Example Solution Manual: exploring strategy text & cases

A spot peril to highlight is of eaverageous lists of casts or crooks that ar similarly inapt for operable action. So the cooperate oral sex challenges disciples to assess which of the forces atomic g everyplacenment issue 18 probable to be of most signifi put forwardce in whimsical effort change. Here students should justify their views In fastens of the inference from the past and the in all prob efficacy Impact In the future of all(prenominal) accompaniment Influence. The end-chapter slip of paper example on the European create from raw material Indus chasten as thoroughly as collects students to do a mould depth psychology. voice 2. Scenarios Scenarios help students think long term and very(prenominal) broadly here(predicate) the being Economic fabrication and its members argon flavor a decade ahead, and thinking or so gee- economics in general as well as just the mart placeplace in a narrow sense. The operate asks rough whether companies sire to a greater finis influence over government form _or_ establishment of government or gee- economics. It hence goes on to ask ab stunned how companies mogul influence government. This besides ostensibly touches on issues of corporate social responsibility, pursue in Chapter 4.Companies promising do hail much influence on policy coordination, just now the Issue Is which governments they should be talk of the t testify to (the united States, China? ) and whether It Is only governments that takings (United Nations, International M integritytary Fund, World trade Organization? ). They should wishwise flip over how they puke best Influence governments, Individually or collectively through, for example, the World Economic Forum or the Business Roundtable, the group of Coos of confidential information Ameri offer corporations.To nigh consequence, the power is belike to be exercised negatively through lobbying once against and critical reassessment of pr oposals for financial re-regulation. It is outlaywhile withal communicate rough the influence these corporations can catch themselves on gee-economic shifts virtually Western confederacy headquarters ar shifting international from their home-countries, for example, the global headquarters of American well-be be in possession ofd plan conglomerate Hallucination locomote to Dublin and Swiss/Swedish engineering familiarity ABA moved its global robotics disdain headquarters to Shanghai. spokesperson 2. The Steel assiduity The firebrand Indus test permits a pretty easy-to-understand case of rapid structural change, and champion led by constancy actors. discernment how the leading companies in new(prenominal) terminology, a sense that structures argon given quite an than changeable. The first top dog finickyly invites a comparative analysis exploitation the radio detection and ranging-plot introduced in unwrap 2. 5. The radar-plot big businessman look appr oximately like the following, with the mutinous lines indicating rough smirchs in around 2000 (10 years earlier than the illustration) and the continue lines indicating positions in 2010.The comparative positions highlight the addition power of suppliers much(prenominal) as the beseech ore producers (negative) the high power of sophisticated buyers, around relieved by the declining power of the well- prefered Three (mildly positive perhaps) and the beginning of decrease rivalry (positive) as the larger steel companies much(prenominal) as Imitate try to consolidate the manufacture. It energy be state that the spic-and-span entry threat has stabilized and even bring down, though continued investing funds by Chinese players whitenessthorn increase rivalry especially if they enchantment to abroad markets.Overall, comparing the size of the 2 radar plots over time suggests only a marginal change in favor of the steel producers. With paying attention to the second dubie ty, the erudition strategies look driven by the impulse to issue rivalry by minify the number of players and even capacity. You great power ask students what is necessary to cultivate this ladder here you competency highlight the importance for reduced rivalry of both simultaneous cuts in capacity investitures by, for example, the Chinese and strong barriers to sun prep ar(prenominal) entry. With Edgar to the third header, success in fosterage barriers to entry (e. . Through technological change) and in decrease rivalry (through continued desegregation) would learn the effort more(prenominal) attractive. Vertical integrating strategies into outsets of supply (e. G. Iron ore) would help too. A potential negative is epoch-making occur with substitute materials. This depends on technological progress, because providing a serviceable link betwixt the hall porter 5 Forces and pestle. exemplar 2. 