Question

What are the driving forces in the industry in which your simulation company is competing [consider a SWOT]? What impact will these driving forces have? Will they cause competition to be more or less intense? Will they act to boost or squeeze profit margins? Support your answer with research from at least three scholarly sources. Your initial posting should be a minimum of 250 words. T his should be related to athletic footwear industry

Answer 1

Core Concept: Dynamic industry analysis involves determining how the drivers of change are affecting industry and competitive conditions.

While it is critical to understand the nature and intensity of the competitive forces in an industry, it is just as important to understand that the intensity of these forces and the level of an industry’s attractiveness are and subject to change. industries are affected by new developments and ongoing trends that alter industry conditions, some more speedily than others. Many of these changes are important enough to require a strategic response. Since the competitive forces have such significance for an industry profit potential, it is critical that managers remain alert to the changes most likely to affect the strength of the five forces. Environmental scanning for changes of this nature will enable managers to forecast changes in the expected profitability of the industry and to adjust their company’s strategy accordingly.

Changes that affect the competitive forces in a positive manner may present opportunities for companies to preposition themselves to take advantage of these forces. Changes that affect the forces negatively may require a defensive strategic response. Regardless of the direction of change, managers be able to react in a more timely fashion, with lower adjustment costs, if they have advance notice of the coming changes. Moreover, with early notice, managers may be able to influence the direction or Scope of environmental change and improve the outlook.

Analyzing Industry Dynamics

Managing under changing conditions begins with a strategic analysis of the industry dynamics. This involves three steps: (l) identifying the drivers of change, (2) assessing whether the drivers of change are, individually or collectively, acting to make the industry more or less attractive, and (3) determining what strategy changes are needed to prepare for the impacts of the anticipated change. Ali three steps merit further discussion.

Identifying cm Industry's Drivers of Change

While many types of environmental change can affect industries in one way or another, it is important to focus on the most powerful agents of change those with the biggest influence in reshaping the industry landscape and altering competitive conditions. Many drivers of change originate in the outer ring of the company’s external environment (see Figure 3.2), but others originate in the company’s more immediate industry and competitive environment. Although some drivers of change are unique and specific to a particular industry situation, most drivers of industry and competitive Change fail into one of the following categories:

Changes in an industry's long-term growth rate. Shifts
in industry growth up 01“down are a key driver of industry change, affecting the balance between industry supply and buyer demand, entry and exit, and the character and strength of competition. Whether demand is growing or declining is one of the key factors influencing the intensity of rivalry in an industry, as explained earlier. But the strength of this effect will depend on how changes in the industry growth rate affect entry and exit in the industry. If entry barriers are low, then growth in demand will attract new entrants, increasing the number of industry rivals. If exit barriers are low, then shrinking demand induce exit, resulting in fewer remaining rivals. Since the numbers of firms in an industry also affects the strength of rivalry, these secondary effects via entry and exit would counteract the more direct of the change in demand on rivalry. Depending on how much entry or exit takes place, the net result might be that the overall force of rivals remains the same. A change in the long-term growth rate may affect industry conditions in other ways as well. For example, if growth prospects induce the entry of a large, established firm with ambitious growth goals, the intensity of rivalry may increase markedly due to the added