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The industry structure and the five forces model
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Definition of strategy and analysis of the environment of the firm. Deep analysis of the five forces model.
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6. The industry structureThursday, 30 September 2021 14:31
WHAT IS STRATEGY?
We need key factors to take into account to create a strategy:
• The long term goals
• Consciousness of :
○ Internal resources, and maximising the use of them
○ The external environment, considering in particular competitors
• The execution
Strategy: is the link between the firm and its environment. Consistency is very imp
The firm The environment
• Entrepreneurial team • Competitors
• Resources and capabilities • Costumers
• Structure and systems • Suppliers
THE ENVIRONMENT
The reason why a company exists is to address the needs of costumers.
We need to do so better than our competitors
There are macro factors that can influence the performance of the company:
• new technology
• Government and policies
• The national/international economy (ex the potential spending money of the
• The natural environment
• Demographic structure
• Social structure
—> the macro env. Impacts the firm on the industry env.
—> The industry env. Lies at the core of the macro env.
How the industry impacts on the profitability of the company?
1. Structure of the industry —> five forces model
2. Requirements for success —> key succes factors
Model or framework: a tool that allows us to observe a phenomenon in the prope
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