Pop Quiz 1 Flashcards
(10 cards)
- How should we define the industry in the first paragraph of writing external assessment?
*You should define the industry briefly by naming the industry, major business segments, and geographical coverage of the industry.
*Do not add anything else in the first paragraph to keep it concise.
*Keep the analysis broad (at the industry level), and do not mention the name of the company in the external assessment section.
- What are key success factors (as defined in the Guidelines for Analyzing and Writing Cases)?
- Key success factors are the resources and capabilities that will be required for any organization to take advantage of the opportunity or neutralize the threat in the future.
- They will provide a link to the internal analysis, where you would look for the required resources and capabilities in the specific firm you are studying.
- What are the three steps in writing the external assessment section for each opportunity or threat (as explained in the Guidelines for Analyzing and Writing Cases)?
o Identification: Name the opportunity or threat and frame it accordingly (positive for opportunities and negative for threats).
o Evidence: Provide positive evidence of the existence of the opportunity or threat, ensuring that the absence of a threat is not sufficient to be listed as an opportunity.
o Key Success Factors: Write at least two relevant key success factors for each opportunity/threat discussed and provide the rationale for each of the key success factors.
- Using the three steps (mentioned in Question 3 above), write a paragraph on an opportunity or threat in the electric car industry.
- Identification: One significant opportunity in the electric car industry is the increasing global commitment to reducing carbon emissions, which is driving demand for electric vehicles (EVs).
- Evidence: Governments worldwide are implementing stricter emissions regulations and offering incentives for EV adoption. For instance, many countries have set ambitious targets to phase out internal combustion engine (ICE) vehicles, with some aiming for complete bans on new ICE sales by 2030 or 2040. This regulatory environment creates a favorable landscape for EV manufacturers to expand their market share and innovate in sustainable technologies
- Key Success Factors:
1) Battery Technology Advancements: The development of more efficient, cost-effective batteries is crucial for enhancing the range and affordability of electric vehicles. As battery technology improves, it will reduce the overall cost of EVs, making them more accessible to a broader consumer base.
2) Charging Infrastructure Expansion: A robust and widespread charging infrastructure is essential for alleviating consumer range anxiety and promoting EV adoption. Companies that invest in or partner with charging network providers will be better positioned to capture market share as more consumers transition to electric vehicles.
- Compare the problems and prospects of electric vs. other (i.e., Internal Combustion Engine-(ICE)) cars considering and explaining various factors how they are likely to influence in the future.
Problems:
o Battery Technology and Range Anxiety: Many consumers are hesitant to switch to EVs due to fears of running out of charge, especially in areas with limited charging infrastructure.
o Infrastructure Challenges: In many areas, there are not enough charging stations to support a significant increase in EVs on the road.
o High Costs: Overall, the high costs of EVs hinder the mass adoption of EVs and limit their market growth potential.
Prospects:
o Technological Advancements: The future of electric vehicles is promising, with ongoing advancements in battery technology expected to improve energy density, reduce costs, and enhance charging speeds.
o Government Support and Incentives: Many governments are actively promoting electric vehicles through incentives, subsidies, and investments in charging infrastructure. This support is likely to continue as countries strive to meet climate goals and reduce reliance on fossil fuels.
o Consumer Preferences: As awareness of environmental issues grows, consumer preferences are shifting towards sustainable transportation options. Electric vehicles are increasingly viewed as a desirable choice due to their lower operating costs and environmental benefits.
- What strategies would you recommend for the companies in the automobile industry (including electric and ICE cars)?
o Invest in Research and Development: Automakers should prioritize R&D to advance battery technology and improve vehicle performance. This includes exploring alternative battery chemistries and investing in solid-state batteries, which promise higher energy densities and faster charging times.
o Expand Electric Vehicle Offerings: Companies should diversify their electric vehicle portfolios by introducing a range of models, including affordable options for mass-market consumers. This strategy will help capture a broader audience and meet varying consumer needs.
o Enhance Charging Infrastructure Partnerships: Collaborating with charging network providers to expand charging infrastructure is crucial. Automakers should invest in or partner with companies that develop fast-charging stations to alleviate range anxiety and encourage EV adoption.
o Focus on Sustainability and Brand Image: Companies should emphasize their commitment to sustainability in their marketing strategies. This includes promoting the environmental benefits of electric vehicles and highlighting efforts to reduce the carbon footprint of their manufacturing processes.
o Adapt to Regulatory Changes: Automakers must stay ahead of regulatory changes by proactively developing compliant vehicles and engaging with policymakers to shape favorable regulations. This will ensure that they remain competitive in a rapidly evolving market.
