global marketers must also have an understanding of national

sources of competitive advantage. Porter has described four determinants of national

advantage. Factor conditions include human, physical, knowledge, capital, and

infrastructure resources. Demand conditions include the composition, size, and growth

pattern of home demand. The rate of home-market growth and the means by which a

nation’s products are pulled into foreign markets also affect demand conditions. The final

two determinants are the presence of related and supporting industries and the nature of

firm strategy, structure, and rivalry. Porter notes that chance and government also

influence a nation’s competitive advantage.

Lecture Outline

I. Strategy Defined (p. 243)

II. Industry Analysis Forces Influencing Competition (p. 244)

a. Five Forces

i. Threat of New Entrants

ii. Threat of Substitute Products

iii. Bargaining Power of Suppliers

iv. Bargaining Power of Buyers

v. Rivalry Among Competitors

III. Global Competition and National Competitive Advantage (p. 248)

a. Factor Conditions

i. Human Resources

ii. Physical Resources

iii. Knowledge Resources

iv. Capital Resources

v. Infrastructure Resources

b. Basic Versus Advanced Factors

c. Generalized Versus Specialized Factors

d. Demand Conditions

e. Related and Supporting Industries

f. Firm Strategy, Structure, and Rivalry

g. Other Forces Acting on the Diamond

i. Chance

ii. Government

h. Other Nonmarket Factors

i. Single or Double Diamond?

IV. Competitive Advantage and Strategic Models (p. 256)

a. Generic Strategies for Creating Competitive Advantage

b. Broad Market Strategies

i. Cost-Leadership Advantage

ii. Differentiation

c. Narrow Target Strategies

i. Focused Differentiation

ii. Cost Focus

V. Strategic Positions (p. 261)

a. Variety-Based Positioning

b. Needs-Based Positioning

c. Access-Based Positioning

d. Which Position to Take?

VI. Competitive Innovation and Strategic Intent (p. 263)

a. Layers of Advantage

b. Changing the Rules

c. Collaborating

d. Hypercompetition?

VII. Summary (p. 268)

Tables and Figures

Figure 9-1 Strategy Formulation, Stage I (p. 242)

Figure 9-2 Strategy Formulation, Stage II (p. 242)

Figure 9-3 Forces Influencing Competition in an Industry (p. 245)

Figure 9-4 Determinants of Nations’ Competitive Advantage (p. 250)

Figure 9-5 Influences on the Development of Industries (p. 255)

Figure 9-6 Influences on Domestic Rivalry (p. 256)

Figure 9-7 The Complete System (p. 257)

Figure 9-8 Generic Competitive Strategies (p. 258)

Figure 9-9 Motorcycle and Related Products Revenue Distribution (p. 260)

Table 9-1 Strategic Positions (p. 262)

Sidebars

Sidebar 9-1 IKEA – Creating Unique Value (p. 241)

Sidebar 9-2 IKEA – Cost Focused (p. 257)