I would recommend that you read all postings labelled 101. I will also make some summary postings to guide you through the material that I have already posted. You should follow all the hyperlinks in the summary postings.
One important aspect of strategic management is industry analysis. Before we can understand the strategies of individual competitors we need to understand the whole industry. This step is often skipped or done in a very superficial manner. Instead I would like you to look at industry analysis like map-making. You are an economic cartographer out to map a part of the economy. The big maps have already been produced, but not the detailed maps.On the detailed level there are still exciting things to uncover, but you never know exactly where. That is your mission, should you choose to accept.
The first step is to define the industry, what exactly is included and what is excluded. The second step is to draw the industry supply curve. This will really test your map making skills.After these preliminaries, we are ready to apply the most well-known strategy model; Michael Porter's five forces framework. Some analysts think about the past and do a quick analysis, which end up being totally meaningless. The past is just the starting point. The real difficulty lies in thinking about the future. Many students get this wrong, because it is difficult. In my experience you need to do 25 different industry analyses to really understand the methodology. That requires a lot of work, but life is long. Pace yourself!
Here are the five forces. I tend to think about them as evil forces out to take/steal the profit available in the industry.
- Bargaining power of suppliers
- Bargaining power of buyers
- Threat from substitute products
- Threat of new entry
- Industry rivalry
Good luck mapmakers!
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