[UPENN-Wharton Business Strategy Competitive Advantage Professor Nikolaj Siggelkow]

Assignment part 1: Analyze Your Industry’s Attractiveness

Instructions: Begin on the next slide. Analyze your industry’s attractiveness. For each factor of industry
attractiveness, move the to the appropriate place on the arrow.
 Industry Attractiveness

Highly Unattractive Mildly Unattractive Neutral Mildly Attractive Highly Attractive

Factor 1: Threat of Value Appropriation by High customer Low customer

Customers power power

Size of key customers Large Small

Price sensitivity High Low

Switching costs (technical) Low High

Switching costs (brand) Low High

Ability to backward integrate Easy Difficult

Factor 2: Threat of Value Appropriation by Low supplier

High supplier
Suppliers power power

Size of key suppliers Large Small

Price sensitivity High Low

Your switching costs (technical) High Low

Your switching costs (brand) High Low

Ability to forward integrate Easy Difficult

 Industry Attractiveness

Highly Unattractive Mildly Unattractive Neutral Mildly Attractive Highly Attractive

Factor 3: Rivalry Among Competitors High rivalry Low rivalry

Number of effective competitors Large Small

Market growth Slow Fast

Degree of differentiation Little High

Strategic stakes High Low

Patents protect profits No Yes

Factor 4: Barriers to Entry High supplier Low supplier

power power

Scale-based benefits Little Large

Experience, learning effects Little Large

Capital requirements Small Large

Value of reputation, brand Unimportant Important

Access to distribution Unimportant Important

 Industry Attractiveness

Highly Unattractive Mildly Unattractive Neutral Mildly Attractive Highly Attractive

Factor 5: Substitutes Many

Few substitutes
substitutes
Availability of close substitutes
for products or services

Factor 6: Regulatory Factors Negative Positive

Impact of regulatory changes

Factor 7: Complementors Negative Positive

Other firms have exclusive relationships

with complementors vs. we have
these relationships
 Industry Attractiveness

Highly Unattractive Mildly Unattractive Neutral Mildly Attractive Highly Attractive

Factor 8: [Optional: Insert other factors]

[optional: insert other]

Factor 09: [Optional: Insert other factors]

[optional: insert other]

Assignment part 2: Create a Summary Sheet
Instructions: Summarize the detailed analysis you completed in the first part of the assignment.

1) In each row, place the to reflect your analysis of the current state of the industry.

2) Next, think about how the industry might evolve for each factor, and place the in the appropriate place in the
Future of the industry area of the table.
Summary Sheet

Icon Bank Current state of the industry Future of the industry

You can drag
these icons and Un- Un-
Factors: Neutral Attractive Neutral Attractive
drop them into attractive attractive
the tables.
Factor 1: Power of customers
(makes this industry…)

Factor 2: Power of suppliers (makes

this industry…)
Factor 3: Rivalry among competitors
(makes this industry…)
Factor 4: Barriers to entry (make this
industry…)
Factor 5: Availability of substitutes
(makes this industry…)
Factor 6: Regulatory factors (make
this industry…)
Factor 7: Relationships with
complementors (make this
industry…)
[Optional Factor: insert optional
additional factor you came up with]
[Optional Factor: insert optional
additional factor you came up with]
Assignment Part 3: Final Analysis Summary

The two factors that are most important in your firm’s industry are:
1.
2.

The two factors that are most likely to change in the future are:
1.
2.