Driving Forces Questions & Answers

Driving Forces Questions & Answers Driving Forces of Change Industries change because forces drive industry participants to alter their actions Driving forces (DFs) are major underlying causes that reshape the industry landscape and alter competitive conditions DFs can be positive and negative, WRT competitiveness and profitability Operate in the_______ of the corporate ecosystem: -remote environment -industry -operating environment (occasionally) Remote environment driving forces Assess Steep Factors: Estimate impact of each factor on the industry - Group factors with common underlying cause -Does it work in our favor? Is it of high importance/priority? -- Why or why not? - How immediate is this issue? -- urgent, soon, future? - What duration might it have? --short or long term? - What is our responsibility to the factor? -- economic, legal, ethical or discretionary? - Which stakeholders are affected? - What is its priority relative to other factors? Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:01 / 0:15 Full screen Brainpower Read More Assessing Steep Factors Rate of change: -accelerating -decelerating -neutral Magnitude -widespread -local Geographic region -global -regional -local Direction -positive -neutral -negative Correlation -Solo -Linkages Industry Environment Driving forces To determine "change" influences, you must first understand existing: - Structure and competitive forces - Market size, share and industry growth rate - Stage of industry development - Industry concentration - Vertical and horizontal integration across value chain - Geographic scope of rivalry - Degree of product differentiation - Technology change and innovation - Complementary products and services Analyzing Industry-Specific Driving Forces 1. Identify forces likely to exert greatest influence over next 1 - 3 years (short term), or longer 2. Assess impact - Is the DF individually or collectively acting to make the industry more or less attractive? - Is the DF causing demand for product to increase or decrease? - Is the DF acting to make competition more or less intense? - Will the DF lead to higher or lower industry profitability? 3. Determine what strategy changes are needed to prepare for the anticipated change Usually no more than 3 - 4 factors qualify as MAJOR drivers of change; others can have minor or longer term implications Common Driving Forces 1. Changes in industry's long term growth rate 2. Increasing globalization of industry 3. Emerging new Internet technology applications 4. Changes in who buys product and how they use it 5. Technological change and manufacturing process innovation 6. Product innovation and marketing innovation 7. Entry or exit of major firms 8. Diffusion of technical know-how across more companies and more countries 9. Changes in cost and efficiency 10. Reductions in uncertainty and business risk 11. Regulatory influences and government policy changes 12. Changing societal concerns, attitudes and lifestyles