Category Archives: Conduct a Company and Industry Analysis

Learn About Michael Porter’s 5 Forces Model using the EBSCO Library Database

English: Porter Generic Strategies

English: Porter Generic Strategies (Photo credit: Wikipedia)

Michael Porter's Diamond of Advantage

Michael Porter’s Diamond of Advantage (Photo credit: Wikipedia)

Illustration of Porters 5 Forces. Illustrates ...

Illustration of Porters 5 Forces. Illustrates article Porter 5 forces analysis (currently available in 11 languages). (Photo credit: Wikipedia)

Català: Michael Porter. Česky: Michael Porter....

Català: Michael Porter. Česky: Michael Porter. Dansk: Michael Porter. Deutsch: Michael Porter. Español: Michael Porter. Suomi: Michael Porter. Bahasa Indonesia: Michael Porter. Nederlands: Michael Porter. ‪Norsk (bokmål)‬: Michael Porter. Polski: Michael E. Porter. Português: Michael Porter. Српски / Srpski: Majkl Porter. Svenska: Michael Porter. Українська: Майкл Портер. 16 лютого 2009. (Photo credit: Wikipedia)

You will use the EBSCO Library Database for this exercise.

 

 

 

 

Watch these Porter’s Model Videos:

1.  Michael Porter Interview

https://www.youtube.com/watch?v=mYF2_FBCvXw

2. http://www.youtube.com/watch?v=DViVtgD0xwE Michael Porter “You Need a Strategy for your Organization”

Go to EBSCO and find the MarketLine Industry Report for “NEW CARS IN THE US”. Read the entire report.

Go to page 14 of 40 in this report and you will see the “Five Forces” Analysis of this industry

Now you are ready to Identify Porter’s Five-Forces Model Table

  1. Create a table with the five forces on the left and snip and insert the 5 forces diagrams into the right side of the table table using the graphics in this report and your snipping tool on your computer under “Accessories”.
  2. Now research your industry form you final project using the same process and find your industry’s 5 forces.
  3. Create a table for your project. You r will tweet these slides at the end of the semester an part of your oral presentationl.

Watch this Generic Strategy Mini Lecture:

http://www.youtube.com/watch?v=V14kuqYEsxE&feature=share&list=ULV14kuqYEsxE

Watch this video: http://www.youtube.com/watch?v=QPu4v_Ae0Vc&index=4&list=ULV14kuqYEsxE

4. Michael Porter Ties it all together at UNC Chapel Hill: “What is Strategy”

http://www.youtube.com/watch?v=KvYwKM5bY0s

5. How to make America more competitive; Michael Porter is interviewed by Charlie Rose

Five forces

Threat of new entrants

Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents (which in business refers to the largest company in a certain industry, for instance, in telecommunications, the traditional phone company, typically called the “incumbent operator”), the abnormal profit rate will trend towards zero (perfect competition).

The following factors can have an effect on how much of a threat new entrants may pose:

  • The existence of barriers to entry (patents, rights, etc.). The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.
  • Government policy
  • Capital requirements
  • Absolute cost
  • Cost disadvantages independent of size
  • Economies of scale
  • Economies of product differences
  • Product differentiation
  • Brand equity
  • Switching costs or sunk costs
  • Expected retaliation
  • Access to distribution
  • Customer loyalty to established brands
  • Industry profitability (the more profitable the industry the more attractive it will be to new competitors)

Threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. For example, tap water might be considered a substitute for Coke, whereas Pepsi is a competitor’s similar product. Increased marketing for drinking tap water might “shrink the pie” for both Coke and Pepsi, whereas increased Pepsi advertising would likely “grow the pie” (increase consumption of all soft drinks), albeit while giving Pepsi a larger slice at Coke’s expense. Another example is the substitute of traditional phone with a smart phone.

Potential factors:

  • Buyer propensity to substitute
  • Relative price performance of substitute
  • Buyer switching costs
  • Perceived level of product differentiation
  • Number of substitute products available in the market
  • Ease of substitution
  • Substandard product
  • Quality depreciation

Bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer’s sensitivity to price changes. Firms can take measures to reduce buyer power, such as implementing a loyalty program. The buyer power is high if the buyer has many alternatives.

Potential factors:

  • Buyer concentration to firm concentration ratio
  • Degree of dependency upon existing channels of distribution
  • Bargaining leverage, particularly in industries with high fixed costs
  • Buyer switching costs relative to firm switching costs
  • Buyer information availability
  • Force down prices
  • Availability of existing substitute products
  • Buyer price sensitivity
  • Differential advantage (uniqueness) of industry products
  • RFM (customer value) Analysis
  • The total amount of trading

Bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes. If you are making biscuits and there is only one person who sells flour, you have no alternative but to buy it from them. Suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

Potential factors:

  • Supplier switching costs relative to firm switching costs
  • Degree of differentiation of inputs
  • Impact of inputs on cost or differentiation
  • Presence of substitute inputs
  • Strength of distribution channel
  • Supplier concentration to firm concentration ratio
  • Employee solidarity (e.g. labor unions)
  • Supplier competition: the ability to forward vertically integrate and cut out the buyer.