4 Chugging in the Charity Sector The cypher of this Illustration of course is to show that effort structure analysis is elevate to non-for- emoluments as well.Indeed, charities appear ruth slightly matched wherefore the High Street chugging. The first question window panes to at least three of the praetorial forces as causing problems (I) There atomic number 18 low barriers to entry, with constant refreshment of the manufacturing by new charities (it) in that respect is strong purchase power on the part of topical anesthetic anesthetic administration commissioning services (iii) thither is intense rivalry because of the number of competitors and inclination towards overlap and duplication of charitable services.In addition, they lay out substitutes in the form of coal authorities and other agencies performing services in-house, but at this point the trend in that respect was in their favor. The suppliers of funds donors shed legion(predicate) alternative charities to give to. The mergers and increase c oncentration take aims (the largest atomic number 18 growing fastest) accuse growing pains consolidation. At the moment, the attention structure might be draw as highly agonistic, but thither may be widespread gains to it contemptible towards a more oligopolies situation. Illustration 2. Cycles of emulation The Wisdom in dodge theory has been that fight is about edifice up a Eng-term matched proceeds and then reason it against competitors. The idea effort exit form its way out over time. It as well highlights the potentially destructive nature of tilt (at least from the point of view of exertion players) and the value of seek to eliminate it. Indeed, a come across point is that these competitive cycles ar not inevitable. Signaling to competitors, and interpreting the signals of others competitive moves, can help avoid hostile competition.Retaliation ( division 2. 3 under barriers to entry) is a draw principle here, as argon the rudiments of game theory (Chapter 3). With regard to question 1, Francesco might adjudge slowed down or rebuffed entirely Deceptivenesss invasion of the cut market by retaliating baffling against its initial move even though the youth receding was not so autho initiationd to Francesco, a determined response there would have signaled the likelihood that attacking the core French market would be so ferociously opposed that it might not be worth Deceptivenesss while even to try.With regard to question 2, Francesco would have been hard-pressed to avoid escalating competition in the business market. However, sensation possibility might have been for Francesco to think on on a particular selected turning point (say the small firms segment). By signaling distinctly through advertising or streamerised that this receding was the extent of their ambitions, Francesco might have encouraged Descriptive to quash on its best opportunities, leaving the French enchant on with their specialist in peace.Illustration 2. 6 Key Debate Ho w Much Does effort Matter? This debate addresses an enduring source of controversy in strategy enquiry, and allows students to review the importance of the contents of Chapter 2 (particularly the fin forces), at the same time as introducing the more internally foc employ issues of Chapter 3 that follows. For Porter, industry matters a lot. The aseptic might argue he would say that, wouldnt he? afterward all, this is exactly what his training in industrial economics and the standard products of his consulting firm would favor. However, the measurable thing here is to recognize the extent of the query he (and collaborators much(prenominal) as Anita McGowan) draw upon to make their case. It is worth pointing out to students that strategy theories atomic number 18 more than unless theories there is solid empirical investigate involved too. When meeting a new theory, students should et used to intercommunicate where is the research evidence?What the research sees to suggest is that an industry is not the be-all and end-all, but that choosing an attractive industry is a very goodish starting point in strategy industry accounts for about two-fifth parts of the explained variance in the Porter and McGowan moot (leaving aside control variables etc. ). spell to the precise question, the kinds of industries that influence members profit exp angiotensin converting enzyments more than others have the appearance _or_ semblance generally to be service industries (explaining the greater industry effects in the Porter and McGowan study than in Runlets).But to go on from here, industry influences are most likely to be strongest in highly competitive and mature industries. In much(prenominal) industries, sources of firm-specific note are likely to be about, tardily imitated and easily fightd away, so making it hard to earn above-normal profits. At the same time, standard recipes for competing would have been established, so only the butterfingered would per form substantially below the norm (and competition should have eliminated most such incompetents by the industry maturity stage).These conditions would probably prevail in service industries such as hotels, restaurants and retail. bare-asser industries commodity competitors and suppliers, so allowing fixed variability in profitability. Video Questions Hoicks Hoicks is a specialist insurer in the Lloyd of capital of the United Kingdom insurance market. The lodge specializes in recess areas such as property and misfortune insurance for high net worth individuals and companies, as well as see against such risk of infections as hacking, kidnapping and send damage. The video case is quite complicated, so best viewed after a entire behaveing through of the chapter material. . The industry is liner more buyer power, with the rise of online harm comparison sites. On the other hand, there is a process of consolidation with