- What are strategic groups? Explain with an example using a diagram. What are their implications for industry analysis?
Strategic Groups are clusters of firms within an industry that have similar business models or strategies. They compete more directly with each other than with firms outside their group.
Example Diagram: Imagine an industry with two dimensions: price (low to high) and quality (low to high). You could have four strategic groups:
* Group A: Low price, low quality (e.g., budget airlines)
* Group B: Low price, high quality (e.g., discount retailers with good service)
* Group C: High price, low quality (e.g., luxury brands with lower quality products)
* Group D: High price, high quality (e.g., premium brands)
Implications for Industry Analysis:
- Competitive Dynamics: Understanding strategic groups helps firms identify their direct competitors and the competitive dynamics within the group.
- Market Positioning: Firms can assess their positioning relative to others and identify opportunities for differentiation.
- Mobility Barriers: It highlights barriers that may prevent firms from moving between groups, affecting competition and strategy formulation.
- Explain the major forces in the macro-environment that can impact attractiveness of an industry.
- Macroeconomic Forces: Economic growth, interest rates, inflation, and unemployment can affect consumer purchasing power and demand for products.
- Political and Legal Forces: Regulations, trade policies, and political stability can influence industry operations and market entry.
- Social Forces: Changes in consumer preferences, demographics, and lifestyle trends can impact demand for products and services.
- Technological Forces: Innovations and technological advancements can create new opportunities or disrupt existing industries.
- Global Forces: Growth in emerging economies can present new opportunities for businesses but also challenges related to local competition and regulations.
- Explain the following concepts with an example of each: (a) Punctuated Equilibrium: (b) Complementors: (c) Mobility Barriers:
(a) Punctuated Equilibrium: This concept refers to periods of stability in an industry that are interrupted by significant changes or disruptions. For example, the rise of digital photography disrupted the traditional film photography industry, leading to a rapid decline in film sales and the emergence of new business models.
(b) Complementors: Complementors are products or services that enhance the value of another product. For example, smartphones and mobile applications are complementors; the value of a smartphone increases with the availability of useful apps.
(c) Mobility Barriers: Mobility barriers are obstacles that prevent firms from moving between strategic groups. For example, a high-end luxury brand may face mobility barriers in entering a low-cost market due to brand perception, cost structure, and customer loyalty.
- Bring up important issues regarding the pros and cons of electric vs. ICE cars from your own experience or something you have seen on the News, Business Publications, or social media, e.g., Problems of Lithium-Ion Batteries, Problems of Lithium-Ion Extraction in SA:
Pros of Electric Vehicles:
- Environmental Benefits: EVs produce zero tailpipe emissions, which significantly reduces air pollution in urban areas. This is particularly important as cities face increasing health issues related to air quality.
- Lower Operating Costs: EVs generally have lower fuel costs compared to gasoline or diesel vehicles. The cost of electricity is often less than that of fossil fuels, and EVs have fewer moving parts, leading to lower maintenance costs.
- Government Incentives: Many governments offer tax credits, rebates, and incentives for purchasing EVs, making them more financially attractive to consumers.
- Technological Advancements: Continuous improvements in battery technology are increasing the range and efficiency of EVs, making them more viable for everyday use.
Cons of Electric Vehicles:
- Battery Issues: Lithium-ion batteries, while effective, have limitations such as range anxiety (fear of running out of charge) and long charging times compared to refueling an ICE vehicle. This can be a significant drawback for consumers who need to travel long distances frequently.
- Environmental Impact of Battery Production: The production of lithium-ion batteries involves significant environmental concerns, including the extraction of lithium, cobalt, and nickel. Mining practices, particularly in regions like South America, can lead to water shortages and ecological damage, raising ethical concerns about sourcing materials.
- Recycling Challenges: The recycling of EV batteries is still in its infancy, and there are concerns about how to manage battery waste and the environmental impact of disposal.
- Infrastructure Limitations: In many areas, charging infrastructure is still underdeveloped, making it inconvenient for EV owners, especially in rural or less populated regions.
