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Home » Management Homework Help » Marketing Management Help » Industry Structural Analysis
Industry Structural Analysis
In addition to competitors, whether present or potential, immediate or indirect, there are several Competitive forces that determine a company’s search for a favorable competitive position in an industry. In the book, “competitive strategy”, Michael Porter wrote that two central questions underline the choice of competitive strategy:

(i) The first is the attractiveness of industries for long term profitability and the factors that determine it. He identified, “five forces” as the five factors that determine the profitability and attractiveness of an industry. These five forces are explained in the five forces model.

(ii) The second central question in competitive strategy is the determination of relative competitive position within an industry. In most industries, regardless of what the average profitability of an industry is, some firms are simply more profitable than others. A firm in a very attractive industry may still not earn attractive profits, if it has chosen a poor competitive position. According to Porter, a firm can choose a competitive by following one of the three generic competitive strategies: cost leadership, differentiation and focus. These generic strategies help a firm achieve a competitive advantage in an industry.

Neither factory by itself is sufficient to guide the choice of competitive strategy. Both questions are dynamic, as industry attractiveness and competitive position change. Industries can become more or less attractive, and competitive position reflects an unending battle among competitors. Ultimately it is a depth understanding of the industry structure and the ability to influence the structure that determines success or failure in an industry.

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