Industry Structure Rules of the Game Part 2

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Industry Structure Rules of the Game Part 2

• Galbraith, Mgt 455 Competitive Strategy, Summer,
  2007

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Porters 5-factor model of industry structure (the
other 4)
Threat of New Entry
Substitute Products/Services
Attractiveness of Industry (profit, etc)
Power of Suppliers
Power of Buyers
Industry Rivalry
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Factor 2 Barriers to Entry

• Government
• Fiscal Barriers - Tariffs, Excise Taxes, and Fees
• Physical Barriers - Borders
• Technical Barriers - standards
• Economic
• Scale economies
• Capital Requirements
• Cumulated Experience
• Technology
• Proprietary Technologies (patents, etc.)
• RD Costs

4
Porters Factors 3-5

• Substitutes
• Cross elasticities
• Power of Buyers
• Buyer size
• Buyer concentration
• Importance of Volume
• Threat of Vertical Integration
• Power of Suppliers

5
Resource Model of Strategy

• Resources
• Financial physical, human, technological,
  organizational
• Tangible and intangible
• Capabilities
• Ability to coordinate and use resources in a
  productive manner
• Distinctive Competence
• Unique and valuable resources with a unique
  capability to use

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SCP v. Resource Models

• SCP
• structure resources, capabilities, distinctive
  competences - strategy performance
• Resource Models
• resources, capabilities, distinctive competences
  - strategy structure performance
• Difference is matter of emphasis on structure
• Applications
• Resource models
• High tech, intangible dense industries, high
  synergy strategies
• SCP models
• Low to medium technology (steel, etc.