Strategy recommendations to Gustavo.
7. Understanding your organization’s industry is essential to making useful strategy recommendations to Gustavo. You will develop a 6–7 page analysis of the industry in which your organization belongs. Your industry analysis should incorporate the components described here and in Step 8 below.
You should appreciate that whatever happens in the industry will influence your organization. Who are the competitors? Is it easy to start a business in this industry? Are there significant entry barriers? What are the dominant characteristics and current trends in your industry?
Discuss industry size in terms of the number of companies, total employment, capital investment, major customers, and annual revenues. What are the driving forces of change in the industry, (e.g., innovation, technology, and buyer preferences and lifestyles)? State how organizations compete within the industry and identify the critical success factors in this industry.
8. Review and apply Porter’s Five Forces Model to your analysis. Tailor the Porter model to the industry and integrate the complete figure of the model within the narrative of the report. What is the competitive structure of the industry? Describe the following:
- Entry barriers—How difficult is it to enter this industry? Are there several players competing for profitability? Are there significant threats of new entrants?
- Intensity of rivalry—Identify your organization’s top three competitors. Discuss industry rivalry. Is competition intense?
- Bargaining power of buyers—Who are the buyers in this industry? What kind of influence do buyers have on the competitors in the industry? Globalization makes it easier for buyers to source products worldwide. Is this the case in this industry?
- Bargaining power of suppliers—Provide a profile of the suppliers. Suppliers with significant industry influence can play a major role in the marketplace. For instance, DeBeers, the world’s leading supplier of diamonds, has enormous bargaining power in the diamond industry.
- Threat of substitutes—Carefully distinguish between similar products in the same industry. A substitute product for eye glasses would be contact lenses. Train travel is a substitute for travelling by car.