MGT 401mid Term Viva

Industry: An industry is a group of firms producing a similar product or service, such as
airlines, fitness drinks, furniture, or electronic games
Industry Analysis: Industry analysis is part of good management. It Is a business function

completed by business owners and other individuals to assess the current business environment.
Why industry analysis is important-1.its development of competitive advantage.2.its

changes in the environment .3.the analysis helps a firms determine.
Firm Level Factors: Include a firm’s assets, products, culture, teamwork among its
employees, reputation, and other resources.
Industry Level Factors: Include threat of new entrants, rivalry among existing firms,
bargaining power of buyers, and related factors
Environmental Trends: Include economic trends, social trends, technological advances,

and political and regulatory changes.
Business Trends: Businesses of all sizes use this kind of data to help predict the future or help
shape strategic decisions. Example: are profit margins in the industry increasing or falling?
Five forces model: Threats of substitute, Threat of New Entrants, Rivalry among existing
firms, bargaining power of buyers, bargaining power of suppliers.
Threats of substitute: is the availability of other products that a customer could purchase from
outside an industry. If price raises coca-cola then Pepsi demand goes up if price if price drops coca-cola
then Pepsi demand goes down.
Threat of New Entrants: refers to the threat new competitors pose to existing competitors
in an industry.
Rivalry among existing firms:, refers to the major determinant of industry profitability is
the level of competition among existing firms.
Bargaining Power of Suppliers: its refers to the pressure that suppliers can put on
companies by raising their prices, lowering their quality, or reducing the availability of their products.
Barriers entrants to supplier industry: supplier concentration, switching cost,

Attractiveness of substitutes, Threat of forward integration.
Bargaining power of buyers: its refers to the pressure that customers/consumers can put
on businesses to get them to provide higher quality products, better customer service, and/or
lower prices.
Barriers entrants to buyer industry: buyer group concentration, buyers costs, degree of
standardization of suppliers product. Threat of backward integration.
Growth rate of an industry: The competition among firms in a slow-growth industry is

stronger than among those in fast- growth industries.
Switching Cost: Switching costs are the fixed costs that buyer when switching or changing
from one supplier to another. If switching costs are high, a buyer will be less likely to switch
suppliers.
Buyer’s costs: The greater the importance of an item is to a buyer, the more sensitive the
buyer will be to the price it pays.
Access to distribution channels: Distribution channels are often hard to crack. This is
particularly true in crowded markets, such as the convenience store market.
Backward integration: The power of buyers is enhanced if there is a credible threat that the
buyer might enter the supplier’s industry
Forward integration: The power of a supplier is enhanced if there is a credible possibility

that the supplier might enter the buyer’s industry.
Level of fixed costs: Firms that have high fixed costs must sell a higher volume of
their product to reach the break-even point than firms with low fixed costs.
Industry Types:
Emerging Industries: is a group of companies in a line of business formed around a new

product or idea that is in the early stages of development. Opportunity: First-mover advantage.
Fragmented Industries: An industry composed one of a large number of small

and medium- sized companies. Opportunity: Consolidation.-mergers and acquisitions
Mature Industries: Industries that are experiencing slow or no increase in demand.

Opportunities: Process innovation and after-sale service innovation
Declining Industries: Its refers to experiencing a reduction in demand. Opportunities:

Leadership, establishing a niche market, and pursuing a cost reduction strategy
Global Industries: refers to industries that effectively operate in all, or most, of the markets
across the world and experience significant international sales. Opportunities: Multi domestic
and global strategies.
Competitor Analysis: A competitive analysis is the process of identifying competitors and
evaluating their strategies to determine their strengths and weaknesses relative to own business,
product, and service. types of competitors –direct, indirect, futures.
Chapter-06
Business model: business model refers to a company's plan for making a profit. It identifies
the products or services the business plans to sell, its identified target market, and any anticipated
expenses.
Importance of business model : Serves as an ongoing extension of feasibility analysis, Focuses

attention on how all the elements of a business fit together and constitute a working whole.,
Articulates a company’s core logic to all stakeholders, including the firms employees .
Value Chain- A value chain is a business model that describes the full range of activities
needed to create a product or service.
Primary activities of value chain—inbound logistics—operations—outbound logistics—

marketing and sales—service
Support activities of value chain—Firm infrastructure—human resource management—

technology development— resource procurement.
Value chain analysis focus on-- A single primary activity such as marketing and sales.,
The interface between one stage of the value chain and another ,such as the interface between
operations and outgoing logistics .One of the support activities, such as human resource
management.
Fatal Flaws : fatal flaws refers to render in business that describes A complete misread of the
customer, utterly unsound economics.
Four component of business model:
1.Core strategy-Core strategy is the strategy which describes how a firm

competes relative to its competitors .
Primary element of core strategy :
i. Business mission Statement ,: A firm’s mission, or mission statement, describes why it

exists and what its business model is supposed to accomplish.
ii) product/market scope,

iii) basis for differentiation - It is important that a new venture differentiate itself
from its competitors in some way that is important to its customers.
2.strategic resources: all those that permit an organization to execute their strategy.
Primary element of strategic resources or/ Two most important strategic resource:
i)Core competencies, A core competency is a resource or capability that serves as a source

of a firm’s competitive advantage. EXAMPLE- Dell’s competence in supply chain management.
ii) strategic assets - Strategic assets are anything rare and valuable that a firm owns. They
include plant and equipment,
Customers interface: customer interface” refers to the dynamic exchange of information

between the customer and a company.
Primary element of customers interface:
Target market : A firm’s target market is the limited group of individuals or businesses that it
goes after or tries to appeal .
Fulfillment and support:
Pricing model/structure: Pricing models vary, depending on a firm’s target market and its
pricing philosophy.

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MGT 401mid Term Viva

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Industry: An industry is a group of firms producing a similar product or service, such as

airlines, fitness drinks, furniture, or electronic games

Industry Analysis: Industry analysis is part of good management. It Is a business function

Why industry analysis is important-1.its development of competitive advantage.2.its

Environmental Trends: Include economic trends, social trends, technological advances,

Barriers entrants to supplier industry: supplier concentration, switching cost,

Growth rate of an industry: The competition among firms in a slow-growth industry is

Forward integration: The power of a supplier is enhanced if there is a credible possibility

Emerging Industries: is a group of companies in a line of business formed around a new

Fragmented Industries: An industry composed one of a large number of small

Mature Industries: Industries that are experiencing slow or no increase in demand.

Declining Industries: Its refers to experiencing a reduction in demand. Opportunities:

Importance of business model : Serves as an ongoing extension of feasibility analysis, Focuses

Primary activities of value chain—inbound logistics—operations—outbound logistics—

Support activities of value chain—Firm infrastructure—human resource management—

Four component of business model:

1.Core strategy-Core strategy is the strategy which describes how a firm

Primary element of core strategy :

i. Business mission Statement ,: A firm’s mission, or mission statement, describes why it

ii) product/market scope,

i)Core competencies, A core competency is a resource or capability that serves as a source

Customers interface: customer interface” refers to the dynamic exchange of information

Primary element of customers interface:

Fulfillment and support:

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