Competitive Analysis Vademecum

A report of class speech, debate, home readings and personal thoughts

By Carlo R. M. A. Santagiustina Master in Science (carlosantagiustina@msn.com) with the assistance of Professor Andrea Stocchetti

Preface

If we want to explain a phenomenon like the decline of IBM, we seem to oscillate between two modes of explanation. The first is to presume that if something is going wrong, somebody did something wrong and the appropriate remedy is to find out who it was and get rid of him-. Thus, the "cause" is at the level of individual action. The second mode is to find some "law" operating at the aggregate, marketlevel, like: it's inevitable that well-established, successful firms, locked into the behaviours that led them to success, will eventually succumb to changing competitive conditions for which these behaviours are inappropriate. Neither of these interpretative modes searches for cause in the relation between the structure of interactions at the individual level and emergent patterns at the aggregate level (D. A. Lane, 1994). In this report, we will try to explain why and how competitive analysis gives us the possibility to understand, and therefore to reconcile, the two viewpoints previously mentioned by D.A. Lane (1994). This can be done through an investigation on the competing conducts in the employee-to-market
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intermediate levels of action, interaction and decision; which range from a single products management strategies often decided at the divisional level- to the corporate mission and value system decided by the CEO and board of directors of a holding company. Hence, we will describe a set of techniques and tools that will support us in the analysis of competition, to identify the features (means) of competiveness and to elaborate competing strategies coherent to the competitive situation taken into account. The above mentioned conjointly determine present and upcoming successes or failures of competing business agents at each strategic level of analysis.

Summary
Page 1 2 4 5 6 7 8 8 9 9 9 10 11 12 13 14 15 16 16 17 Section Pre. Sum. How. 1st Part Intro. I. a. b. c. d. e. II. a. b. c. d. e. III. a. b. Title Preface Summary How to read this report The process of competing An introductive puzzle on competition The concept of Competition Agents Objectives Context Strategies Interactions and relationships Competition in Markets Agents Objectives Context Strategies Interactions and relationships Two divergent views of market competition Perfect competition Factual competition

Page 19 20 21 25 26 28 30 32 39 43 43 45 46 49 52

Section

Title

2nd Part Competitive Analysis vade-mecum I. a. Outlining a Competitive Analysis

Step One: Choosing the scale and perspective of analysis Defining the competitive context with the Abell Focus 1 Model b. c. Focus 3 Step Two: Gathering and interpreting information Step Three: From analysis to strategy Five Forces to identify the structure of inter-firm competition and shape the business strategy
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Focus 2 The Kano Questionnaire

Focus 4 Quality Function Deployment II. a. b. Focus 5 Ref. App. When values become competitive dimensions CSR and the benefits for being sustainable Towards a possible integration of values in products and firms? Means-Ends Chain References Appendix: Tasks Time Table

How to read this report:

Textboxes in this report (with hypertext links):
(Fl ash considerations) (Insight s)

Thoughts, Suggestions, brief ideas

Definitions; Explanations;

(Focus on r eality)

(Standalone/ relat ed quot at ions)

(Useful relat ed t o argument Web Resources)

Web pages,

Case-studies; Examples,

Quotation Author

Web articles, Other online resources;

Topic precedence/preference symbols:

Precedence (time spent): time needed for reading, thinking and writing about the topic measured through Task timer application for Google Chrome browser; Preference: preference/interest for the topic;

\Precedence Preference Less Somewhat Most

Introduced (-5 hours)

Argufied (5-10 hours)

Developed (+10 hours)

First Part: The process of competing

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An excursus on the notion of competition: from natural phenomenon to socio-cultural performance

An introductive puzzle on competition:

