one page individual report

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Business Finance

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1 page Individual Report Reflect on your experience in analyzing the case and in no more than one page indicate:

1)what you learned about strategy by applying the course concepts;

2)any other insights you gained into strategic analysis;

3)what you learned from working with your team; and

4)how these insights might apply to the company you work for currently, have worked for in the past, or would like to work for in the future


i provide individual report sample in the file, and one chapter from the course for you to have idea to write this report.

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Chapter 6 Business-Level Strategy and the Industry Environment Learning Objectives  Understand competitive dynamics at different stages in an industry’s life cycle ◼ Identify the strategies managers can develop to increase profitability in fragmented industries. ◼ Discuss the special problems that exist in embryonic and growth industries and how companies can develop strategies to effectively compete. ◼ Understand competitive dynamics in mature industries and discuss the strategies managers can develop to increase profitability even when competition is intense. ◼ Outline the different strategies that companies in declining industries can use to support their business models and profitability. 3 Fragmented industry  Composed of a large number of smalland medium-sized companies.  Reasons for fragmentation ◼ Lack of scale economies ◼ Brand loyalty in the industry is primarily local ◼ Low entry barriers due to lack of scale economies and national brand loyalty  Focus strategy works best for a fragmented industry. 4 Consolidating a Fragmented Industry  Why Consolidate? ◼ To gain economies of scale (if available)  How to Consolidate? ◼ Through Horizontal Mergers  Merging with or acquiring competitors and combining them into a single large enterprise. ◼ Through Value Innovation  Value innovator: Defines value differently than established companies and offers that value at lower cost ◼ Chaining ◼ Franchising ❑ Aids in building a national brand ❑ Branches are interconnected by information technology to 5 function as one large company Consolidation through Value Innovation: Chaining and Franchising  Chaining: Obtaining the advantages of cost leadership by establishing a network of linked merchandising outlets.  Franchising: Franchisor grants the franchisee the right to use the franchisor’s name, reputation, and business model in return for a fee and a percentage of the profits. 6 Franchising: Pros & Cons  Advantages  Finances the growth of the system, resulting in rapid expansion.  Franchisees have a strong incentive to ensure that the operations are run efficiently.  New offerings developed by a franchisee can be used to improve the performance of the entire system.  Disadvantages  Tight control of operations is not possible.  Major portion of the profit go to the franchisee.  When franchisees face a higher cost of capital, it raises system costs and lowers profitability. 7 Embryonic Industries  Industry is very new  Customer demand for products is limited due to: ◼ Customer unfamiliarity with the product. ◼ Limited performance and poor quality of the first products. ◼ Poorly developed distribution channels. ◼ Lack of complementary products. ◼ High production costs due to small production volumes 8 Mass Market  A Mass Market is one in which there is a large numbers of customers 7/3/2018 9 Growth Industries  Industry enters the growth stage when a mass market starts to develop for its products. This happens when: ◼ Product value increases, due to  Ongoing technological progress, and  Development of complementary products. ◼ Production cost decreases, resulting in low prices and high demand. 7/3/2018 10 11 12 Market Development & Customer Groups  Innovators ◼ First to purchase and experiment with a product based on new technology  Early Adopters ◼ Understand that the technology may have important future applications  Early Majority ◼ Practical and understand value of the new technology  Late Majority ◼ Purchase a new technology only when it is obvious that it has great utility and is here to stay  Laggards ◼ Unappreciative of the uses of new technology 13 Market Development and Customer Groups 14 Market Share of Different Customer Segments 15 Strategic implications: Crossing the chasm  Customers in each segment have very different needs. ◼ New strategies are required to strengthen a company’s business model as a market develops.  Competitive chasm: Transition between the embryonic market and mass market. ◼ Failure to do make the transition results in the company going out of business. 16 Strategic implications: Crossing the chasm Innovators and early adopters • Technologically sophisticated and willing to tolerate the limitations of the product. • Reached through specialized distribution channels. • Companies serve this segment by producing small quantities of product that are priced high. Early majority • Value ease of use and reliability. • Requires mass-market distribution and mass-media advertising campaigns. • Serving this segment requires large-scale mass production to produce highquality product at a low price. 