Industry Analysis

STRATEGIC MANAGEMENT INDUSTRY ANALYSIS
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STRATEGIC ANALYSIS: INDUSTRY ANALYSIS
“When an industry with a reputation for difficult economics meets a manager with a reputation for excellence, it is usually the industry that keeps its reputation intact.” Warren Buffet

DEEPAK DATTA
UTA MBA 2011

DKD

Strategy Analysis
Mission Goals and Objectives External Environment Internal Environment

The Strategic Management Process

Strategy Formulation
Business-Level Corporate-Level Strategy Strategy International Strategy

Strategy Implementation
Governance And Control Functional Strategy Organization Design Orgn. Culture & Innovation

Strategic Competitiveness

DKD

INDUSTRY AND THE MACROENVIRONMENT
MACROENVIRONMENT
DEMOGRAPHICS LEGAL INDUSTRY ENVIRONMENT SOCIAL

Firm
ECONOMIC POLITICAL

TECHNOLOGICAL

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STRATEGIC MANAGEMENT INDUSTRY ANALYSIS
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INDUSTRY/MARKET DEFINITION
Qualitative approach: Two products are in the same market if they are close substitutes
» Same or similar product performance characteristics » Same or similar occasions for use » Sold in the same geographic markets

SIC (Standard Industrial Classification)/ NAICS (North American Industry Classification System) Codes
» Used by U.S. Bureau of Census to analyze and report on U.S. business activity. DKD

PROFITABILITY OF US INDUSTRIES Median return on equity (%), 1999-2007 199925 20 15 10 5 0 ROE 1999-2007 -5 -10 -15 Pharmaceuticals Tobacco Food Consumer Products Petroleum refining Medical Products & Equipment Apparel Computer Software Health Care Furniture Motor Vehicles & Parts Forest and Paper Products Telecommunications Airlines

Source: Grant (2009)

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INDUSTRY ANALYSIS
Industry segmentation/Strategic mapping Strategic group characteristics, attractiveness Likely impact of macroenvironmental changes Implications for strategy
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STRATEGIC MANAGEMENT INDUSTRY ANALYSIS
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INDUSTRY ANALYSIS
Industry