What we call competition is first a natural phenomenon, an instinct of living beings, which refers to an innate impulse to overcome the problem of allocation of scarce resources and possibilities through the contrast and comparison of abilities. The performance of competing is triggered by environmental stimuli that give rise to incompatible desires and needs. Competition is therefore a contest, a demonstration of one's fitness to the environment and power over it. As for other natural phenomenon (for example natural selection), men tried to conceptualize competition and assign socio-cultural and ethical functions and roles to it. These competition philosophies either stimulate or restrain mens competitive nature. In such a way competition has become more than a natural phenomenon; it is also a rationalised and therefore intentional socio-cultural performance. Since in this paper we will try to analyse both the phenomenon and the sociocultural concept of competition, it is worthwhile to see how people nowadays debate the very notion of competition. Therefore, here follow nine interpretations of competition from a web forum (Online Philosophy Club), which summarizes the widespread socio-cultural opinions and ideas on the subject: A is some natural number [1 to +infinity]; B is some natural number less than A. Competition is what drives us to become the best we can be; to try to become better at something than everyone before us. This is what drives people to discover new things, and build the most sophisticated things possible. I believe that not all competition is good. However, competition is the best way for the human race to advance, and it keeps people happy, occupied and satisfied, and seems like a worthwhile thing to have. We compete all of the time 100%, whether we like it or not. Living is competition; our reason for blindly competing is to "be" and be happy. We find any reason that can drives us to happiness, no matter how superficial. Competition only leads to inflated self-worth. It is a flaw in design. There is no answer in competition itself, but only to succeed. It's a mindless desire, with no logic. to be the best", explain being the best. What does that even mean?

Competition arises when A people want what only B people can have. Competition can be subtle (which the majority is), or it can be obvious (sports, business, school, courtship). The former is the more tangible manifestations, which makes competition appealing. The latter is hidden within everything you do. Typing this sentence efficiently is a competition with my brain to advance/ maintain my coherence

Life is competition, so, shouldn't there be a philosophy about it?

Some simply enjoy the act of competing - testing themselves against the skills of others. Those who seek to better themselves need competition to sharpen their skills but also to assess them against the skills of others. 'Healthy' competition is a fine thing

I.

The concept of Competition

An etymol ogic defi niti on of To Compete (verb) from:

1610s, " to enter or be put in rivalry with," from Middle French compter "be in rivalry with" (14c.), or directly from Late Latin competere "strive in common," in classical Latin "to come together, agree, to be qualified," later, "strive together," from com- "together" (see com-) + petere "to strive, seek, fall upon, rush at, attack" (see petition (n.)). Rare 17c., revived from late 18c. in sense "to strive (alongside another) for the attainment of something" and regarded early 19c. in Britain as a Scottish or American word. Market sense is from 1840s (perhaps a back-formation from competition); athletics sense attested by 1857.

In nature, competition exists because of the incompatibility between paths and situations that different agents undertake for reaching their objectives. Competition takes place when an agent undertakes an action -to approach or achieve an objective- that can undermine the possibility of other agents to approach or achieve their own objectives (Deutsch M., 1949); consequently, in competition if one or more players will reach their target/goals, one or more other players will not; so, the most desired situation (preferred outcome) will be impossible to be obtained by all agents at the same time. Research has sometimes used rivalry as simply a synonym for competition; by contrast, we treat it as a distinct construct. We conceptualize rivalry as a subjective competitive relationship that an actor has with another actor that entails increased psychological involvement and perceived stakes of competition for the focal actor, independent of the objective characteristics of the situation. [.] rivalry exists when an actor places greater significance on the outcomes of competition against certain opponents as compared to others, as a direct result of his or her competitive relationships with these opponents [] this conception of rivalry captures the extent to which competition is relational (Kilduff G. J. et al., 2010). The following scheme summarizes the main implications of what has been formerly alleged about the psychology of competition and rivalry:

Tivation to wi

Source: From figure 1 page 947 in Kilduff G. J. et al., 2010

Competiton
AGENTS OBJECTIVES STRATEGIES CONTEXT INTERACTION

a.

Agents
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Agents try to achieve their objectives by reasoning with bounded rationality -as defined by Simon H. A. in his decision making studies- to interpret information, evaluate alternative plans (paths of choices) and then perform the one considered the best for reaching the predetermined objective. The rationality of agents is considered bounded because of: limited computation capacity; limited ability to evaluate possible consequences of alternative behaviors (and give objective probability values to events); asymmetric/imperfect information and transaction/decision costs. Agents are generally separated in two categories: Players: are agents directly competing for an objective or award; Non-players: are agents not directly competing for an objective or award but affecting competition result. Those actors can be functional or dysfunctional to the reaching of objectives by players;

b.

Objectives

Objectives are planned and desired states of existence that an agent wants to obtain. When an agent has multiple objectives, those can be ordered (or weighted) by hierarchies or priorities, with pre-conditions. Some objectives can be incompatible, other can be shared, but even in the latter situation Nash equilibriums are not always first bests for agents. The following of mutually dysfunctional goals therefore denotes the capacity of prioritizing and pondering different objectives.

