Business Analysis and Valuation Using Financial Statements Ch 2.Palepu.ppt

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1、Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Chapter 2:Strategy Analysis,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thom

2、son,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,The Importance of Strategy Analysis,Strategy drives the actions of an organization.Studying a firms strategy provides:An understanding of what drives risks,profitability,and competit

3、ive advantagesA basis for future performance to be forecastedAn idea of how to measure the success of a firms actions,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy Analysis

4、Palepu&Healy,Key Concepts in Chapter 2,The importance of industry-level analysisPorters“five forces”framework for industry analysisCompetitive strategy analysis of the firmCorporate strategy analysis for multi-business organizations,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corpor

5、ation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,The Importance of Industry-Level Analysis,A firms strategy is heavily influenced by the industry it belongs to.Understanding the environment and competitive forces within a

6、n industry helps with evaluating the quality of a particular firms strategy.Porter created a useful framework to evaluate the competitive forces at work in an industry,as seen in Figure 2-1.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-West

7、ern are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Industry Structure and Profitability,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy Ana

8、lysisPalepu&Healy,Competitive Force 1:Rivalry Among Existing Firms,Higher degrees of competition among firms:Push prices towards the marginal cost of production.Make non-price dimensions of products or services more important.Determinants of the intensity of competition among firms:Industry growth r

9、ate.Concentration and balance of competitors.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Rivalry Among Existing Firms,continued,Determinants of the

10、intensity of competition among firms:Degree of differentiation in products and services and switching costs.Scale/Learning economies and ratio of fixed to variable costs.Excess capacity and exit barriers.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,

11、and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Competitive Force 2:Threat of New Entrants,The ease with which a new firm can enter an industry will affect the profitability of other firms within the industry.Factors affecting the barriers to entry

12、 are:Economies of scaleFirst mover advantageRelationships with suppliers and customersLegal barriers,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Comp

13、etitive Force 3:Threat of Substitute Products,The degree to which substitute products or services exist affects the industrys bargaining power with suppliers and customers,and ultimately profitability.The degree to which substitutes exist depends upon the relative price and performance of competing

14、products or services,and the willingness of customers to accept substitutes.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Competitive Force 4:Bargaini

15、ng Power of Buyers,Buyer bargaining power can exert downward pressure on prices.Factors that can affect this bargaining power are:Buyer price sensitivity to product or serviceRelative bargaining power of buyers,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star

16、 logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Competitive Force 5:Bargaining Power of Suppliers,A mirror image of the bargaining power of buyers.Suppliers have bargaining power when there are few substitutes and/or few suppliers relative to

17、 the number of customers demanding a product or service.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Applying Industry Analysis to the Personal Compu

18、ter Industry,Despite the sales volume and ubiquity of the product,profitability in the industry was low.Competitive forcesBargaining power of suppliers and buyers,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used here

19、in under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Competitive Strategy Analysis,Individual firms must choose appropriate strategies to succeed within their industry segment.Two basic competitive strategies are:Cost leadershipProduct/service differentiationFigure 2-2 conveniently summarizes a

20、spects of cost leadership and differentiation.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Strategies for Creating Competitive Advantage,Copyright(c)

21、2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Achieving and Sustaining Competitive Advantage,Choice of strategy is an important first step for a firm.The likelihoo

22、d of achieving and sustaining competitive advantage must be evaluated.Factors to evaluate include:Resources and capabilities to implement strategies.Whether the firms activities,infrastructure,and other operating elements consistent with its competitive strategy.,Copyright(c)2008 Thomson South-Weste

23、rn,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Applying Competitive Strategy Analysis to the Dell Computer Corporation,How was Dells growth in income and market share achieved and sustaine

24、d?Low-cost competitive strategyDistribution channelMass customizationOutsourcing serviceCash managementInvestment in R&D,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy Analy

25、sisPalepu&Healy,Corporate Strategy Analysis,Companies with multiple business segments require an analysis how the separate segments are managed within the corporate governance structure.Factors to analyze include:Transaction costsSpecific benefits to operating under one corporate umbrellaThe case of

26、 General Electric.,Copyright(c)2008 Thomson South-Western,a part of the Thomson Corporation.Thomson,the Star logo,and South-Western are trademarks used herein under license.,Chapter 2:Strategy AnalysisPalepu&Healy,Concluding Comments,The industry analysis approach has notable strengths and some limitations.Porters“five forces”framework is valuable in evaluating the strategy and actions of firms within an industry.,