Chapter 6Analyzing Global Industry

and Competitors

John S. Hill

Chapter Outline

IntroductionWorldwide Industry AnalysisGlobal Competitor AnalysisUsing Market Opportunity and Competitive Analyses to Craft Global Strategies

Figure 6-1: Global Analyses of Industries and

Competitors Worldwide Industry AnalysisIndustry DemandSupply ChainsStructureIndustry Change DriversFinancial BenchmarksKey Success Factors

Competitor AnalysesGlobal, Regional Sales & Market DependenciesSupply Chain Deployments & TrendsStrategic Thrusts

Inputs into Strategic Planning Process (Chapter 7)

Worldwide Industry Analysis

Evaluation of Worldwide Market Demand

Assessing Industry Supply Chains

Industry Structure Drivers of Industry

Change Financial Benchmarks Key Success Factors

Worldwide Industry Analysis

Evaluations of Worldwide Market Demand Global Industry Demand, worldwide sector demand over time

for regions and countries Export Market Demand: uses national export statistics to locate

markets which can be accessed from a given country base Nations Trade Data Yearbook, this source uses a different

product classification (the standard international trade classification—SITC); shows which nations import specific products

Table 6.2 Global Consumption and Production Trends: Machine Tool Industry (page 209)

Table 6.3 Deriving Harmonized System Product Codes: Computers and Components (page 210)

Table 6.4 Top 25 U.S. Annual Exports of Automatic Data Processing Machines (page 211)

Worldwide Industry Analysis

Assessing Industry Supply Chains Locating Import Sources of Supply, the same databases as

the exporting analyses; import statistics show which nations are competitive sellers into a given market

Manufacturing Site Assessment: shows which countries build up expertise in particular sectors. US in computer software, Japan in consumer electronics, etc.

Table 6.5 United Nations Trade Data: Imports/Exports (page 212)

Table 6.6 Top 25 U.S. Annual Imports of Cellular Phones (page 213): shows top foreign sources for US market

Table 6.7 Global Profile: Communications Equipment Industry (page 214): market size, growth, structure, demand drivers, supply chain aspects, profitability, KSFs

Worldwide Industry Analysis

Industry Structure Identifies dominant firms in particular

industries: nationalities, sizes, influence Industry structures are becoming more global

as mergers and acquisitions, particularly among major players (‘mega-mergers’) are increasingly affecting industry competitive landscapes.

Table 6.8 Global Profile: Household Non-Durables Industry (page 215): dominant Unilever and P & G

Worldwide Industry Analysis

Drivers of Industry Change Political Trends Global Change: WTO and IMF improve worldwide

infrastructures and payments mechanisms; increasing numbers of nations are adopting democratic institutions; and more markets adopt capitalism and open up

Regional political trends: trade blocs increase and firms look to multi-market brands and supply chains

National elections and changes in political and economic agendas are constant sources of political uncertainty

Worldwide Industry Analysis

Drivers of Industry Change Economic Trends Global economic growth affects industry global

demand Regional economic growth affects how firms

allocate resources among worldwide operations National economic growth affects country

industry demand and affects national sales goals, manufacturing capacity plans and demand management for individual countries

Worldwide Industry Analysis

Drivers of Industry Change Societal Trends National industrialization efforts: create

demand for new types of financial services, industrial products, consumer products (education, healthcare, brands, labor-saving products)

Societal Priorities: At the regional and country levels, national governments push issues onto corporate agendas (conservation, recycling, rural development, transportation)

Worldwide Industry Analysis

Drivers of Industry Change Technological Trends Societal Effects Religion: reliance on technologies reduces religiosity and

provides new media outlets for alternative viewpoints Demographics: human longevity enhanced; graying of

national populations Education: internet makes vast knowledge bases available Popular Culture: new international media, products and

services have made global icons out of people and brands Company Effects Internet Technologies: gives the public access to companies

via their websites

Worldwide Industry Analysis

Drivers of Industry Change Technological Trends Customer access: internet creates opportunities for

personalized customer relationships Supply chains: suppliers have technological interfaces

with manufacturers, distributors and customers Global Market Access via websites give small companies

opportunities to trade worldwide Human resource needs have changed from financial

capital to human intellectual capital The intranet, makes information and data increasingly

accessible within companies Global financial resource availability has been enhanced

