- Strategic Management Tutorial
- Strategic Management - Home
- Strategic Management - Introduction
- Strategic Management - Types
- Strategic Management - Process
- Strategic Leadership
- Organization Specifics
- Performance Issue
- The Top Leadership
- Entrepreneurial Orientation
- The External Environment
- Organization & Environment
- Analyzing the External Environment
- Judging the Industry
- Mapping Strategic Groups
- Organizational Resources
- The Resource Based Theory
- Intellectual Property
- The Value Chain
- Other Performance Measures
- Company Assets: SWOT Analysis
- Business Level Strategies
- Different Types
- Cost Leadership
- Niche Differentiation
- Focus Strategies
- The Best-Cost Strategy
- Aiding Business Level Strategies
- Competitive Moves
- Competitor's Moves
- Cooperative Moves
- International Marketing Strategies
- Pros & Cons
- Drivers of Success and Failure
- International Strategies - Types
- International Markets - Competition
- Cooperative Level Strategies
- Concentration Strategies
- Vertical Integration Strategies
- Diversification Strategies
- Downsizing Strategies
- Portfolio Planning
- Strategy and Organizational Design
- Organizational Structure
- Creating an Organizational Structure
- Organizational Control Systems
- Legal Forms of Business
- Strategic HR Management
- Growth & Nature
- Organizational & HRM Strategy
- Impact of HRM on Performance
- Strategic Management Resources
- Strategic Management - Quick Guide
- Strategic Management - Resources
- Strategic Management - Discussion
- Selected Reading
- UPSC IAS Exams Notes
- Developer's Best Practices
- Questions and Answers
- Effective Resume Writing
- HR Interview Questions
- Computer Glossary
- Who is Who
Strategic Management - Judging Industry
Judging the industry is an important strategic function. Without the proper understanding of the industry, it is impossible to take strategic decisions regarding the products and services.
It is important to know how big the opportunity is and why it’s worth going after. This means finding the number of customers and what are the revenue possibilities?
Industry Forces and Trends
Now you’ll need to outline what’s happening in the industry. PEST and Porter’s analysis can help in this regard.
P - Political factors − What is the government’s role?
E - Economic factors − What is the state of the economy?
S - Social factors − What are the trends, demographics, consumer attitudes, buying patterns and opinions?
T - Technological factors − What is the effect of changing technological trends on your industry?
Porter's 5 Forces Analysis
Threat of New Entrants − How difficult (or easy) it is for someone to enter your industry? If it’s very easy then it will be crowded with competitors.
Threat of Substitute Products (or Services) − If another product or service could decrease the demand or displace you, there is a risk.
Bargaining Power of Customers − In terms of pricing and terms, how much power does your customer have? Are they organized to use the purchase power?
Bargaining Power of Suppliers − If it’s difficult or near impossible for you to switch, that means the suppliers have the upper hand.
Competitive Rivalry of the Market − Factoring the first four forces, you can arrive at a good understanding of the playing field.
Once you’ve found the size of the market and gained knowledge about the competitors in the industry, you’re going to have to start dropping names and point out your major competitors. For this, a SWOT analysis is important.
S – Strengths − What do competitors have, i.e. technology, brand, people, or lean value chain?
W – Weakness − Is there lack of experienced management, unreliable customer service, and poor customer retention?
O - Opportunities − The advantages: Are there environmental trends or changes that may benefit them?
T – Threats − What are the kind of threats that keeps the competitors worried?
Generic Competitive Strategy
Cost Leadership − This refers to having the capacity to scale operations in order to offer lower prices.
Differentiation − This is where your product or service offers something distinct than those of the current cost leaders and standing out based on the “newness” factor.
Segmentation − It is about the focus on a very specific or “niche” target market and focus on building traction with a smaller market demand.