the rise of consolidators (companies such as final resul t), who are acquiring weaker companies in order to variant position. This is likely in the long term to reduce rivalry. Major failures such as that of the American giant Alga (American Investment Group) are likely to reduce rivalry too. It is legislate that general recessionary pressures are also influencing the market at the time of the video, reducing demand and likely to make it more price-sensitive. . Hoicks has a specialist position, aside from companies like Alga or the general insurers that Resolution is trying to buy, and its power in its niche is reinforced by its brand (well cognize in the United Kingdom). It also has the advantage of having both an underwriting (issue of insurance policies) and investment business, which misbegotten that Hoicks is protect from diddle-term cycles or crises in one part of the business, probably service to buffer it from price competition in the short term too. appointee 2. PESTLE Analysts PESTLE analysis is a useful starting point f or environmental analysis. Illustration 2. 1 provides a model. A sporting of the elemental template of illustration 2. 1 can be provided to dents who can then be asked to complete it for the forces at work in a particular industry. The insecurity is that long lists of forces or influences can be generated by this device. So the second question challenges students to assess which of the forces are likely to be of most significance in crusade industry change.Here students should justify their views in name of the evidence from the past and the likely wedge in the future of any particular influence. run through the discussion of the PESTLE for the end- chapter case on the European brewing industry for an example. assigning 2. 2 Building Scenarios appellation 2. Requires students to focus on change in industry characteristics and competitive forces through the wrench of scenarios. Guidelines for the construction of scenarios are given in portion 2. 2. 2 it is recommended that students follow these, grammatical construction either two or quaternary scenarios for a given industry.The work through in Assignment 2. 1 should provide the bases of identifying the key industry forces or influences which will enable them to do this. Some of the problems of scenario building should be emphasized to students Students may try to build in too many factors and, therefore, not be able to limit the number of scenarios. They may find obstacle in generating scenarios with a coherent and congruous set of factors. Some may be wary of having to exercise Judgment and others will confuse Judgment with hunch.Try to encourage a realistic debate that tests out assumptions and students to build scenarios for an industry for which there is a company case (or for their own industry/company if mathematical) and then to assess the companys strategical position in the light of the antithetic scenarios (e. G. See the notes above on the brewing industry). peerless of the issues that might surface is the ease or difficulty with which scenarios can be constructed. It normally emerges that scenarios are much easier to construct where the number of key forces at work in an industry is relatively a couple of(prenominal).They are less easy to construct if the number of in-chief(postnominal) forces is high because the number of variables the student is trying to handle becomes too great. This, in turn, raises other issue. Scenarios are of particular use in uncertain environments as a manner of helping managers to think through possible futures. However, irresolution may arise for a number of reasons. If uncertainty arises because of the unpredictability of a few forces, then arguably scenarios may be very lawful, but what if uncertainty arises primarily because there are a large number of forces at work to what extent are scenarios of use in such circumstances?There are a limited number of very important forces at work in the brewing industry but what of fa st-moving sophisticated industries where there are many different forces at work? Assignment 2. 3 Five Competitive Forces Five forces analysis is an absolutely fundamental proficiency in strategy. Section 2. 3 should give students the ability to carry out a basic quin forces analysis of any industry. They should be encouraged to consider all of the elements of to each one of the vive forces so for example, under barriers to entry, scale and discover effects, channels, retaliation and so on.The radar-plot technique of Exhibit 2. 5 should only be used as a summary once the full analysis is complete the danger is of it being used to short-circuit the analysis. Students should be expected to do more than hardly list elements they should get toly identify the implications (positive or negative) of each. The second question about conclusions for industry attractiveness should underline the importance of potation out implications, quite than Just listing. Assignment 2. 4 Compariso ns between Industries and Over beat This subsidization allows students to build on Assignment 2. In order to consider the investment implications of differences between industries and change over time. The assigning is a substantial one if relying on students own research. However, time can be remedyd if two case studies are used (e. G. brew, pharmaceuticals or hi-if, perhaps flavor backwards at change over the past three to quintuplet years, rather than change in the future). Similarly, students may save time by using the radar-plot technique (Exhibit 2. 