Mcocase

MCO 101Issue date: 15 June 2008

How To Do Your Case Study?

March 2009


To Think the Case by Answering the Following Questions

• Who are we?• Where are we now?• How did we get here?• Where are we going?• How can we get there?


Who are we?

• Background Introduction • Corporate strategy and business

strategy– What kind of product or service do you

provide?• Product, service, lifestyle. etc

– What’s your advantages and disadvantages?

• The business model (profit pattern)


Where are we now?

• Where is the company or industry now?

• How well is it doing financially and in terms of market performance

• What’s the main problems?• SWOT analysis for current situation (Page 97)


Where are we now?

• External environment analysis– Economic situation– Industry situation– Competition situation

• Internal environment analysis– What problems do we have, or are we facing?– Performance

• Industrial or corporate performance• Financial performance

• Five-force model analysis (industry attractiveness)


How did we get here?

• What have been the environmental and management factors that had led to the present success or failure?

• The successful business model or the successful experience

• The failed experiences• What can be learned from the past


Where are we going?

• Where is the business heading?• Does the future environment and

application of the present strategy look favorable or unfavorable?– The goal or target– The trade-off and opportunity cost– strategy or planning– The reason to go there


Where are we going?

Rate of Profit Above the competitive LevelHow do we make money?

Industry AttractivenessWhich industry should we be in?

Competitive AdvantageHow should we compete?

Corporate Strategy

Business Strategy


How can we get there?

• What should be done?• What strategies and decisions are required to

overcome the current problems or capitalize on its opportunities?

• How should your suggestions or your recommendations be implemented?– Opportunities– Challenges or difficulties– Resources that have obtained for to be obtained– The solution to solve problems– The prospect

• SWOT analysis


The Environmental Analysis


Political/Legal

Political/Legal

EconomicEconomic

TechnologicalTechnological

GlobalGlobal

DemographicDemographicSocio-culturalSocio-cultural

CompetitiveEnvironment

Industry Environment


Components of the General EnvironmentComponents of the General Environment


SWOT Analysis

• Strengths• Weaknesses• Opportunities • Threats


The Purpose of SWOT Analysis

• It is an easy-to-use tool for developing an overview of a company’s strategic situation– It forms a basis for matching your

company’s strategy to its situation


SWOT is the starting point

• It provides an overview of the strategic situation.

• It provides the “raw material” to do more extensive internal and external analysis.


Strengths

What advantages or capabilities the firm hasR & DMarketingDistribution channelKnow-howBusiness model, etc


Opportunities

• An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment.

• Possible Opportunities:– Emerging customer needs– Quality Improvements– Expanding global markets– Vertical Integration


Weakness

The disadvantages the firm hasFinancial status: cash flowMarketing: product positioning

(competitors)Corporate culture and structure:

bureaucratic and motivationR & D, etc.


Threats

• A THREAT is a factor in your company’s external environment that poses a danger to its well-being.

• Possible Threats:– New entry by competitors– Changing demographics/shifting

demand– Emergence of cheaper technologies– Regulatory requirements


Opportunities and Threats form a basis for EXTERNAL analysis

• By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification.

• By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position.


The purpose of Five-Forces Analysis• The five forces are environmental

forces that impact on a company’s ability to compete in a given market (return on capital or ROC).

• The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.



Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants

Porter’s Five Forces Model of CompetitionPorter’s Five Forces

Model of Competition


Threat of New EntrantsThreat of New Entrants

Barriers to Entry

Barriers to Entry

Government Policy

Economies of Scale

Product Differentiation

Capital Requirements

Switching Costs

Access to Distribution Channels

Cost Disadvantages Independent of Scale


Bargaining Power of Suppliers


Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants




Bargaining Power of SuppliersBargaining Power of Suppliers

Suppliers exert power in the industry by:Suppliers exert power in the industry by:

* Threatening to raise* Threatening to raiseprices or to reduce qualityprices or to reduce quality

Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Suppliers are likely to be powerful if:

Supplier industry is dominated by a few firms

Suppliers’ products have few substitutes

Buyer is not an important customer to supplier

Suppliers’ product is an important input to buyers’ product

Suppliers’ products are differentiated

Suppliers’ products have high switching costs

Supplier poses credible threat of forward integration


Bargaining Power of Buyers


Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants






Bargaining Power of BuyersBargaining Power of Buyers

Buyers compete with the supplying

industry by:

