Order Number			45471455714
Type of Paper			Essay
Writer Classification Level			Undergraduate
Style of Writing			MLA/APA/CHICAGO/
Sources and References			5
Number of Pages			4
Paper Instructions   Chapter 3 External and Industry Analysis   External Analysis is the term used to assess the most strategically relevant aspects of a single business company’s macro environment. The assessment of all relevant factors outside the Company’s boundaries External Factors Industry Analysis Driving Forces Key Success Factors Porter’s 5 Forces of Competition Global Environment Natural Environment   5 Factors Components of an External Analysis General Economic Conditions Regulatory and Legal Environment Demographics/Population Societal and Lifestyle Preferences Technology   Industry Analysis   Performing an Industry Analysis provides a strategic view about an Industry’s overall situation and drawing conclusions about whether an Industry represents an attractive investment Economic conditions and competitive traits vary with each Industry   Industry a group of firms whose products have so many of the same attributes that they compete for the same buyers Overall Industry Questions to be answered What are the Industry’s dominant economic features What is the competitive climate What is causing the Industry’s competitive structure and business environment to change What companies are in the strongest/weakest positions What strategic moves are these rival companies planning to make next What are the key factors for competitive success   Is this Industry attractive, and what are the prospects for above average profitability   Dominant Economic Features – Identify Opportunities for Growth Market size Geographic Scope of rivalry (local, regional, national) Market and position of business life cycle (early development, rapid growth, maturity, and saturation) Number of rivals and their relative sizes (fragmented or concentrated) Number of buyers Industry rivals integrated backward or forward Types of distribution channels Pace of technological change in product and process Are products differentiated Economies of scale for purchasing, manufacturing, production etc. Are key Industry rival clustered in one geographic area (Silicon Valley) Are certain Industries characterized by strong learning curve or specific knowledge/skill as a competency Capital requirements and the ease of entry and exit Industry profitability above or below par Competitive Analysis What is the Competition like and how strong are each of the Competitive Forces   3.      Driving Forces: Drivers of Change in the Industry   Forces in motion that create incentives or pressures for change. Trends and new developments that gradually produce changes important enough to require a strategic response. What external factors will produce the biggest potential change in the Company’s business over the next 1 to 3 years. Usually 3 to 4 major factors are considered Driving Forces within an Industry   Changes in long term Industry growth rate Changes in who buys the product and how they use it..shifts in buyer demographics Product innovation Technological change Marketing innovation…ie; the internet Entry or exit of major firms…ie; Sears Technical know-how; manufacturing process Increased Globalization of Industry Changes in cost and efficiency…’E-Mail’ faxes affected U.S.Postal Newly constructed high efficient generating plants have opened competition in the Electric Utility Industry Emerging buyer preferences for differentiated products…new features,, style changes, image changes due to marketing efforts Regulatory and Policy changes Changing societal attitudes and life styles Reductions in uncertainty and Business risk…good economy   4.      Key Success Factors   The strategic elements of an Industry: product attributes, resources, core competencies, competitive capabilities, and business outcomes that spell the difference between profit and loss. These are the issues that each Company must be competent at performing in order to achieve success. They represent the opportunity for Competitive Advantage   Usually 3 – 4  KSFs Beer Industry: Brewing Capacity (limit production costs) Excellent distribution channel (distributors) Significant advertising     Common KSFs: Technology research expertise product innovation Manufacturing low cost production efficiency low cost labor low cost plant locations excellent quality control high utilization of fixed plant costs low costs product engineering   Distribution strong network of distributors ample space on retailer shelves for product fast delivery low distribution costs   Marketing effective advertising merchandising skills courteous customer service variety and availability of wide product line attractive packaging/styling good customer support delivery process Skills superior workforce quality control know-how design expertise expertise in a particular technology ability to develop innovative products fast product development cycle Organizational capability managerial know-how good information systems ability to respond to market (quick decision making) Additional KSFs favorable brand image overall low cost (not only in manufacturing) convenient locations..in front of customer excellent customer service..customer friendly patent