BU481 Lecture Notes - Lecture 3: Pest Analysis, Variable Cost, Switching Barriers
Document Summary
Industry analysis: understand where value is being derived in industry, understand drivers of profitability, understand why some industries are more attractive than others, understand macro-economic influences/trends, understand key success factors, tools for industry analysis. Industry value system: porter"s 5 forces, pest, key success factors, complementary coverage between each tools, and each is used in different situations. Value system: any activities the company should to leave others in the system (ex. Divest): any activities that the company should integrate forward or backward, how to achieve competitive advantage in the industry given the activity"s unique cost drivers, profitability at each stage indicates power/importance of that value system stage. Porter"s 5 forces (industry: threat of entrants, buyers, suppliers, substitutes, rivalry. Collective strength of the forces determines ultimate profit potential of an industry. Threat of entry: to keep this threat low, economies of scale, product differentiation, capital requirements, cost advantages, access to distribution channels, government policy.
