UCSD Management Saudi Arabian Oil Company Analysis Paper

  

Description

review Figures 3.1, 3.2, 3.3, 3.5, and 3.6 from your textbook.(attached) Select a Saudi Arabian company, identify the industry in which it competes, and identify its three main competitors. Complete an Industry Analysis by answering the following questions.

1.Analyze and predict industry profitability:

a.Apply a detailed Porter’s Five Forces framework with a graphic representation (Figure 3.3) and written explanation for your selected company in relation to the Five Forces.

b.Given the Five Forces analysis outcomes, predict the level of industry profitability expressed as high, intermediate, or low.

2.Implications for strategy:

a.What strategies can the rival companies adopt to reduce competitive pressure and improve industry profitability?

b.Which strategies do you recommend for your company to improve its competitiveness, position, and earnings?

3.Identifying Key Success Factors (KSFs)—What are the KSFs of your company?

a.See Figure 3.6. Who are the customers and what do they want?

b.See Figure 3.6. How does the company survive competition?

c.Has your company’s KSFs changed over time?

FIGURE 3.1
From environmental analysis to industry analysis
The national/
international
economy
The natural
environment
THE INDUSTRY
ENVIRONMENT
Technology
Demographics
• Suppliers
• Competitors
• Customers
Government
and political
forces
Social forces
FIGURE 3.2
Porter’s five forces of competition framework
SUPPLIERS
Bargaining power of suppliers
INDUSTRY
COMPETITORS
Threat of
POTENTIAL
ENTRANTS
Threat of
substitutes
SUBSTITUTES
new entrants
Rivalry among
existing firms
Bargaining power of buyers
BUYERS
FIGURE 3.3 The structural determinants of the five forces of competition
SUPPLIER POWER
• Buyers’ price sensitivity
• Relative bargaining power
(See Buyer Power for detail)
THREAT OF ENTRY
INDUSTRY RIVALRY
• Capital requirements
• Economies of scale
• Absolute cost
advantages
• Product differentiation
• Access to distribution
• Legal barriers
• Retaliation
• Concentration
• Diversity of competitors
• Product differentiation
• Excess capacity and
exit barriers
• Cost conditions
SUBSTITUTE
COMPETITION
• Buyers’ propensity to
substitute
• Relative prices and
performance of
substitutes
Price sensitivity
• Cost of product
relative to total cost
• Product
differentiation
• Competition
between buyers
BUYER POWER
Bargaining power
• Size and concentration
of buyers relative to producers
• Buyers’ switching costs
• Buyers’ information
• Buyers’ ability to
backward integrate
FIGURE 3.5
Industries are becoming more complex: Recorded music
1990
2018
SUPPLIERS
Recording artists, songwriters
Recording artists, songwriters
PRODUCERS
Record Companies
EMI, CBS, BMG, Polygram
Record Companies (Sony BMG,
Universal Music, Warner Music)
DISTRIBUTORS Wholesalers
Retailers
(Amazon, HMV,
Shimamura)
Download
(Apple iTunes,
Amazon MP3)
Streaming
(Spotify, Apple Music,
Pandora, Google Play,
Kugou Music)
Retailers
Platforms (Apple iOS,
Android, MS Windows)
Advertisers
CONSUMERS
Consumers
Consumers
FIGURE 3.6 Identifying key success factors
Prerequisites for success
What do customers
want?
How does the firm
survive competition?
Analysis of demand
• Who are our customers?
• What do they want?
Analysis of competition
• What drives competition?
• What are the main
dimensions of competition?
• How intense is competition?
• How can we obtain a superior
competitive position?
KEY SUCCESS FACTORS

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