protection access to financial capital…strong capital position Michael Porter’s 5 Competitive Forces Outlines the state of competition within an Industry 5 Forces of Competition   The Rivalry among competing sellers in the Industry Potential entry of new competitors Analyzing the affect of substitute products Bargaining power of suppliers Bargaining power of sellers 1.Rivalry among competing sellers Jockeying for position; Intensity is determined by how vigorously they employ such tactics as lower prices, expanded customer services, more bells and whistles, longer warrantees, special promotions and new product introductions. Rivalry increases as more competitors enter the Market Rivalry is stronger when the demand for the product slows Rivalry intensifies when pressures build to cut inventory . When fixed costs (unused capacity) is high percentage of costs Rivalry is high when switching costs for another product is low Rivalry is strongest when a competitors make a strategic positioning move Rivalry is strong when it costs more to get out of a business rather than stay in and compete Rivalry increases when larger Firms outside the Industry acquire weaker Firms within the Industry 2.Potential entry of New Competitors Identifies the barriers to entry and the expected reaction to of incumbent Firms to new entry ·       Capital requirements how large is the total dollar investment needed to enter the market successfully (Airline Industry) ·       Economies of scale existing players who have large economies of scale can deter entry ·       Cost and resource advantages existing Firms may have existing cost advantages, such as partnerships and alliances of suppliers ·       Learning curve existing Firms have experienced the learning curve cycle for specialty know how products ·       Existing Technology patented products provides tremendous Technical capability that is difficult to provide resulting in Competitive Advantage ·       Brand Equity and Customer loyalty difficult for a customer to switch Brands very expensive advertising for entrants to overcome ·       Regulations, Tariffs and Trade restrictions… Government policies; particularly in regulated Industries make it very difficult for new entrants   The best guide of whether potential entry is strong or weak is to determine the Industry’s profit margin, and growth rate. This could overcome entry barriers.   3.Substitute Products Firms in one Industry are in close competition with Firms in another Industry because their respective products are good substitutes Eyeglasses contacts lasik corrective vision wool polyester  ‘E-Mail’ Postal delivery Overnight express Critical issues facing substitute products are: Are attractively priced substitutes available Do buyers view the substitute as satisfactory in terms of quality and performance Can buyers switch easily …low switching costs   The lower the price of substitutes, the higher the quality and performance and the lower the user’s switching costs…the greater the force and competitive pressure of substitute products.   4.Power of Suppliers When Companies and Firms have little bargaining power with suppliers it weakens their competitive position When suppliers can supply an item more cheaply than it costs the Firm to produce When suppliers supply a major component and a large cost of the product When few large suppliers control the supply to the Industry   Firms have great bargaining power with suppliers when When the item being provided has low switching costs When the supplier is supplying a major customer in the Industry     5.Power of Buyers Whether the seller or buyers’ relationship is strong or weak depends on  buyer’s switching costs to competitive brands are low when buyers buy frequently number of buyers are small. When buyers are small they may have leverage since it is difficult to recover lost customers…sellers are willing to make concessions   buyers are well informed about seller ‘s price, product and costs buyers threat of backward integration when buyers have discretion to delay the purchase  Strategic Implications of the Five Competitive Forces   The stronger the collective impact of the competitive forces; the lower the profitability and number of participant Firms.   If rivalry among sellers is strong, low entry barriers do not detract new entrants, competition from substitutes is strong, and both suppliers and customers are able to exercise leverage; then the competitive structure of an Industry is clearly unattractive
	Distinguished (100%)	Proficient (85%)		Basic (70%)	Below Expectations (50%)	Non-Performance (0%)
Thesis Statement	Raises the strongest   objection to the thesis presented in the assignment. The objection is strongly grounded in research and logical reasoning.	Raises a plausible objection to the thesis presented in the assignment. The objection is mostly grounded in research and logical reasoning.		Raises an objection to the thesis presented in the assignment. The objection is somewhat grounded in research and logical reasoning.	Attempts to raise an objection to the thesis presented in the assignment. The objection is minimally grounded in research and logical reasoning.	The objection to the thesis is either nonexistent or lacks the components described in the assignment instructions.
