lecture 4

Industry evolution

2 types

Fragmented Industry

• Many small firms compete.

• No dominant company.

Examples:
☕ Local coffee shops
🍔 Restaurants
💈 Barber shops

Consolidated Industry

• Few large firms control most of the market.

• Difficult for new firms to enter.

Examples:
✈ Emirates, Qatar Airways
🚗 Toyota, Ford, Volkswagen

Categorizing International Industries

What are they

Multi-Domestic Industry

• Products adapted to each country.

Example: McDonald’s different menus in different countries.

Global Industry

• Similar product sold worldwide.

Example: iPhone.

Regional Industry

• Competes mainly within one geographic region.

Example: Ryanair (Europe).

Strategic groups ?

A set of firms within the same industry that follow similar strategies and possess similar resources and capabilities.

Examples:

• Emirates & Qatar Airways → Premium airlines

• Air Arabia & FlyDubai → Low-cost airlines

Key Point: Firms compete most intensely with firms in the same strategic group.

The 4 Strategic Types (Miles & Snow)

Defender

Focus on efficiency and serving existing markets well.
Example: Starbucks

Prospector

Focus on innovation and pursuing new market opportunities.
Example: Apple

Analyzer

Balance efficiency and innovation by maintaining stable products while adopting proven innovations.
Example: Toyota

Reactor

Lack a clear strategy and respond to changes only when forced.
Example: Nokia

Hypercompetition

A market characterized by:

• Rapid change

• Intense competition

• Short-lived competitive advantages

Key Success Factors (KSFs) meaning

Critical factors that determine whether a firm succeeds in an industry.

Examples:
✈ Airlines → Safety, customer service, route network

🍔 Restaurants → Food quality, service, location

📱 Smartphones → Innovation, brand reputation, product quality

Competitive intelligence and sources

The systematic collection and analysis of information about competitors to support strategic decision-making.

Sources:

• Internet → Company websites, annual reports, social media, news.

• Information Brokers → Companies that sell industry and market research reports.

• Investigatory Services → Consulting firms that legally gather and analyze competitor information.

• Industrial Espionage ❌ → Illegal or unethical collection of competitors’ confidential information.

Forecasting and methods

Definition:
Forecasting is based on assumptions about future events and trends. Incorrect assumptions lead to inaccurate forecasts.

Methods:

• Extrapolation → Uses past data to predict the future.

• Brainstorming → Group generates ideas and predictions.

• Expert Opinion → Uses specialists’ judgment.

• Industry Scenarios → Creates best-case, worst-case, and most likely future situations.