GB 401- Industry Structure Industry Analysis How competitive forces shape strategy: The general and competitive environment Review: The fundamental fact in Strategy is that profits vary across industry and within industry. Some industries have higher average profit than others Some firms have higher average profit than others Industry profitability is relatively stable over longer periods of time Firm profitability shows greater variation over time, but tends to be stable and high for some firms, and stable and low for others. Achieving profits above the industry average is extremely difficult, particularly over a sustained period of time (this is the concept of sustainable competitive advantage) Our job, as Strategists, is to analyze the determinants of firm long-term performance and make recommendations to achieve high performance The General Environment: It is useful to differentiate between the broad (general) environment and the task (competitive) environment The general environment is the big picture that the firm has little control over i.e., the war in Iraq i.e., interest rates i.e., outcome of a presidential election Yet these events may have a significant impact on the firm We can break the broad or general environment down into six categories: Demographic Socio-cultural Political/Legal Technological Economic Global *There is considerable overlap between these categories Demographic: Root of many Δ’s in society Aging population Rising or declining affluence Δ in ethnic composition Geographic distribution of population Greater disparities in income levels Socio-cultural: Influence the values, beliefs and lifestyles of a society More women in the workplace Increase in temporary workers Greater concern for fitness Greater concern for the environment Postpone of marriage and/or starting a family Political/Legal: Influence regulation Americans with...