Counter Argument	Provides a strong, thorough rebuttal to the objection. The rebuttal effectively demonstrates that the thesis can withstand the objection and applies the principles of charity and accuracy.	Provides a rebuttal to the objection. The rebuttal mostly demonstrates that the thesis can withstand the objection and mostly applies the principles of charity and accuracy.		Provides a limited rebuttal to the objection. The rebuttal somewhat demonstrates that the thesis can withstand the objection and somewhat applies the principles of charity and accuracy.	Attempts to provide a rebuttal to the objection; however, the rebuttal minimally demonstrates that the thesis can withstand the objection and does not apply the principles of charity and accuracy.	The rebuttal is either nonexistent or lacks the components described in the assignment instructions.
Conclusion	Provides clear and concise closing remarks that comprehensively summarize the essay. The remarks consider the broader controversy and/or further research that could offer additional insight into the moral solution of the business problem.	Provides closing remarks that summarize the essay. The remarks mostly consider the broader controversy and/or further research that could offer additional insight into the moral solution of the business problem. The closing remarks are somewhat unclear.		Provides closing remarks that minimally summarizes the essay. The remarks minimally consider the broader controversy and/or further research that could offer additional insight into the moral solution of the business problems. The closing remarks are unclear and/or vague.	Attempts to provide closing remarks that summarize the essay; however, the remarks do not consider the broader controversy and/or further research that could offer additional insight into the moral solution of the business problem. The closing remarks are unclear and vague.	The closing remarks are either nonexistent or lack the components described in the assignment instructions.
Written Communication: Context of and Purpose for Writing	Demonstrates methodical application of organization and presentation of content. The purpose of the writing is evident and easy to understand. Summaries, quotes, and/or paraphrases fit naturally into the sentences and paragraphs. Paper flows smoothly.	Demonstrates sufficient application of organization and presentation of content. The purpose of the writing is, for the most part, clear and easy to understand. There are some problems with the blending of summaries, paraphrases, and quotes. Paper flows somewhat smoothly.		Demonstrates a limited understanding of organization and presentation of content in written work. The purpose of the writing is somewhat evident but may not be integrated throughout the assignment. There are many problems with the blending of summaries, paraphrases, and quotes. Paper does not flow smoothly in all sections.	Organization and presentation of content are extremely limited. The purpose of the writing is unclear. There is little or no blending of summaries, paraphrases, and quotes. Paper does not flow smoothly when read.	The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Control of Syntax and Mechanics	– Displays meticulous comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains no errors and is very easy to understand.	Displays comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains only a few minor errors and is mostly easy to understand		Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written work contains a few errors which may slightly distract the reader.	Fails to display basic comprehension of syntax or mechanics, such as spelling and grammar. Written work contains major errors which distract the reader.	The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Required Formatting	Accurately uses required formatting consistently throughout the paper, title page, and reference page.	Exhibits required formatting throughout the paper. However, layout contains a few minor errors.		Exhibits limited knowledge of required formatting throughout the paper. However, layout does not meet all requirements.	Fails to exhibit basic knowledge of required formatting. There are frequent errors, making the layout difficult to distinguish as required style.	The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Word Requirement	The length of the paper is equivalent to the required number of words.	The length of the paper is nearly equivalent to the required number of words.		The length of the paper is equivalent to at least three quarters of the required number of words.	The length of the paper is equivalent to at least one half of the required number of words.	The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Resource Requirement	Uses more than the required number of scholarly sources, providing compelling evidence to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.	Uses the required number of scholarly sources to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.		Uses less than the required number of sources to support ideas. Some sources may not be scholarly. Most sources on the reference page are used within the body of the assignment. Citations may not be formatted correctly.	Uses an inadequate number of sources that provide little or no support for ideas. Sources used may not be scholarly. Most sources on the reference page are not used within the body of the assignment. Citations are not formatted correctly.	The assignment is either nonexistent or lacks the components described in the instructions.