Essay Questions The Spectrum of Competition

Essay Questions

The Spectrum of Competition

Because competitive intensity varies dramatically from one industry to another, identifying and understanding the nature of the spectrum of the competitive landscapes is critical. Within this spectrum, each landscape poses different strategic challenges.

1.) Identify the Spectrum of Competition (Structure) including some of their characteristics. Provide an example of a company (1) that competes within one of the representative classified categories. Explain, in detail how the company achieves a competitive advantage.

Competition in Concentrated Industries

Industries containing firms with substantial market share are called concentrated industries because market share is concentrated in the hands of a few firms. These firms are large enough to affect industry pricing and, more generally, to determine the competitive characteristics of their industries.

Within the broad category of concentrated industries, two general structural patterns prevail: An Oligopoly: An industry where a few firms hold a large share of industry sales, but no firm, by itself, dominates the industry; and aDominant Firm: An industry in which a large firm competes with many, much smaller firms.

Also, industries differ in the kinds of actions managers can take to develop a competitive advantage, for example price and capacity (output). These actions determine the competitiveness and intensity of the industry.

2.) Select a company that competes on price and one that competes of capacity and describe the dynamics associated with each. Explain how either price or capacity (output) determine the intensity of competitiveness with an industry by rivals.

Entry and the Advantage of Incumbency

Entry barriers are conditions that make the industry less attractive to a potential entrant than it is to the incumbent firms. Because this asymmetry in competitive positioning is fundamental to entry barriers, entry barriers are referred to as "incumbency advantages." An entry barrier may give a competitive advantage to an incumbent firm because it is an incumbent.

3.) There is often an advantage afforded to incumbent firms. Provide examples of incumbent advantages. Explain why the examples that you have chosen provide an "incumbency advantage". Also, is low pre-entry profits a barrier to entry to an entrant? If so, why? if not, why not. Explain.

Creating and Capturing Value in the Value Chain - Buyer or Supply Power

In keeping with the framework for industry analysis, we are interested in how the characteristics of segments in the value chain and the links among them affect the division of value (PIE). We want to identify what determines the value that the manufacturing segment, the retailing segment, and the final consumers in this chain each capture. The value extraction problem faced by the incumbents is to maximize the share they can capture by reducing the share captured by other segments in the chain.

However, if we broaden our perspective to include value creation, we will consider how relationships between firms in different segments of a chain can create value and increase the total value of PIE rather than have members of the value chain compete for the existing share of PIE..

4.) Explain the difference between creating participant value within an industry and increasing the value (among participants) within an industry. Provide an example of each to support your position. Be specific.

Strategic Management in a Changing Environment

When the firm's external context changes significantly, the firm's strategy may no longer be aligned with its external and internal contexts. Managers must recognize the change, understand how it will affect the firm's strategy, and adjust the strategy and internal context accordingly. The challenge is more daunting because change is usually accompanied by some uncertainty. A given change can portend a new, long run trend, or merely a transitory deviation.

5.) Changing environments cause smart organizations to evaluate, reevaluate their strategies. Discuss the importance of understanding the concept of the industry life cycle. Also, identify and discuss the importance of some of the characteristics of each phase and how a company's strategy may change, as it moves through each phase. Finally, discuss the organizational and structural implications of these changes.

Strategy in Markets with Demand-Side Increasing Returns

These are often "winner-take-all" markets that a single firm eventually dominates, even though initially several well-positioned rivals heavily contested them.

6.) Identify the sources of Demand-Side Increasing Returns (DSIR) and explain how DSIR is achieved. Provide an industry example and explain how DSIR was achieved.

The Strategy Process

How a firm's managers develop, implement and change its strategy. Every firm has some set of routines for making the decisions central to its overall direction. Firms face different internal and external conditions, and their strategy processes reflect these differences.

Despite the wide variation in strategy processes, any successful process will include certain basic elements. Paramount among these is the formulation of a strategy with a clear set of goals, scope, competitive advantage, and logic. Formulation of such a strategy is almost always affected by two different processes: the intentional part of the strategy process and the autonomous part of the strategy process.

7.) Identify and describe the Principles of the Strategy Process. In addition, address the questions - who is responsible for developing "the" strategy? How is the strategy implemented within a business? Does the process occur in a rigid sequence or may steps within the process be eliminated? Explain. Are some steps more important than others? Why or why not?