Intensity of competitive rivalry

For most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the industry.

Potential factors:

Conduct Company and Industry Research and Analysis Internationally

 

Swot analysis image

Swot analysis image (Photo credit: Wikipedia)

SWOT analysis diagram in English language. Fra...

SWOT analysis diagram in English language. Français : Matrice SWOT en anglais. (Photo credit: Wikipedia)

Your first assignment will involve industry and company research.
I will give you a table that you will complete and turn in on the second class meeting. This project will be completed using Google Drive.

Go to EBSCO and search PepsiCo in Company Profile. Then search “Global Food Products” in Industry Profile. Go to IBIS and search “Soft Drinks”.

Go to Lexis-Nexis search Company directories and Profiles to find Worldscope and Hoover’s. Then go to Proquest-modify the search and go to advanced search add “strategy and search recent 12 months..

Strategic direction requires insights in the form of market intelligence, market size, market growth rates, competitor analysis and other key variables. Industry reports are available for: Telecommunications, Healthcare, Energy and many other industries.

Your Research will be an organized effort to gather information about markets, customers and industries. It is a crucial component of our class. This exercise will offer important information that will allow you to identify and analyze the market and the competition.

You will systematically gather and interpret information about your organization. You will harness the power of research during the semester to support your decision-making and presentation efforts.

Watch these videos: https://www.youtube.com/watch?v=TD7WSLeQtVw

ProQuest search results

ProQuest search results (Photo credit: The Shifted Librarian)

Hoover's Logo

Hoover’s Logo (Photo credit: Wikipedia)

Your research will be conducted using the Library Databases. You will also create a stock portfolio on Yahoo Finance. At the end of the semester, you will submit your data in a “Market Study” Binder.

For example, go to the website “academics” and click on “library”. Then go to EBSCO and click on Business Searching Interface. Type in “Global Wine Industry” and you will find the MarketLine pdf report. It includes the following information that you need to know:

Executive summary, market overview, market data, market segmentation, market outlook, five forces analysis and leading companies.

Here’s an EBSCO list of some of the industries that we will cover in Class with industry participants:

Global Spirits: Diageo

Global Electronics: LG, Toshiba,

Global Hypermarkets and Supercenters and GLobal Food Retail: Metro, Carrefour and Tesco

Global Household Durables: IKEA

Global Consumer Electronics: Phillips, Sony

Global Automobile Manufacturers: Toyota, Hyundai, Honda, Volkswagon, Daimler

Global Food Retail:

Global New Cars

Global Semiconductors

Global Oil and Gas: Gazprom, Petrobras

Global Audio and Video Equipment: Samsung

Global Telecommunications: Telefonica

Global Pharma: Novartis

Global Metals and Mining: Rio Tinto

 

 

If you search “Global Air Transportation”, the link will look like: http://web.b.ebscohost.com.ezproxy.lewisu.edu/bsi/pdfviewer/pdfviewer?vid=10&sid=cf49c074-c7b2-4e02-84cc-af4bdc2b60e5%40sessionmgr114&hid=125

Search “Global New Cars”:

http://web.a.ebscohost.com.ezproxy.lewisu.edu/bsi/pdfviewer/pdfviewer?vid=7&sid=7a83dc31-a7fa-406f-b0a5-8f5b99241ec8%40sessionmgr4004&hid=4106

If you search “Global Precious Metals and Mining”:

http://web.a.ebscohost.com.ezproxy.lewisu.edu/bsi/pdfviewer/pdfviewer?vid=10&sid=18d85859-83d2-423d-9c79-77ecb3216c92%40sessionmgr4004&hid=4106

English: Figure 10: SWOT-Analysis of the organ...

English: Figure 10: SWOT-Analysis of the organic business idea. Belongs to The Organic Business Guide. (Photo credit: Wikipedia)

You can also search for a “company profile” that will provide the following information: company overview, key facts, business description, history, key employee biographies, major products and services, revenue analysis, SWOT analysis, top competitors, company view and locations and subsidiaries.

Swot analysis

Swot analysis (Photo credit: Wikipedia)

Then you will search the Lexis Nexis database for companies. Click on “Company Profile”. Enter the company name and put a check in the Worldscope box. Enter search and you will get a company description, key financials, income statement information, information regarding foreign assets and income margin. The “Ratio” section will provide three years of ratios for your company. At the end of the report, you will find a geographic sales breakdown and sales and operating income by business unit.

