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3-1

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Industry Analysis

Chapter 03

3-3

Category Attractiveness Summary

3-4

Aggregate Category Factors

Category size Category growth Stage in product life cycle Sales cyclicity Seasonality Profits

3-5

Attractiveness of Market Variables

3-6

Category Attractiveness over the Product Life Cycle

3-7

Category Factors

Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Current category rivalry Pressure from substitutes Category capacity

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Factors in Assessing the Structure of Industries

Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Amount of intracategory rivalry Threat of substitute products or

services

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Threat of new entrants

Economies of Scale Product Differentiation Capital Requirements Switching Costs Distribution

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Buyer Bargaining Power is High When:

Product bought is a large percentage of the buyer’s cost.

Product bought is undifferentiated. Buyers earn low profits. Buyer threatens to backward

integrate. Buyer has full information. Substitutes exist for the seller’s

product or service.

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Supplier Bargaining Power is High When:

Suppliers are highly concentrated, that is, dominated by a few firms.

There is no substitute for the product supplied.

Supplier has differentiated its product or built in switching costs.

Supply is limited.

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Major Characteristics of Categories Exhibiting Intensive Rivalries

Many or balanced competitors Slow growth High fixed costs Lack of product differentiation Personal rivalries

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Impact of Category Factors on Attractiveness

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Environmental Factors

Technological Political Economic Regulatory Social

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Typology of Technical Developments

3-16

Conceptualizing Political Risks

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Projected Population Change in the U.S.: 2000–2010

3-18

The 10 Themes of N-Gen Culture

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Evidence of Inequality, as Cited by Federal Reserve Chairman Ben Bernanke

3-20

Share of Food Purchases

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Category Attractiveness: Retail Coffee

3-22

Category Attractiveness: MP3 Phones