Page 1

Situation Analysis

Page 2

Hierarchy of External Influences

Firm

• Political/Legal• Economic• Socio-Cultural• Technical• Global

• Five Forces• Competitors• Industry Structure• Strategic Groups• Political/Legal

Page 3

Industry Vital Statistics

•Industry scope: How is the industry defined? What are its boundaries?

•General: Size, growth rate

•Key Players: Rivals, customers, suppliers, government agencies

•Structure: Fragmented vs. concentrated; vertically integrated, etc.

•Performance: Profit levels, trends, distribution of, variability of

Page 4

Life Cycle Stage

Growth is GoodG

row

th R

ate

Time

Page 5

Innovation Cycle Time

Slow is good, unless you’re the one driving innovationG

row

th R

ate

Timet1 t2 t3

Page 6

Concentrated Structure

Dominant Player

No. 2

Fringe Players

Concentrated is good, if you’re No. 1 or No. 2 …or, if you’re a smaller player in a protected niche

Page 7

Fragmented Structure

No Dominant Player

No Clear No. 2

MultiplePlayers

Fragmented is good, if you’ve got the best strategy/technology

Page 8

Threat of Substitute Products

Threat of Substitute Products

Threat of

New Entry

Threat of

New Entry

Bargaining Power

of Buyers

Bargaining Power

of Buyers

Bargaining Power

of Suppliers

Bargaining Power

of Suppliers

(+) or (-) or no influence on...

Profit = (P – C) x Qty.

Intensityof

Rivalry

Intensityof

Rivalry

Porter’s Five-Forces of Industry Analysis

Page 9

Plays out in the following ways:

** Jockeying for strategic positionJockeying for strategic position

** Price competitionPrice competition

** Advertising wars -- Coke vs. PepsiAdvertising wars -- Coke vs. Pepsi

** New product introductions – Cheerios cereal (14 types)New product introductions – Cheerios cereal (14 types)• Regular Cheerios• Apple-Cinnamon Cheerios• Honey-Nut Cheerios• Frosted Cheerios• Three-Grain Cheerios• Cheerios with Berries (blueberry, strawberry, banana, mixed)• Yogurt Cheerios (vanilla or straw) • Fruity Cheerios (like Fruit Loops, only healthier)

** Increasing consumer warranties or serviceIncreasing consumer warranties or service

Intensity of Rivalry Among Existing CompetitorsIntensity of Rivalry Among Existing Competitors

Page 10

Situation Analysis Summary Grid

Serious Mild Mild GreatThreat Threat No Impact Opportunity Opportunity

  Economics          

  Technology          

Remote Socio-Cultural          

Environment Political-Legal          

Global          

Environment          

Demographics          

New Entrants          

Competitive Substitutes          

Environment Buyers-Customers          

Suppliers          

  Rivalry          

TOTAL IMPACT         

Page 11

Situation Analysis – Newspapers

Serious Mild Mild GreatThreat Threat No Impact Opportunity Opportunity

  Economics          

  Technology          

Remote Socio-Cultural          

Environment Political-Legal          

Global          

Environment          

Demographics          

New Entrants          

Competitive Substitutes          

Environment Buyers-Customers          

Suppliers          

  Rivalry          

TOTAL IMPACT         

Strategic Map

Strategic Dimension / Coordinate #1

Str

ate

gic

Dim

en

sio

n

/ C

oord

inate

#2

Strategic Map: Beer

(Pre-light / Pre-microbrew)

Dark/Full

Light

Low Price High Price

Amber

Regular

Strategic Map: Beer

(Current)

Old Swill

GuinnessBlackened Voodoo

Anchor Porter

AmstelCardinal

Miller LiteBud Light

Sam Adams Bass Ale

Pilsner Urquell

Killian’s RedRed Wolf

Amber Bock

Lowenbrau

Killian’s Brown Lowenbrau Dark

Milwaukee’s Best Light

BudMiller

Dark/Full

Light

Low Price High Price

Amber

Regular

Strategic Map: Beer-like Beverages?

Mike’s Hard

Lemon

WoodchuckCider

SmirnoffIce

NewStrategic

Dimension

Dark/Full

Light

Low Price High Price

Amber

Regular

GuinnessBlackened Voodoo

Anchor Porter

Sam Adams Bass Ale

Pilsner Urquell

Killian’s RedRed Wolf

Milwaukee’s Best Light

BudMiller

Situation Analysis of Coffee Industry

Major Rivals:

Major Products:

Customer Segments:

OtherCharacteristics:

Page 17

Serious Mild Mild GreatThreat Threat No Impact Opportunity Opportunity

  Economics          

  Technology          

Remote Socio-Cultural          

Environment Political-Legal          

Global          

Environment          

Demographics          

New Entrants          

Competitive Substitutes          

Environment Buyers-Customers          

Suppliers          

  Rivalry          

TOTAL IMPACT         

Situation Summary Grid –Coffee Industry

Strategic Dimension #1

Str

ate

gic

Dim

en

sio

n

#2

Strategic Map of Coffee Industry

Don’t use Priceas a dimension

Implications

We worry about…

1.

2.

3.

We are encouraged by…

1.

2.

3.

Page 19