Core theme of this report

Behaviors can be:

Dysfunctional Functional PARTNERSHIP

Objectives can be:

Same

COMPETITION

Different

OBSTRUCTION

COOPERATION

c. Context and boundaries

The context is an amalgamation of constraints, opportunities and boundaries that shape the competitive environment. A agents environment is made of elements that influence competitors actions and outcomes; like obstacles, moderators, facilitators, and more others. The same element can affect different players efficiency and effectiveness in dissimilar ways. Furthermore, since all elements of an environment are generally interdependent, they act as combined parts of a single system. Therefore, any element in the context can significantly alter the specific effects of other elements. As a result, the effect of a single isolated element is usually different from the effect of this same element as part of a specific context. Accordingly, all action that changes the context can subsequently change the other elements effects, and adjust players strategic positioning and possibilities to reach their objectives;

d.

Strategies

Strategies are implementable sets of planned and non-random actions, instrumental for the achievement of ones objectives. A Strategy, to be so called, must be more effective (in a competitive performance sense) than uncontrolled or totally random behaviors, for the reaching of predetermined goals or paths towards goals. Strategies are often at sens unique (path dependent decisions), they are never walk-back situations, because their results are time sensible and time has a unique sense of deployment. Timing in implementing a strategy, defines the overall outcome of the strategy, because time passing changes the competitive environment by leading to new development all actions and situations. Hence, strategies that change the context can prevent, obstruct or delay other players decisions and actions;

e. Interactions and relationships

Interactions and relationships among agents are normally structured according to some behavioral codes and tacit rules, which can be either imposed by one of them or codetermined by the dynamics of interaction between agents. Those structures of interaction govern as restrictions, controls and instructions- the means by which agents actions and decisions can/should influence others players decisions and strategies. Players possibilities are both empowered and confined by their contacts, clusters and networks. Accordingly, interaction rules determine the way in which agents react to others decisions in order to prevent or facilitate them in reaching their objectives. The most significant interaction rules are therefore the ones which have a direct impact on others potential effectiveness and possibilities of succeeding in their missions;

II.

Competition in Markets

First, competition is a matter of relations, not [only] player attributes. Second, competition is a relation emergent, not observed. Third, competition is a process not just a result. Fourth, imperfect competition is a matter of freedom, not just power. (Burt R., 1995)

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Firms are alike leaving beings constituted by individuals, artifacts, knowledge and most of all organization. The ultimate, but not unique, objective of firms is to maximize their present and forthcoming profits; this is the basis of inter-firm competition within markets. Rivalry is a powerful force that pushes firms to continuously renovate themselves. Firms compete by giving to consumers goods and services increasingly capable of responding to their needs and desires, both rational and impulsive. The strategies to succeed in such a mission are the most diverse. In general, the intensity of a competition between firms determines the degree to which investment inflows drive returns to the free market level, hence the ability of firms in the industry to sustain above average returns (Porter M. E., 1980). The more a group of goods/services, used to meet a given need or fulfill a given desire is homogenous; the better is the substitutability between those goods for customers, and the greater is the intensity of the competition between the firms producing those goods/services. As a result, the more competition is intensive, the more the competing firms must undertake a great effort to fit the needs and requirements of consumers better than their competitors. Therefore, firms try to give themselves the most effective and efficient organization of functional elements to their scopes, to maximize their share of sales and profits, at the detriment of their competitors. Firms characterizing resources, which are functional to competition, can generally be subdivided in five categories: Financial capital: cash and deposit money, lines of credit, financial assets and liquid investments; Material capital: real estate, plants, facilities, machinery, et.; Immaterial capital: brands, patents, internal organization, codified corporate knowledge, technology and other intellectual property rights; Social capital: reputation, status and trust relationships within the social network of the firm and its employees; Human capital: ability of attracting, employing, retaining and giving value to manual and cognitive abilities or knowledge of employees.

