Strategic Thinking in a Complex World - Session 5

A situation where a large number of small companies compete in a specific industry.

A process where many companies within an industry merge or acquire each other, resulting in a smaller number of larger companies.

When companies from different industries start serving the same customer needs, often driven by technological advancements.

An industry structure with a limited number of large companies dominating the market, often due to high barriers to entry.

Factors that influence the long-term direction and growth of an industry, such as technology advancements, globalization, and regulatory changes.

The extent to which companies in an industry are similar or different in terms of their products, services, and marketing strategies.

The ease with which a company can enter or exit an industry.

The amount of money a company has invested in an industry that can't be easily recovered.

The rate at which an industry is growing or shrinking.

The number of companies competing in an industry.

The extent to which companies in an industry are able to control the price of their products or services.

The ease with which companies can enter or exit an industry.

The extent to which companies compete against each other in an industry.

The power that suppliers have over a company. This is high when suppliers have bargaining power, such as when switching costs are high for the buyer.

The ease or difficulty for a buyer to switch to a competitor's product or service. High switching costs make suppliers more powerful.

The number of buyers in the market. A smaller number of large buyers gives them more bargaining power.

A supplier's ability to control their production process and potentially even sell directly to the customer, thus bypassing intermediaries. This gives the supplier more power.

How reliant a buyer is on a specific supplier. Low dependence means the buyer has more options and less pressure.

A situation where multiple companies compete fiercely for market share.

When the market is growing slowly and competition is intense.

High fixed costs mean a company must sell a lot to cover its expenses. This can lead to aggressive competition to increase sales.

High Exit Costs discourage companies from leaving an industry, leading to more competition.

If products are very similar, companies need to find other ways to compete, such as price or promotions.

The difficulty for new companies to enter an industry. High entry barriers make it harder for new competitors to challenge existing ones.

The extent to which existing companies react to new entrants. Aggressive reactions can deter new competitors.

Advantages held by existing companies that are difficult for new entrants to replicate. Examples include brand recognition, established customer relationships, or unique technologies.

The process of identifying the relevant companies and industries that directly compete with the company being analyzed.

Identify the different groups that exert pressure on a company's profitability, including competitors, potential entrants, buyers, suppliers, and substitute products.

Assess the strength of each competitive force – how much pressure they apply – by considering factors like pricing power, bargaining power, and market share.

Focus on the most significant pressure point affecting a company's profitability, not simply the average pressure.

A framework that analyzes competitive forces to determine the potential for profitability in an industry. It identifies factors like competition, potential entrants, buyer power, supplier power, and threats from substitutes.

A framework that expands on Porter’s Five Forces by considering the role of complementors, cooperation, and coordination in influencing industry profitability.

Companies that provide products or services that enhance the value of a company's products or services to customers.

The Value Net framework emphasizes the potential for increased profitability through collaboration and coordination among companies in an industry.

The number of suppliers present in the market. A highly concentrated market means there are few suppliers, whereas a less concentrated market has many competitors.

The ability of suppliers to enter a specific industry. A high barrier to entry means it is difficult for new suppliers to join the market.

The degree to which suppliers offer unique products or services. Highly differentiated products are complex, specialized, or hard to substitute.

The ability of suppliers to enter a market and compete with existing players. Factors like regulations, capital requirements, or technology can make entry difficult or easy.