Worldwide Industry Analysis

Financial Benchmarks are important indicators of the industry attractiveness and competitiveness

Key Success Factors (KSFs): strategic expertise, competencies, resources, and competitive capabilities

Global Competitor Analyses

Uses of Global Competitor Analyses

Internal Assessments

External Assessments: Analyzing Competitor Operations

Global Competitor Analyses

Uses of Global Competitor Analysis GCA provides insights into rivals’ strategies and enable

companies to:

Outwit Rivals - detect marketplace changes more quickly than competitors

Outmaneuver Rivals - Being the first to introduce new products and technologies

Outperform Rivals - In terms of new product development, market share, customer satisfaction levels and corporate reputation

Global Competitor Analysis

Internal Assessments Corporate missions: provide overviews of

corporate priorities in terms of products, markets, technology, and corporate culture

Strategic intents: relate to long-term competitive aspirations

Core competencies: are articulations of what companies do better than others – their acknowledged expertise vis-à-vis the rest of the industry: innovation styling, value

Global Competitor Analyses

External Assessments: Analyzing Competitor Operations

Total sales and regional breakdowns show current revenue streams of competitors and regional sales dependencies

Global demand analyses show recent sales trends in specific regions and product areas

Supply Chain Strategy: the efforts firms are making to streamline purchasing, manufacturing, and distribution activities on a worldwide basis

Strategic initiative analyses: highlight management priorities in market expansion efforts

Global Competitor Analyses

External Assessments: Analyzing Competitor Operations Table 6.9 Competitive Profiles: Unilever and Proctor

& Gamble (page 222)—total, regional sales, supply chain and new strategic initiatives

Figure 6.2 Global/Regional Analysis of Principal Competitors (page 223): sales, market shares, strengths, weaknesses

Figure 6.3 Intra-Regional Analyses of Individual Competitors (page 223): regional analysis by country

Figure 6.4 Geographic evaluations of competitor supply chains (page 224): R & D, materials, manufacturing, sales

Using Market Opportunity and Competitive Analyses to Craft Global

Strategies Market Selection

Strategies

Competitive Effects on Strategic Decision-Making

Using Market Opportunity and Competitive Analyses to Craft Global

Strategies Market Selection Strategies Large international companies routinely

monitor market sizes and growth rates in over 150 national markets: large markets and markets with potential are always priorities

Smaller companies may be more selective to avoid head-to-head competition

Table 6.10 Market Size/Growth and Investment Priorities (page 225): divisions into large, medium, small, and growth, stable and declining markets

Using Market Opportunity and Competitive Analyses to Craft Global

Strategies Competitive Effects on Strategic Decision-Making Companies must not only satisfy customers but out-

compete market rivals Market challengers must be careful how they attack strong

market leaders; but few firms are strong everywhere Smaller companies lacking global reach or resources can

use acquisitions, joint ventures or global alliances to attack larger competitors

Large companies can use superior brand names, corporate reputations, cost structures, and technologies to attack weaker competitors

Table 6.11 Global Industry and Competitor Analysis Inputs into Strategy-Crafting and Decision Making (page 226)

Key Points

Analyzing industries on a worldwide scale

Evaluation of market demand

Industry supply chains Industry structure Industry change

drivers Financial benchmarks Analyses of global

competitors

Key Points

Analyzing industries on a worldwide scale has become essential as companies and industry sectors have expanded their global presences throughout international markets.Worldwide industry analyses starts with evaluations of worldwide and regional market demand and demand within individual countries. Export market demand should also be assessed using national and international trade statistics.

Key Points

Industry supply chains can be analyzed to assess international sources of supply, national expertise in manufacturing, and global distribution patternsIndustry structure analyses shows leading companies in particular sectors. Firms can then isolate individual rivals for in-depth competitor analyses of sales and supply chains

Key Points

Industry change drivers should be examined, including trends in global, regional, and national political and economic environments, societal and technological trends.Financial benchmarks are provide guidelines for corporate assessment of business divisions and subsidiariesKey success factors evaluate where to focus corporate efforts: “what they must do well” to be successful in their industry

Key Points

Analyses of global competitors include: Internal assessments of

Rivals’ corporate missions Strategic intents Core competencies

External assessments of Global and regional revenue streams Trends Supply chain strategies Strategic initiatives