Market Competiton
AGENTS: Organizations customers, suppliers, final clients OBJECTIVES: Objective management techniques STRATEGIES: level and unit dimension CONTEXT: legal, institutional, political, economical, cultural, social, technological and demographic INTERACTION: business network, relationshps, centrality, reputation and social capital

a. Agents
Once we have chosen a focal business organization, for which we want to study the competitive situation (generally a private firm, but could also be a publicly own company or an individual company), which shall be our first player. We can find which agents are parts of this context, both with the role of players or non, by: looking to agents in the supply chain, like suppliers, customers and their respective prospects; looking to market participants or influencers, like business rivals(players)/partners, regulators, etc.; looking to other stakeholders, like the community, government, investors, etc.;

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Consumers pay an important role in most of the competitions, because they oftenly are the ultimate judges of a products performance, we can classify them in the following categories: Clients and prospects: agents who have done business with you, and/or who will probably do so in the future; Anti-clients: agents who will not engage in transactions with you, who will actively reject to your engage themselves in any way with your organization and will incite others to do the same (they have an obstruction role ); Ex-clients: agents who have been clients, but no longer engage in transactions with the business;

Source: From Tom Graves Web-blog, NOTES

b.

Objectives

Firms are complex multi-agent organizations that generally pursue at the same time multiple objectives; some of these can be complementary, but a large majority of them will be mutually dysfunctional. This means that resources invested in reaching a goal will be deprived from the pursuit of other goals. A consequence of this is the creation of tradeoffs and path-dependency (old decision affect the viable options for the future). In addition to maximizing actual and forthcoming profit, a firm generally pursues other common or particular goals (brand leadership, employment stability, dissemination of corporate values and vision, sustainability, CSR, other) conveyed to it by its stakeholders: owners/shareholders, managers, clients, employees, public institutions. In several situations resources and effort be must be invested in activities whose outcome is uncertain or variable, to deal with those situations managers have to model the uncertain situation/event with specific technical instruments, like Bayesian networks and decision graphs (Namwongse P. & Limpiyakorn Y.,2011). In addition, managers use objective management techniques to prioritize the firms objectives, and subsequently choose how allocate the scarce resources of the firm to accomplish the chosen objectives as efficiently as possible. Objective management techniques generally include: Time Management
It is the process of organizing, employees tasks and prioritize/ optimize them as functions of time. Criteria of optimization can be single or multiple: urgency, importance, profit, opportunity, feasibility and other.

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Definition and Consistency, suitability, adjustment of feasibility , acceptability milestones and paths checks
It is the process of determining and monitoring the state of progress of a planned strategy, to verify its coherence and compliance with prearranged conduit and schedule. Feasibility checks are accomplished to determine if a strategy is still practicable and worth of pursuing for the fulfillment of an objective, before spending additional resources on it. It is the process of defining and formalizing the roadmap towards the fulfilment of the objectives. Through the construction and implementation of a project plan/path for the realization of prerequisites and the overcoming of obstacles/impedime nts.

Dissolution of personal or collective blocks to change and success

It is the process of identification and removal of habits and ways of thinking that can hinder creativity, undermine cooperation and any other psychological attitude that can demoralize employees and damage the business working environment.

Further concept explanation by:

Further concept explanation by:

Further concept explanation by:

Further concept explanation by:

www.mckinsey.com/ insights/organizatio n/making_time_man agement_the_organiz ations_priority

en.wikibooks.org/wi ki/Business_Strateg y/The_Three_Proces ses_of_Strategy

www.pmhut.com/ca tegory/timemanagement/project -milestones

www.mckinsey.com/ insights/organizatio n/the_irrational_side _of_change_manage ment

c. Context
The context is the ensemble of the environmental elements and forces, which jointly determine the rules and payoffs of a competition. The legal, institutional, political, economical, cultural, social, technological and demographic systems in which businesses are embedded, set up the lively arena in which any competition takes place. Legal, institutional, political, economical, cultural, social, technological and demographic trends are powerful and often relentless forces, which persistently influence and inspire the actions and decisions of agents that therein live and operate, both at the local and global level. Trade standards, intellectual property rights protection, business regulation, public policies and investments, administrative and registry offices efficiency, tax and tariff regime, contract enforcement, trade union power, labor law, official corruption, consumers culture and education, labor force training, productivity and vision of life jointly shape the mechanisms and boundaries of competition and the horizon of possibilities of competitors. Market power dynamics are also affected by these surrounding environmental forces. There are several which can be used to analyze and model the context (competitive environment), Here follows a brief description of two, which I consider particularly interesting because complementary in their approach and perspectives: PESTLE: audit of an organizations environmental influences (for detail see: CIDP, PESTLE analysis) AGIL: structural functionalist sociological analysis of the environment (for details see: Parsons T., 1970); Defining the context and boundaries for an analysis: When we talk about competition, we must decide our level of analysis (see scheme on the right). Since competition takes place at different levels, for each one we can identify a distinct context made of elements, agents, interactions, objectives and strategies; whose specificity will shape and confine the particular competitive situation/arena taken into account.

