Industry, Competition and
Strategy

Industry
• Number of Sellers
• Degree of differentiation

Pure Monopoly
• Only one Provider
Unregulated monopoly
Regulated monopoly

Oligopoly
• Small no. of Firms Providing Service
• Pure Oligopoly ( Less/ No Differentiated)- Steel
• Differentiated Oligopoly ( More Differentiated)Camera, Overhead projectors

Monopolistic Competition
• Many Competitors
• Ability of differentiate offering is high
- Hotels

Pure Competition
• Many Competitors
• Similar Offering
• Scope and basis for Differentiation is low
- Cereals, Cigarette, Tea, Biscuit

Drivers of Industry’s Competitive Structure
•
•
•
•
•
•

Entry Barrier
Mobility Barrier
Exit Barrier
Cost Structure
Degree of Vertical Integration
Degree of Globalization

Entry Barrier
•
•
•
•
•
•
•

Capital Requirements
Economies of Scale
Patents
Licensing Requirement
Location
Raw materials
Intermediaries

Exit Barrier
• Legal and Moral Obligation to Customers,
Creditors, Employee
• Govt. Restrictions
• Low Asset Salvage Value
• Lack of Better Opportunities
• High Degree of Vertical Integration

Mobility Barrier
• Barrier when Firm Tries to go Upward, Enter
More Attractive Segments
( AirAsia & Vistara; Permission to operate internationally)

Cost Structure
• Which Component is the major Cost Centre
-Manufacturing
- Distribution
-Advertising
-Licensing and any other

Degree of Vertical Integration
• Flexibility in Operating in a Highly Integrated
Chain and its Disadvanatges.

Degree of Globalization
• How Local/Global the Firm is ?

Analyzing Competitors
• Strategic Groups

Strengths and Weaknesses of Competitors
• The three Variables to be Considered
Share of Market
Share of Mind
Share of Heart

Industry attractiveness analysis

Debasis Pradhan, XLRI, India

Porter’s Five Force