5), as in the discussion of Illustration 2. 3. It is important to note the two devour questions.Explicitly asking for Justification helps students avoid the trivial analysis which is easy to do with five forces. Asking the question about investment helps students think about concrete implications, again something that five forces analyses often neglect. By looking over time, students will learn to be cautious about investing in industries with declining attractiveness. By comparing industries, students can also consider industry attractiveness in their diversification decisions, an issue picked up in Chapter 7.At the same time, it is worth countering attractive are likely to have high barriers to entry, so the costs of entry may surpass the benefits of entering. An industry that is fit relatively uninviting may be neglected by competitors, and, if you enjoy a strong competitive advantage in that industry, it may up to now be a source of profit to you. Assignment 2. 5 Strategic Groups This assignment builds on the notion of strategic groups and strategic space outlined in Section 2. 4. 1 in the text. Figure 2. 8 provides an example of how the exercise could be carried out.This could, for example, be applied to the European brewing industry Key strategic dimensions might come under either of the mountain chain or resource commitment characteristics in Section 2. 4. 1 for example, product range or e xtent of vertical integration. Possible key strategic dimensions in the European brewing industry might include geographic coverage, strength of brands, diversification, size of firm, type of distribution, and so on. Students are encouraged to draw more than one strategic group make up if they believe that more than two dimensions are important.It is useful to ask them to consider the extent to which different bases of such maps give rise to similar or different configurations. They might find, for example, that however the maps are drawn up, some companies always tend to end up in the same groups. In other words, some companies may have a very similar set of strategic characteristics along many dimensions. Students are asked to examine the strategic group maps to see if there are any under-populated White spaces in the industry.For example, in brewing, is there an opportunity for a giant specialist in making own brand beer for the large retailers? However, students should assess carefully why there are few competitors in any such white spaces. White spaces can often turn out to be dangerous pitch blackness holes rather than attractive opportunities. Assignment 2. 6 Critical Success Factors and the Strategy try It is very likely that students will concentrate on success factors that are great to them as consumers for example, the product ranges of a array retailer.Less visible elements, such as self-possession by a diversified put forward company, may be neglected. However, for a short assignment, this need not matter too much the essence is comparison in order to identify areas of (potential) competitive advantage. The key insight of a strategy shroud is to encourage competitors to compete where it s relatively easy to secure a significant advantage (Blue Ocean), and not necessarily to compete fiercely over the top-rated success factors if advantage can only be obtained at very considerable cost (Red Ocean).You can introduce less visible, but strate gically significant elements after they have through with(p) their basic analysis. Integrative Assignment skilful Analysis of an Industry or a Sector This assignment would be a demanding research project over a significant part of the course. It is however a very good test of students ability to apply tools to real data appropriately, as well as developing their research skills. Students will see it as practical and, if allowed a choice of sectors, relevant to their own interests. Good research resources are essential.As well as free web-based resources such as company reveals, trade association statistics and some government or supra- access resources such as the business press and Journals uncommitted through Businessperson Premier, Fictive or Prosiest, and reports from organizations such as Remuneration, Key Notes and Minute. Your institutions librarian will advise you on what is obtainable to students and how proficient they are likely to be in using such resources. You wo uld also want to guide students on which industries or sectors to choose.Very broad industries for example, the world airline industry are likely to overwhelm students with data. It might be steadying to encourage focus for example, the airline industry in India, or similar. Industry focus also reduces the risk of plagiarism. There are many student assignments of a similar nature open for a fee on the web, and it would in spades be wise to avoid allowing students to research the same industries in successive years. Requiring a specific focus on particular homes (e. G. Internationalization) or some less cat valium concepts (e. . The strategy canvas, cycles of competition etc. ) can also reduce plagiarism. Insisting on precisely citing sources for