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Market Industry

Business Area

Segment

Product

d. Strategies
As Beard D. W. & Dess G. G. (1981) pointed out, strategic decision making is a crucial part of the process by which organizations adapt to their environments according to the aforementioned authors, business policy should always be distinct in three levels of organizational strategy: The corporate-level (inter-industry) strategy Concerned with questions about what businesses to compete in. It is defined in terms of variationi n the deployment of a firm's resources among the portfolios of industries within which all business firms compete.

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The business-level (intra-industry) strategy Concerned with questions of how to compete within a particular business. It is defined in terms of variation in firm characteristics relevant to competitive success or failure within a given industry. The functional/divisional level (intra-industry and intrabusiness) strategy The first is concerned with questions of how to achieve better results compared to the other divisions and how to compete with substitute products/lines of other firms; while the latter is concerned with questions of how to increase the competitiveness of the firm through the improvement of the performance of a particular business function. In addition to the organizational strategy dimension, we have a hierarchical unit dimension (that determines the impact/action scale of a strategy) the latter can be subdivided into four kinds of units: The choice of bounding a problem to a particular strategic level or unit of analysis is critically important. But if problems are not bounded, they remain intractable. The process of identifying and bounding a problem is intimately connected with the generation of alternative decision choices [and paths] to be considered. When we assume that the alternative decision strategies are prespecified, we seriously misrepresent the art of formal [strategic] analysis. In practice the process is iterative. The analyst might bound his problem one way only to find out that hes in an impossible morass, so he backs up and redefines his problem area [and its unit impact/action dimension] by bounding it differently and generating new restricted alternatives(Keeney R. L.,1993). Each strategic level and unit affects, in a distinct manner, the businesss possibility of generating profit, achieving specific objectives and increasing the competitive performance.

Indirectly linked environment

Directly linked environment Organization as a whole

Management Decision makers

e.

Interactions and relationships

Embeddedness is a central characteristic of business networks whereby social relations strongly influence firms activity and strategy, as well as their outcomes, by facilitating or disrupting cooperation, competition, synergies, trade and other viable multi-agent initiatives, either between firms or between a firm and its environment (Uzzi B., 1996). Embeddedness occurs because the competitive arena has a social structure: players trusting certain others, obligated to support certain others, dependent on exchange with certain others, and so on. [] The rate of return [on business investments] is keyed to the social structure of the competitive arena. [] Each player has a network of contacts in the arena. Something about the structure of the player's network and the location of the player's contacts in the social structure of the arena provides a competitive advantage in getting higher rates of return on investment. As a result the social structure renders competition imperfect by creating entrepreneurial opportunities for certain players and not for others. This is the so called social capital of a firm, which is a thing owned jointly by the parties to a relationship. No one player has exclusive ownership rights to social capital. If you or your partner in a relationship withdraws, the connection, with whatever social capital it contained, dissolves. (R. Burt, 1995). The relational influence/power of a firm over its environment is a combination of: 1. Centrality: that is a measure of the interaction activity and capability of an organization (node), it grows together with the quantity of relations (links) and the centrality of directly linked interlocutors (neighbors). 2. Reputation: capability of being distinguished and thus preventively recognizable by other organizations within the network and environment, that gives to the organization the opportunity to create and maintain personalized interactions and relations with other organizations. In business, we generally distinguish between three broad forms of competitive

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relations/interactions between firms: i. Direct competition between firms which produce services/goods which perform the same function and therefore directly compete against each other (high multimarket contact values). ii. Indirect competition between firms which produce services/goods which are close substitutes for one another (average multimarket contact values).

iii.

Budget competition - between firms which produce services/goods that compete for a common share of a group of customers budget (low/nil multimarket contact values).

