How do the five competitive forces in Porter’s model affect the average profitability of the indus- try?
As noted in the chapter, research found that firm effects are more important than industry effects. What does this mean? Can you think of situations where this might not be true? Explain.
Choose an industry with a clear leader, and then examine the differences between the leader and one or two of the other competitors in the indus- try. How do the strategies differ? What has the leader done differently? Or what different things has the leader done?
2. How do the five competitive forces in Porter’s model affect the average profitability of the indus- try? For example, in what way might weak forces increase industry profits, and in what way do strong forces reduce industry profits? Identify an industry in which many of the competitors seem to be having financial performance problems. Which of the five forces seems to be strongest?
Conduct a value chain analysis for McDonald’s. What are its primary activities? What are its support activities? Identify
the activities that add the most value for
the customer. Why? Which activities help McDonald’s to contain cost? Why?
b. In the past few years, McDonald’s has made
a lot of changes to its menu, adding more healthy choices and more higher-priced items, such as those offered in McCafé (e.g., pre- mium roast coffee, frappé, and fruit smooth- ies), and has also enhanced its in-restaurant services (e.g., free, unlimited Wi-Fi; upgraded interiors). Did McDonald’s new priorities—in terms of a broader, healthier menu and an improved in-restaurant experience—require changes to its traditional value chain activities? If so, how? Try to be as specific as possible in comparing the McDonald’s from the recent past (focusing on low-cost burgers) to the McDonald’s of today.
3. Interface, Inc., is discussed in Strategy Highlight 5.1. It may seem unusual for a business-to-business carpet company to be using a triple-bottom-line approach for its strategy. What other industries do you think could productively use this approach? How would it change customers’ perceptions if it did?
4. The chapter highlights several firms that are developing business models around a “sharing economy.” The idea being that assets not cur- rently in use by their owners (cars, car seats, homes, rooms, etc.) can be rented to (shared with) others. What other industries can you think of that can be disrupted by this new business model? Where do you see “excess” space or other assets that could perhaps be utilized more efficiently?