Contemporary Strategy Analysis, 10th Edition

3Industry Analysis: The Fundamentals

When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.

—WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY

The reinsurance business has the defect of being too attractive‐looking to new entrants for its own good and will therefore always tend to be the opposite of, say, the old business of gathering and rendering dead horses that always tended to contain few and prosperous participants.

—CHARLES T. MUNGER, CHAIRMAN, WESCO FINANCIAL CORP

OUTLINE

• Introduction and Objectives
• From Environmental Analysis to Industry Analysis
• Analyzing Industry Attractiveness
  • Porter's Five Forces of Competition Framework
  • Competition from Substitutes
  • Threat of Entry
  • Rivalry between Established Competitors
  • Bargaining Power of Buyers
  • Bargaining Power of Suppliers
• Applying Industry Analysis to Forecasting Industry Profitability
  • Identifying Industry Structure
  • Forecasting Industry Profitability
• Using Industry Analysis to Develop Strategy
  • Strategies to Alter Industry Structure
  • Positioning the Company
• Defining Industries: Where to Draw the Boundaries
  • Industries and Markets
  • Defining Industries and Markets: Substitution in Demand and Supply
• From Industry Attractiveness to Competitive Advantage: Identifying Key Success Factors
• Summary
• Self-Study Questions
• Notes

Introduction and Objectives

In this chapter and the next, we explore the ...