III. Two divergent views of market competition a. Perfect competition

Characteristics of markets in Neoclassical perfect competition theory

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homogeneus products atomism of players no entry or exit barriers perfect information and no transaction costs costant returns to scale

In the mainstream neoclassical microeconomic perfect competition theory, to be Pareto-efficient, market agents (firms and consumers) should have perfectly symmetric information. Firms should produce homogenous goods, should have no barriers to entry/exit, no transaction costs and constant returns to scale. In the long-run, all markets should be in perfect equilibrium (unitary prices equal to average unitary costs) and consequently all firms should make zero profits. Firms, for which the unitary costs are above the price level, should be immediately knocked out of market. As a result, the selection of the better performing firms should be almost instantaneous. Since all firms have the same technology, information and costs structure, choices (production problems) have a unique ex-ante optimal choice (more efficient solution), obvious to all agents. Therefore, the neoclassical microeconomic theory represents a market system where firms have no incentive to develop and adopt alternative strategies, because there is a clear and common one best strategy for all competing firms, time and space are irrelevant variables. In such a system, where firms have no reason to formulate distinctive competitive strategies, there is no discretional space for firms to improve their capabilities, creativity, skills and expertise. As a result, in the Neoclassic Perfect Competition theory, the commonly recognized raison dtre of market competition -that is to use the profit reward as an incentive to encourage and stimulate the growth of those firms which are able to efficiently develop and implement improvements and innovations that increase the ability of their products to satisfy human needs and desires- is totally absent. For that reason, the idea of Perfect Competition is actually the antonym of factual competition between firms. Additionally, according to the perfect market theory, agents should behave as the so-called Chicago Men. The aforementioned has perfectly congruent inter-temporal rational preferences

and perfect (instantaneous, unbiased, free access) information on goods qualities and relative prices in all moments; the constraints and possibilities of these agents are determined by their utility functions and endowments. As a result, ones desire to maximize its own onedimensional ordinal utility is its sole incentive to consume and therefore work.

b.

Factual competition

Characteristics of markets in industrial economics and management studies

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differentiated products

distinctiveness of players

entry or exit barriers

imperfect information and transaction costs

variable returns to scale

However, Simons impossibility theorem about perfect rationality in choices, demonstrates that, even if all the other neoclassical assumptions were true, imperfect information in markets is a sufficient condition to make such a theory misrepresentative, and unsuitable to understand the functioning of market competition. In real markets there are hidden (that necessitate an effort/cost to be understood or revealed) or unobservable or invaluable alternatives, which limit and distort the choosing capability of individuals and organizations, limiting the overall productive and allocative efficiency of the market system. Besides this, and beyond any repair, the limitedness of computational capacity, the asymmetric access to information, the inhomogeneous distribution of knowledge and interpretive skills, can make agents and firms behave inefficiently or ineffectively even when rationally performing or taking logically consistent decisions. Since human agents behave far less mechanistically than the all-seeing and simple-minded Chicago Man; agents true needs, desires and behaviours are much less straightforwardly predictable and easily satisfiable by firms, in respect to what is said in perfect competition theory. Unlike neoclassical economists, who believe that an invisible hand (directed by the perfect competition axioms) is sufficient to shape a perfectly efficient and effective market; Industrial economists and other theorists of the organization and management of firms try to recognize and model the great sophistication of the functioning mechanisms of the business world. Those lasts generally acknowledge that, despite the limitedness in the agents capacity to predict others behaviours, it is not a good idea to relegate to the role of exogenous factor the decisional mechanisms, the internal organization and structure of interactions of those different agents that operate in markets.

In view of that, in Competitive Analysis, when we want to identify the degree of rivalry between firms operating in the same market/sector/segment, we can start by identifying which, in a specific case, are the breaches in the assumptions of perfect competition theory. By doing so, we can evaluate how, each competing firm, plans and implements strategies to leverage in its favour the concrete breaches and holes of the theoretical economic utopia that is perfect competition. Accordingly, market imperfections allow firms to differentiate their identity, relations, capabilities and competing schemes; to create or maintain a strategic advantage in respect to other competing organizations. These strategic advantages, determine the possibilities of a firm to attain the preferred outcomes and achieve its objectives, in this ceaseless struggle between organizations for survival, profit and leadership, that we call market competition. In market competition, social capital is as important as competition is imperfect and investment capital is abundant. Under perfect competition, social capital is a constant in the production equation. There is a single rate of return because capital moves freely from low-yield to high-yield investments until rates of return are homogeneous across alternative investments. When competition is imperfect, capital is less mobile and plays a more complex role in the production equation. There are financial, social, and legal impediments to moving cash between investments. There are impediments to reallocating human capital, both in terms of changing the people to whom you have a commitment and in terms of replacing them with new people. Rate of return depends on the relations in which capital is invested. Social capital is a critical variable. This is all the more true when financial and human capital are abundant -which in essence reduces the investment term in the production equation to an unproblematic constant. (R. Burt, 1995)

