Hi There

Hi There

  • Submitted By: hoim123
  • Date Submitted: 03/14/2009 10:21 AM
  • Category: Business
  • Words: 544
  • Page: 3
  • Views: 334

hiST week we talked about what you would do if you were the economic

adviser of a big company and were asked to analyse its profitability

or that of another corporation.

Now you know how to do that, but what if your boss asked you to

analyse an entire industry, as often happens.

Your management might just want a "big picture" or overview of the

industry your company is in, so it can then ask you to advise on

future planning.

But, more often, your management is toying with diversifying into a

related industry to make more money. But the managers know little

about that industry, so they want you to analyse it and report.

To do this, you can use a set of "tools" called the "five forces of

industry". They were formulated by a professor at Harvard

University's business school, and can be used to analyse any industry.

If you have attended a business school and gained your MBA, you will

already know these forces.

Force one is the intensity of rivalry among competitors. Let's imagine

that the motor trade in Hong Kong is an industry. Then, if you want to

get into the motor trade, you will find there is intense rivalry.

First, there is the dealer-distributor relationship. Instead of having

one distributor of Ford cars and a number of franchised dealers in

Hong Kong, the sole distributor is the authorised franchisee.

That means you cannot suddenly decide to sell Mazda cars and trucks in

Hong Kong - somebody else has the exclusive franchise.

If you did get a franchise for a new product in Hong Kong, you would

find the competition intense because all major European and Japanese

car manufacturers are already represented and the distributors and

franchisees are fiercely competitive.

They face further competition from the "grey-market" importers who

bring cars in on a personal basis and then sell them at a profit.

The second force is the bargaining power of buyers. Yes, it is very


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