Use the snipping tool to enter some of the diagrams into your industry table. To find this tool, go to all programs, accessories and “snipping tool”.

If you were researching Apple, these are some of the resources that you would use to conduct an industry analysis:

Angel with mobile phone

Angel with mobile phone (Photo credit: Akbar Sim)

EuroMonitor Passport: Mobile Phones in the US

Various cellular phones from the last decade

Various cellular phones from the last decade (Photo credit: Wikipedia)

IBIS World: Computer Pheripheral Manufacturing #33411B; Computer Manufacturing #31141A; Operating Systems and Productivity Software #51121A; and Internet Publishing and Broadcasting in the US #51913B

In Lexis Nexis, under company profile search Hoover’s, Disclosure and Worldscope

In EBSCO, find Company Profiles:  look at the SWOT Analysis, Key Executives, and Company overview. Gather global information in the “Global Industry Reports” including: Global Computer and Electronics Retail; Global Mobile Phones and Global Computer Storage and Peripherals.

English: Yerba Buena Center for the Arts (YBCA...

English: Yerba Buena Center for the Arts (YBCA) one week before iPad 2 announcement. (Photo credit: Wikipedia)

Get the Company’s 10K and look for: Company background, business strategy, products, risk factors, stock performance and “Management” discussion of financial issues and segment operating performance. Pay attention to the Corporate Governance Issues.

Fo to Yahoo Finance and generate a Stock Portfolio. Include as many competitors as possible so that you can get a customized daily news bulletin. Buy 100 shares of stock in each company.

Go to the website and get the annual report under “Investor Relations

This plan was created for the Wikimedia Founda...

This plan was created for the Wikimedia Foundation’s strategic planning process and will be used during that process. (Photo credit: Wikipedia)

Use Proquest to find articles on strategic alliances, joint ventures, acquisitions and divestitures.

If you wanted to conduct research on a global food company like Sara Lee; look at some of the following reports:

IBIS Meat, Beef and Poultry Processing #31161

Baking Mix and Prepared Food Manufacturing #31181

file

file (Photo credit: Wikipedia)

Cookie, Cracker and Pasta Production in the US #31182

Coffee Production in the US #31192a

For Global information, use:

1. Packaged Foods and Meat;

2. Global Meat , Fish and Poultry

3. Global Hot Drinks

4. Global Frozen Food

5. Global Bread and Rolls

Here’s an excellent resource:

http://globaledge.msu.edu/industries/food-and-beverage

When you have gathered all of your data, you can complete your Team SWOT Analysis and start your TOWS Matrix.

Use these templates:

1. This worksheet will help you visually organize information about the external environment:

http://www.mindtools.com/pages/article/worksheets/PESTAnalysisWorksheet.pdf

2. After completing a SWOT analysis, you will engage in a matching and converting process using a TOWS Matrix. Matching strengths to opportunities to leverage competitive advantages. Develope conversion strategies to convert or mitigate weaknesses or threats by dinding new markets, diversifying or developing new products. Generate a TOWS Matrix for your project using this format:

http://www.mindtools.com/pages/article/worksheets/TOWSAnalysisWorksheet.pdf

3. Generate a Porter’s Model Worksheet:

http://www.mindtools.com/pages/article/worksheets/PortersFiveForcesWorksheet.pdf

Here’s a Rudyard Kipling Quote to think about:

“I keep six honest serving , they taught me all I knew. Their names were What, Why, When, How , Where and Who.”

Figure 10: SWOT-Analysis of the organic busine...

Figure 10: SWOT-Analysis of the organic business idea. Belongs to The Organic Business Guide. (Photo credit: Wikipedia)

Dr. EveAnn Lovero teaches Strategic Management and International Business at Lewis University in Illinois.

You can research companies like:
Nestle Switzerland Food Producers 206,440 7.40

Novartis (REGD) Switzerland Pharmaceuticals & Biotechnology 188,471 6.76

Roche Hldgs (GENUS) Switzerland Pharmaceuticals & Biotechnology 176,552 6.33

HSBC Hldgs UK Banks 157,075 5.63

Bayer AG Germany Chemicals 103,823 3.72

Sanofi France Pharmaceuticals & Biotechnology 99,669 3.57

Royal Dutch Shell A UK Oil & Gas Producers 98,243 3.52

GlaxoSmithKline UK Pharmaceuticals & Biotechnology 90,773 3.25

Banco Santander Spain Banks 89,312 3.20

Vodafone Group UK Mobile Telecommunications 86,207 3.09
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