CAOT 31 Lecture Notes - Lecture 16: Dynamic Capabilities, Path Dependence, Oligopoly
3 Oct 2020
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External analysis: 2 most commonly used tools: 1) porters five-force and 2) stakeholder analysis. Porter"s five-force model: initially developed to assess industry attractiveness, but in practice also assesses a specific firm"s external environment. Industry attractiveness: treats all competitors as roughly the same. Objective: ascertain whether the industry as a whole will be profitable. Specific external environment: often identifies ways in which the external forces differentially affect the firm vis- -vis its competitors. Objective: identify threats and opportunities for the firm. (emphasized in this chapter) The 5 forces: the degree of existing rivalry is influenced by a number of factors, number and relative size of competitors. Switching cost: factors that make it difficult or expensive to change suppliers or buyers, such as investments in specialised assets to work with a particular supplier or buyer. If the firm faces switching costs, this will likely increase buyer"s bargaining power.
