Lecture 1 Summary

• Core Competencies, Distinctive Competencies and Competitive Advantage

• Effectiveness and Efficiency
• Corporate-, Business- and Functional-level Strategies
• Feedback loop
• Biases in Decision-Making
• Characteristics of Good Leadership

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 Lecture 2
External Analysis:
Identification of
Opportunities and Threats
[Hill. 2013]
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 Overview of Lecture
• Basic Terms

• Porter’s Competitive Forces Model (Porter’s 5 Force Model)

• Industry Life-Cycle Analysis

• Macro-environment

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 Basic Terms
• Industry

• Sector

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Porter’s Competitive Forces Model/
Porter’s Five Forces

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 Porter’s Competitive Forces Model/
Porter’s Five Forces
1. Threat of New Entrants
Economies of Scale (e.g. Ford)
Brand Loyalty (e.g. Coke vs Pepsi Challenge)
Absolute Cost Advantage (e.g. WalMart)
Switching Cost (e.g. Bank Accounts,
PowerPoint to Prezi)
Government Regulations (e.g. Trump’s policies)

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 Porter’s Competitive Forces Model/
Porter’s Five Forces

2. Rivalry among Existing Competitors (e.g. Coke, Pepsi &

RedBull)

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 Porter’s Competitive Forces Model/
Porter’s Five Forces
3. Bargaining Power of Buyers
Power of Choice
Switching Cost
Bulk Purchase

4. Bargaining Power of Suppliers

Substitutes
Switching Cost
Backward and Forward Integration

(e.g. Gaming Industry)

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 Porter’s Competitive Forces Model/
Porter’s Five Forces
5. Threat of Substitutes (e.g. No-frills airlines)

“The Sixth Force: Complementors”

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Industry Life-Cycle Analysis

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 Industry Life-Cycle Analysis

• Embryonic Stage
• Growth Stage
• Shakeout Stage
• Mature Stage
• Decline Stage

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The Macroenvironment

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 The Macroenvironment
• Macroeconomic Forces
Growth rate of economy
Interest rates
Currency exchange rates
Inflation (deflation)

• Global Forces

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 The Macroenvironment
• Political and Legal Forces

• Technological Forces
Spread and Speed of Adoption

• Demographic Forces (e.g. Age,

Gender, Race, Social Class)

• Social Forces

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 Lecture 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)

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