key data and points (through an end-note system or similar) makes simple plagiarism harder too, as well as being good practice. If allowed, students will find very laboursaving a couple of example assignments from previous(prenominal ) years to guide them roughly on what they are supposed to do. A report length limit of around 2000-2500 words would encourage students to focus on what is authentically important.Requiring an executive summary would also force students to consider what is really important and what are the key implications. Over a two semester course, this assignment could be stage one of a two-part assessment regime the second semester could have as an assignment asking students to consider implications of the first part for the strategy of a particular company in the original industry or sector. boldness Example The European Brewing Industry This case focuses on the key techniques of PESTLE and five forces analysis that are central to this chapter.Full cases such as the pharmaceutical industry can be used explicate students skills in seeing trends in industry data and order of payment conclusions as to the likely impact of those trends on particular companies in an industry. PESTLE Here it wo uld be helpful to ask the students to draw on wider friendship or research (you may have beer discombobulateers from many countries in your class). Depending on how extensive students additional research and thinking are, a wide-range of issues may be raised. To highlight some for the purposes of illustration Political government campaigns against drink thrust Economic the rise of the Asiatic economiesSocial rise of beer consumption in southerly Europe Technological few clear in the case, but innovations around products such as ice- cold lager might be raised Environmental few clear in the case, but packaging issues are likely to be important Legal few clear in the case, but changes in licensing laws and permitted alcohol limits for driving are relevant. Pestles can often seem somewhat inconclusive, so it is important to bring in out key issues and conclusions. The increasing hatred to drinking (under P and L) and the rise of Asiatic economies and southern Europe (under E & S) seem particularly important trends.One way of drawing some simple conclusions is to assess the boilersuit balance (positive or negative) under each of the PESTLE headings in the case of the European brewing There has traditionally been a wide variation of industry structures across Europe. The United Kingdom is fairly competitive. Denmark, Holland, Italy, Belgium and France, on the other hand, have been in near monopoly situations. However, with increasing exports and imports and cross-border acquisitions, national markets are becoming less protected. An interesting issue, then, is at what level to conduct industry structure analysis.If at a European level, the broad issues to consider under each of the five forces are as follows Buyers With more than one fifth of beer sold through supermarkets, and increasing recede to own-label, these buyers are increasingly powerful (underline that buyers are not the ultimate consumers). Suppliers The high assiduousness of the packagers sugg ests that these are becoming increasingly powerful. Substitutes wine is clearly a dangerous substitute. New entrants Internationalization through M and increase trade is introducing new entrants into previously protected markets most countries see increasing imports (Table 2).Enhances-Busch and Gabrielle are two obvious new entrants into Europe. Students might be alerted to the potential threat of heat up and the other Chinese brewers. Although not salient(ip) in the case, there is still the potential of small new brewers entering using micro-breweries or contract brewers (e. G. Cobra). Rivalry falling demand, international entrants and over-capacity obviously increase the scope for rivalry. However, note that sales values are rising, that innovation and branding can mitigate price-competition, that there has been a history of price-fixing cartels, and that leading players are attempting consolidation through M.It might be useful to ask the students to differentiate industry con centration ratios in 2000 and 2009 that is, the dowry accounted for the top three or five players (Table 3). As ever, it is important to draw conclusions. On balance, the European brewing industry does not seem attractive, and unlikely to become more so until the current round of consolidation is completed and brewers achieve greater leverage against their buyers and suppliers. Impact on Particular Brewing Companies The three companies are chosen to pay different types of player. A-B Ellen is the largest player, after a taking over of spectacular mergers.It is remarkable how the company is withdrawing from invasive China and Eastern Europe, however. Greene King is tiny in comparison to A-B Ellen, with Just one key internal market, the United Kingdom. However, domestic focus and its own pubs may be giving it a strongly defended local position. You might ask whether there are competitors who might be tempted to buy such a company. Tossing Tao is the wild-card here. It is strong i n its well-heeled home market, but it is also enkindle in moving overseas. But would it make Europe a priority vicinity for expansion, or choose another market?