In this exercise, you will apply strategic tools to analyze a particular industry and a particular organization in that industry. You should choose an industry and a organization that you are personally familiar with. The organization that you choose can be an entire company, or a division of a larger diversified organization.
You and your organization will get the most benefit from doing this exercise if you choose the industry and organization where you currently work, but if you wish, you may choose a different industry and organization. For example, you may decide that you should not analyze your own company here because you need keep information about your company confidential. In that case, simply choose a different organization and industry that you know well.
Please type your answers into the spaces provided in this assignment document, and then submit the completed file by uploading the completed document to “Submit Deliverables” section of the Business 634M web site on Blackboard. The file name of the submitted document should start with your last name – e.g., “Jones-ApplicationExercise.doc”. The strategy application exercise constitutes 10% of the final course grade, and is due on Monday December 8.
This exercise is divided into five parts – industry analysis, competitive advantage, corporate-level strategy, business-model innovation, and implications.
Part 1 – Industry Analysis
1) Industry choice: What industry have you selected? In 1 or 2 sentences only, please BRIEFLY describe how you gained personal familiarity with that industry.
2) Intra-industry rivalry: On a scale of 1 to 10 (where 1 = no threat at all, and 10 = extremely severe threat), how severely is the overall profitability of the industry threatened by intra-industry rivalry among the current competitors? In about 4 or 5 sentences only, please BRIEFLY explain how you reached that conclusion. When answering this question, carefully consider the set of factors that frequently affect rivalry, listed in the box below.
Factors frequently affecting rivalry:
Degree of seller concentration?
Rate of industry growth?
Significant cost differences among firms?
Excess capacity?
Cost structure of firms: sensitivity of costs to capacity utilization?
Degree of product differentiation among sellers?
Brand loyalty to existing sellers?
Cross-price elasticities of demand among competitors in industry?
Buyers’ costs of switching from one competitor to another?
Are prices and terms of sales transactions observable?
Can firms adjust prices quickly?
Large and/or infrequent sales orders?
Use of “facilitating practices” (price leadership, advance announcement of price changes)?
History of “cooperative” pricing?
Strength of exit barriers?
3) Potential entrants: On a scale of 1 to 10 (where 1 = no threat at all, and 10 = extremely severe threat), how severely is the overall profitability of the industry threatened by the potential entry of new competitors? In about 4 or 5 sentences only, please BRIEFLY explain how you reached that conclusion. When answering this question, carefully consider the set of factors that frequently affect entry barriers, listed in the box below.
Factors frequently affecting entry barriers:
Significant economies of scale?
Importance of reputation or established brand loyalties in purchase decision?
Entrants’ access to distribution channels?
Entrants’ access to raw materials?
Entrants’ access to technology/know-how?
Entrants’ access to favorable locations?
Experience-based advantages of incumbents?
“Network externalities”: demand-side advantages in incumbents from large installed base?
Government protection of incumbents?
Perceptions of entrants about expected retaliation of incumbents/reputations of incumbents for
