Lecture 2 Takeaways

• Definitions of Industry, Sector and Market Segments

• Porter’s Competitive Forces Model (threat of new entrants, competitive rivalry,

bargaining power of buyers, bargaining power of suppliers, threat of substitutes)

• Industry Life-Cycle Analysis (embryonic, growth, shakeout, matured, decline)

• Macroenvironment (macroeconomy, global, demographic, social, technological, political

and legal forces)

MGT489 SmM4
 [Hill. 2013]

Lecture 3
Internal Analysis
 Overview of Lecture

• Distinctive Competencies
• Profitability and Value Creation
• Building Blocks of Competitive Advantage
• Why Companies Fail and Steps to Avoid Failure
 Distinctive Competencies

• Resources
✔ Tangible Resources (e.g. land, buildings, inventory, machines)
✔ Intangible Resources (e.g. brand name, knowledge)

• Capabilities
 Profitability and Value Creation

• Profit Margin
• Customer Reservation Price
• Consumer Surplus
 Building Blocks of Competitive Advantage

• Superior Quality • Superior Efficiency

Quality as Excellence
Quality as Reliability

• Superior Customer Responsiveness

• Superior Innovation Customer Response Time
Product Innovation (anticipated vs unknown)
Process Innovation
 Lecture Takeaways

• Distinctive Competencies (resources and capabilities)

• Profitability and Value Creation (profit margin, consumer reservation
price, consumer surplus)
• Value Creation Diagrams
• Building Blocks of Competitive Advantage (quality, innovation, efficiency,
customer responsiveness)