Buyers compete with the supplying

industry by:

* Bargaining down prices* Bargaining down prices

* Forcing higher quality* Forcing higher quality

* Playing firms off of* Playing firms off ofeach othereach other

Buyer groups are likely to be powerful if:

Buyers are concentrated or purchases are large relative to seller’s sales

Purchase accounts for a significant fraction of supplier’s sales

Products are undifferentiated

Buyers face few switching costs

Buyers’ industry earns low profits

Buyer presents a credible threat of backward integration

Product unimportant to quality

Buyer has full information


Threat of Substitute Products


Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants








Threat of Substitute ProductsThreat of Substitute Products

Products with similar function limit the prices firms can charge

Products with similar function limit the prices firms can charge

Keys to evaluate substitute products:

Products with improving price/performance tradeoffs relative to present industry products

Example:

Electronic security systems in place of security guards

Fax machines in place of overnight mail delivery




Threat of New

Entrants

Threat of New

Entrants

Threat of New

Entrants

Rivalry Among Competing Firms

in Industry

Rivalry Among Competing Firms

in Industry








Rivalry Among Existing CompetitorsRivalry Among Existing Competitors

Intense rivalry often plays out in the following ways:

Jockeying for strategic position

Using price competition

Staging advertising battles

Making new product introductions

Increasing consumer warranties or service

Occurs when a firm is pressured or sees an opportunity

Price competition often leaves the entire industry worse off

Advertising battles may increase total industry demand, but may be costly to smaller competitors


Cutthroat competition is more likely to occur when:

Rivalry Among Existing CompetitorsRivalry Among Existing Competitors

Numerous or equally balanced competitors

Slow growth industry

High fixed costs

Lack of differentiation or switching costs

High storage costs

Capacity added in large increments

High strategic stakes

High exit barriers

Diverse competitors


The Five Forces are Unique to Your Industry

• Five-Forces Analysis is a framework for analyzing a particular industry.– Yet, the five forces affect all the other

businesses in that industry.


Competitor AnalysisCompetitor Analysis

The follow-up to Industry Analysis is effective analysis of a firm’s Competitors

CompetitiveEnvironment





AssumptionsWhat assumptions do our competitors hold about the future of industry and themselves?

Current StrategyDoes our current strategy support changes in the competitive environment?

Future ObjectivesHow do our goals compare to our competitors’ goals?

CapabilitiesHow do our capabilities compare to our competitors?

ResponseResponseWhat will our competitors do in the future?

What will our competitors do in the future?

Where do we have a competitive advantage?

Where do we have a competitive advantage?

How will this change our relationship with our competition?



Future ObjectivesFuture ObjectivesHow do our goals compare to our competitors’ goals?

How do our goals compare to our competitors’ goals?Where will emphasis be placed in the future?Where will emphasis be placed in the future?

What is the attitude toward risk?What is the attitude toward risk?

What Drives the competitor?



What is the competitor doing?

What can the competitor do?




Current StrategyCurrent StrategyHow are we currently competing?How are we currently competing?

Does this strategy support changes in the competitive structure?

Does this strategy support changes in the competitive structure?



What does the competitor believe about itself and the industry?





Does this strategy support changes in the competition structure?


Do we assume the future will be volatile?Do we assume the future will be volatile?

Are we assuming stable competitive conditions?Are we assuming stable competitive conditions?

What assumptions do our competitors hold about the industry and themselves?


AssumptionsAssumptions



What are the competitor’s capabilities?








Are we operating under a status quo?Are we operating under a status quo?




What are my competitors’ strengths and weaknesses?What are my competitors’ strengths and weaknesses?

How do our capabilities compare to our competitors?


Capabilities










Are we operating under a status quo?Are we operating under a status quo?




ResponseResponseWhat will our competitors do in the future?What will our competitors do in the future?

Where do we have a competitive advantage?Where do we have a competitive advantage?



CapabilitiesCapabilities

What are my competitors’ strengths and weaknesses?What are my competitors’ strengths and weaknesses?


