Chapter 2 - Positioning School and Industry Analysis Flashcards
According to De Wit, how do they define competition?
“Act of working against others, where 2 or more organisations’ goals are mutually exclusive”.
“The rivalry behaviour exhibited by organisations or individuals where one’s win is the other’s loss”.
According to Johnson et Al, how do they define Competitors?
“Firms with similar products and services aimed at the same customer group”.
What is the difference between industry and markets? (Where competitors can be found)
Industry - broader term for sectors/markets, e.g. retail industry, supermarket industry.
Markets - specific areas within an industry where firms compete more directly, e.g. tech industry, video games console market.
Competition can be said to be made up of what 2 elements?
1) Where to compete (corporate strat)
2) How to compete (business strat)
What is the Porter 1980 Competitive Strategy?
Competitive scope vs source/type of CA.
Industry wide/single segment vs low cost/differentiation
Any single segment strat involves focus
What is coopetition?
I.e. cooperative competition
Mutually beneficial partnerships that make both parties more competitive.
E.g. Ford & VW - produced single body car in early 90s which was used in VW Sharan and Ford Galaxy.
These models then competed in the marketplace.
Both benefitted from Os/Ts of the other to decrease unit costs.
What is Porter’s (1980) view on strategy?
Argues you must understand industry structure and competitive forces to strategize effectively.
“Industry structure drives competition and profitability, not whether an industry produces a product/service, is emerging or mature, high tech or low tech, regulated or unregulated”.
What are the key points of the Porter’s Five Forces Model?
NOT all forces equal.
Not all factors are forces, e.g. industry growth and tech change.
Goes beyond data and trends
Dynamic factors can lead to sudden change in implications of the model, so application may not be consistent with strategy.
Looks at en/exogenous drivers of structural change.
Useful model but NOT uncontested.
What is the positioning school?
Concept for consdering the importance of an org’s position within an industry as a key determinant of CA.
What are Grundy’s critiques of Porter’s Five Forces?
“Relatively abstract and highly analytical” - theoretical more than practical, v. unlikely that managers apply it.
"”Highly prescriptive and somewhat rigid” - removes creativity/flexibility within the framework.
“Visual structure is relatively difficult to assimilate” - difficult for managers to understand and implement.
“Requires sig. further development”.
What does Grundy’s thoughts on ‘Rethinking and Reinventing’ this model consist of?
Considering a more systems-based approach or way of thinking.
Looks for connections between forces and how they’re related on/dependent on each other.
What is Grant’s 6th force?
Complements (Complementary Gs/Ss)
These increase the value of the product and suppliers of these create value for the industry.
So suppliers can exercise bargaining power.
Relates to network externalities.
What are network externalities?
Create a positive feedback loop.
Grant (2018) - “Linkages between users of a product or technology that results in the value of that product or tech being positively related to the number of users”.
How is Amazon and example of network externalities?
Online retailing platform with most users.
Complementors favour platforms with lots of users.
Users favour platform with the most complementors (sellers of different products).