17 The Chasm in the Smartphone Business 18 Factors that Accelerate Customer Demand       7/3/2018 Relative Advantage Simplicity v. Complexity Compatibility Trialability Observability’ Viral Model of Infection 19 Factors that Accelerate Customer Demand  Relative Advantage ◼ Degree to which a new product is perceived as better at satisfying customer needs than the product it supersedes.  Simplicity v. Complexity ◼ Products perceived as complex and difficult to use will diffuse more slowly than those that are easy to use.  Compatibility ◼ Degree to which a new product is perceived as being consistent with the current needs or existing values of potential adopters 7/3/2018 20 Factors that Accelerate Customer Demand  Trialability ◼ Degree to which potential customers can experiment with a new product during a handson trial basis.  Observability ◼ Degree to which the results of using and enjoying a new product can be seen and appreciated by other people.  Viral Model of Infection ◼ Lead adopters in a market who become “infected” with a product “infect” other people, making them adopt and use the product. 7/3/2018 21 Mature Industries  Strategies to Deter Entry  Strategies to Manage Rivalry  Strategies to Control Capacity 7/3/2018 22 Mature industries: Strategies to deter entry  Product Proliferation Strategy ◼ Catering to the needs of all market segments to deter entry by competitors  Limit Price Strategy ◼ Charging a price that is lower than that required to maximize profits in the short run  Is above the cost structure of potential entrants  Strategic Commitments ◼ Investments that signal an incumbent’s longterm commitment to a market or a segment of the market 23 Limit Pricing 24 Mature industries: Strategies to Manage Rivalry  Price Signaling  Price Leadership  Non-price Competition  Market Penetration  Product Development  Market Development  Product Proliferation 25 Mature industries: Strategies to Manage Rivalry  Price Signaling ◼ Companies increase or decrease product prices to  Convey their intentions to other companies.  Influence the price of an industry’s products  Price Leadership ◼ When one company assumes the responsibility for determining the pricing strategy that maximizes industry profitability 26 Mature industries: Strategies to Manage Rivalry  Non-price Competition ◼ Use of product differentiation strategies to deter potential entrants and manage rivalry within an industry  Market Penetration ◼ Occurs when a company concentrates on expanding market share in its existing product markets 7/3/2018 27 Mature industries: Strategies to Manage Rivalry  Product Development ◼ Creation of new or improved products to replace existing products  Market Development ◼ When a company searches for new market segments to increase the sale of its existing products  Product Proliferation ◼ Large companies in an industry have a product in each market segment 7/3/2018 28 Four Non-price Competitive Strategies 29 Mature industries: Strategies to Control Capacity  Factors causing excess capacity. ◼ New technologies that produce more than the old ones. ◼ New entrants in an industry. ◼ Economic recession that causes global overcapacity. ◼ High growth of demand in an industry that triggers rapid expansion  Capacity growth exceeds demand growth 30 Mature industries: Strategies to Control Capacity  Objective: To control or benefit from capacity expansion programs ◼ Each company individually must try to preempt its rivals. ◼ Companies must collectively coordinate with each other to be aware of the mutual effects of their actions. 31 Declining industries  Leadership Strategy ◼ Become the dominant Player in the industry  Niche Strategy ◼ Focus on pockets of demand that are declining slower than the industry as a whole to maintain profitability  Harvest Strategy ◼ Reduce to a minimum the assets employed to reduce cost structure and extract maximum profits from its investment  Divestment Strategy ◼ Exit the industry by selling its assets to another company. 32 Factors Determining Intensity of Competition in Declining Industries 33 Strategy Selection in a Declining Industry 34 Questions? 7/3/2018 35 Individual report Through this case analysis, first of all, I understand how to scientifically analyze the case, roughly divided into seven steps. In the first step, I need to decide the problem, and then I need to have reasonable evidence to prove the problem. After this process, we can start analyzing cases and provide reasonable solutions. During the learning process, we judge the company’s financial situation and expenses to determine which areas need improvement. In this case, we focus on the company's operating cost structure, customer evaluation, product customization, and the company's market share in various areas in order to get a scientific strategy. Our team divided the case into various parts for each team member. But before we start this work, we must fully acknowledge the problem of this case and decide a general direction. Sometimes there will be disputes among team members, but in my opinion, this is a very good phenomenon. At least we all take this homework very seriously and during the discussion, we realized our deficiencies. In my later career, I will develop a work plan for myself so that I can work efficiently. As a financial major student, in the future financial analysis, I should consider all aspects of the company to provide a better strategy. When cooperating with my colleagues, I should actively put forward my own opinions and listen to others' opinions in order to improving my vision and financial analysis skill.
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