In this document the key notes of the lectures are mentioned. It contains material of the powerpoint slides, mentioned concepts by lecturers, overlap with book concepts and lessons learned (mostly book concepts that were not mentioned in the lectures) from previous exams. There are a lot of bullet ...
Economic measures
- Cost of debt
- Cost of equity
- Weighted average cost of capital (WACC)
Levels of external analysis
- General environment
- Industry
- Strategic group
- Individual firm (internal / competitor)
General external environment
- Technological change
- Demographic trends
- Cultural trends
- Economic climate
- Legal / political conditions
- Specific international events
SCP-model
- Structure
- Conduct
- Performance
5 forces model
- Threat from existing competitors (rivalry)
- Threat from new competitors (entry)
- Threat of substitute products
- Threat of supplier leverage
- Threat from buyers’ influence
- Sixth force complementors
High threat of existing competitors industry conditions
- Large number of competitors
2
, - Slow or declining industry growth
- Low product differentiation (leading to low customer loyalty and switching costs)
- Industry capacity added in large increments
High threat of new competition industry conditions
- High industry growth rate
- Low barriers of entry
o Economies of scale
o Product differentiation
o Government regulation of entry
o Retaliation of incumbent
o Proprietary technology
o Managerial know-how
o Favorable access to raw materials
o Learning-curve cost advantages
High threat of substitutes industry conditions
- High potential of fulfilling the same need (high quality)
- Low switching costs for customers
High threat of supplier leverage industry conditions
- Small number of firms in supplier’s industry
- Highly differentiated product
- Lack of close substitutes for suppliers’ products
- Focal firm is an insignificant customer of supplier
- High switching costs for focal firm
High threat of buyers’ influence conditions
- Small number of buyers
- Low level differentiation
- Low switching costs
Drawbacks five forces
- Averages with big variance
- Unclear weight separate forces
- Highly dependent on industry definition
- Oversimplification / not complete
- Catch 22
Week 2 – Internal analysis
Resource categories
- Financial
- Physical
- Human
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