INDUSTRY DYNAMICS AND CHANGE Presentation

Industry Dynamics and
Change
Knud Jensen
Ted Rogers School of Management, Ryerson University
2008 Knud Jensen, Rein Petersen, Neil Wolff
Industry Dynamics and Change
Understanding how to
grow requires an in-depth
understandingand clarification
of the external environment
in which the organization
exists.
Information is Important
Information about the following is important:
Industry
Market
Industry structure
Competitors
Buyers/consumers
Technology
The Big Three

1. Where are we currently?
2. Where do we want to go?
3. How do we get there?
The Why of Why?
Asking why? questions basic beliefs and gets to the

real cause of problems, issues, roadblocks, etc.
Challenges lead to insight

Toyotas 5 whys
More Questions
Externally Focused Questions:
How and at what pace is the companys market

evolving?
What factors are driving market change and what

impact will they have?
What are competitors up to? In what ways are

competitive conditions growing stronger or weaker?
What does the changing market and competitive

landscape mean for the companys business over the
next five years and beyond?

THE OBJECTIVES OF THE INFORMATION
MUST ALWAYS BE KEPT IN MIND:
1. To develop a deep understanding of where the
company is now with respect to the external
environment.
2. To clarify the complex forces impacting on the
company.

We need to understand magnitudes,
market limitations, and most
important, prospects for future growth.
Example:
Size and 2 5 years historical growth
Simple growth trends can generate a lot of discussion

Complexity:
You may be part of one industry
You may be part of several industries (via

products/services, customers, suppliers)

Tools For The Industry:
Boundaries (What is your sandbox?)
Industry structure
Driving forces
Key success factors
Competitor analysis
Maps
10
Analyzing Competitive Forces
Rivalry amongst competing sellers
Threat of new competitors
Threat of substitute products
Supplier bargaining power
Buyer bargaining power
11
Driving Forces
Driving forces are variables that have the capacity to
change not only demand, but also the very nature of an
industry.
Driving forces should be identified for your industry.
Changes result in:
Buyer behaviour modification
Structural change
Competitive reaction
Product portfolios
Disruptions
12
Typical Driving Forces
Demographics
Technology
Innovations, inventions
Social and cultural changes
New products/services
Changes in buyer attitudes
Government regulations, policy, changes in law
13
Strategic Group Map Illustration
14
Strategic Group Map
Identify competitive characteristics that differentiate firms

in your industry. Choose two possible axes that you
consider appropriate. Some possible axes to consider are:
Price/Quality (high, medium, low)

Geographic coverage (local, national, international)
Degree of vertical integration (none, partial, full)
Product-line breadth (wide, average, low)
Use of distribution channels (narrow, average, low)
Degree of service offered (no-frills, limited, full)
15
Complete Your Own Map
16
Key Success Factors (KSFs)
Think about what it takes to be successful in your industry
There are must have and there are nice to have
Identify the gap or gaps that exist between your success

factors and those in the industry
If you want to grow, you have to fill the gaps
KSFs are not stable and they are not equal, but they are
necessary
17
SWOT
A summary of the characteristics of
strengths, weaknesses, opportunities, and
threats
Strengths:
Something we do well
Valuable know-how
Competitive capability
Attributes
Ventures, alliances
18
SWOT
threats cont
Weaknesses:
Something we do poorly
A disadvantage
A deficiency in expertise or competence
Lack of assets (physical, human, intangible)
Missing capabilities
19
SWOT
threats cont
Opportunities:
Best prospects
Competitive advantage
New customers, markets, products
Change in industry structure
20
SWOT
threats cont
Threats:
Competitive behaviour
New product/service
Demographics
Technology
21
SWOT
threats cont
Growing From SWOT Analysis:
Build on the organizations strengths
Recognize weaknesses and correct, where possible
Take advantage of opportunities this is what drives
growth
Recognize threats to the organization and take steps to
minimize the effects
22
Before executives can chart

a new strategy, they must
reach common
understanding of the
companys current position.
W. Chan Kim and

Renee Mauborgne
23

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Industry Dynamics and

2008 Knud Jensen, Rein Petersen, Neil Wolff