BU481 Lecture Notes - Lecture 3: Mainframe Computer, Longrun, European Cooperation In Science And Technology
Document Summary
Collective strength of the 5 forces determines ultimate profit potential of an industry. Intense = no company earns spectacular returns on investment. E. g. industries: tires, metal cans, steel: mild = room for high returns. E. g. industries: oil field services + equipment, soft drinks + toiletries. Perfectly competitive industry: competing for position is unrestrained + entry is easy: offers worst prospective for long-run profitability, weaker the forces collective greater opportunity for superior performance. Corporate strategist"s goal = find position in industry where company can best defend itself against the forces / influence them in its favour. Strongest competitive force determine profitability of an industry most important for strategy formulation. Coping w the substitute product becomes number 1 priority. Each industry has underlying structure / set of fundamental economic + technical characteristics: different forces take on prominence in shaping competition in each industry. Companies diversifying through acquisition into industry from other markets cause a shakeup.
