BA 469
Dowling – Spring Term 2007
Chapter 2 – Discussion Questions/6e
Chapter 2 is a very dense chapter covering a wide range of competitive issues. Some of the concepts you have no doubt studied in other classes such as Porter’s Five Forces Model and the industry life cycle model. This is one of the chapters that you will need to really master to do well in the course this term. Spend extra time reading and learning the key ideas - these will serve you well in your career.
1. What do we mean by an “industry” in analyzing competitive forces in an industry environment? What is a business “sector”?
2. What is meant by the ‘competitive structure’ of an industry? What are examples of a fragmented industry structure? A consolidated industry structure?
3. Explain the dimensions of Porter’s “Five Forces Model.” What is the probable impact on industry participants (companies working in a given industry) when these forces are strong? Weak?
4. What factors in a competitive environment are effective barriers to entry? That is what factors keep potential new entrants from encroaching on incumbent firms?
5. What factors drive competitive rivalry among incumbent firms in an industry? Which of these factors do you think is most important? Why?
6. When is the bargaining power of buyers the strongest? When is the bargaining power of suppliers the strongest?
7. What is meant by the competitive threat of substitute products? What are some recent examples of substitute products being a competitive threat?
8. Under what conditions are price wars most likely to occur in an industry? What are the implications of a price war for a company? How should a firm try to deal with the threat of a price war?
9. Andy Grove of Intel added a 6th force to Porter’s model that he called ‘complementors’. Explain this notion and be able to provide industry examples.
10. What are dimensions of the macro environment that impact competitive forces in an industry? ?
11. What are the implications for strategic groups within an industry? How do mobility barriers limit movement of firms within strategic groups? What are some examples here?
12. What are some of the limitations of Porter’s model and the concept of strategic industry groups? How do the proponents of the concept of ‘punctuated equilibrium’ address these limitations? What about hypercompetitive industries – does Porter’s model apply to them? If not, why not?
13. What are the five stages of the industry life cycle model? Explain the key drivers within each of these five stages. Be prepared in class to explain an industry example.
14. What are some of the impacts of globalization of markets on industry conditions, profitability, and product quality?
15. How do national factors impact competitive advantage?