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Part Two: Competitive Analysis vade-mecum

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Procedures, techniques and instruments for assessing the positioning and performance of competing firms and products

I. Outlining a Competitive Analysis

A competitive analysis is an investigation on a market competition. It examines by what means market organizations, mainly firms, try to improve their performance and achieve their objectives by shaping their strategies to take advantage of all of the potentially exploitable forces, assets and mechanisms at work in their business environment; to find and secure a long-term economic success and leading position for their business activities and products. According to this approach, firms define and execute their strategies:

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To improve their fitness to their environment; To reap competitive advantages of/from other competitors; To influence competitors economic results, limit their possibilities or influence their strategies payoffs; To remodel their organization, structure and redefine their objectives, as an autopoietic complex system; To reshape and reorganize the boundaries, content context. of interactions their and business defini ti on fr om: Assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Profiling coalesces all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment. definition from: Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service Competitive analysis:

As we will see later on, market organizations try to steer and the competitive forces around them to take advantage of environmental trends. Consequently, it is considered inopportune for a firm to stabilize and standardize to much its decisional mechanisms and reactions to others strategies, because these would become easily foreseeable and imitable by rivals. As a result competing firms act as inventive organizations, which ceaselessly redesign their organization and recombine their decisional instruments and strategies, to win a business contest that goes far beyond the simple share out of consumers earnings.

Accordingly, competitive market systems are heterarchies, which, for the previously mentioned reasons, are almost impossible to be knowingly governed in the long run by a centralized entity. Since these business environments and their constituents and features are continuously reorganized and redefined via the incessant repositioning and engagements of its ever-evolving habitants, firms behaviors are very difficult to be precisely foreseen. In view of that, the core idea of Competitive Analysis is to develop and implement a set of managerial tools and models able to identify firms and markets dynamics and recognize the agents strategies. Consequently competitive analysis is as fundamental activity for the characterization of any competitive business reality, and for the understanding of its functioning: 1) To recognize a competition / competitive situation; 2) To identify and delineate the agents, objectives, strategies, context and boundaries, influencing a specific firms competitive situation; 3) To evaluate the strengths, weaknesses opportunities and threats of/for a product, firm or corporate vis-a-vis its competitors; 4) To rationally interpret and explain the basic elements of a competitive situation and in some cases forecast the possible outcomes of such situations or measure the effect of alternative strategies; By examining the business environment with competitive analysis tools and models firms can improve their understanding of the outcomes of their strategies, and therefore try to use this knowledge to perform better; for instance: By developing/reinforcing identified distinctive competitive advantages; By developing/reinforcing entry barriers/obstacles for potential competitors, in order to prevent them from incoming a market/industry/business area/segment/product; By seizing opportunities and exploiting competitors weaknesses to gain market shares or to entry a new market/industry/business area/segment/product;

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a. Step One: Choosing the scale and perspective of analysis

The first next step of a competitive analysis is the choice of the strategic perspective that will be used to identify and classify the current and potential competitors of a corporate/firm/product. To do so, in general firms use either an industry perspective or a marketing perspective: The industry perspective identifies competitors as organizations that are

producing/selling the same product or service. The marketing perspective identifies competitors as services/products with the ability to satisfy a common need of a common group of customers. In Industrial Economics, the key issues are the determinants of the behavior, scale, scope, and organization of business (Schmalensee R., 1988), which are studied to evaluate the intensity of a competition in a specific market area i.e. industry. In view of that, firms are subdivided in groups by business activity, each of which is recognized by a set of characteristics of its competitive structure (see next page):

Concentration:
Concentration is defined by the distribution of production within an industry (industrial concentration) or a market (market concentration). It indicates the distribution of production shares or income among competing firms. Perfect market implies the lowest possible level of concentration, while monopoly implies the highest possible level of concentration.

Differentiation:
Differentiation occurs when in a market consumers perceive as differentiated (with different values) products with the same function/purpose, this difference can be technical or sensorial. Consumers consequently evaluate the value of such goods with a multi-dimensional perspective, their preferences for some attributes/characteri stics mustnt necessarily be justifiable.

Innovation trajectories:
Innovation trajectory are defined by an industrys scientific and technological trends, clusters of micro-improvements and the momentum of the technological heuristics, intended as the set of paradigms used in a determined field to solve the most significant problems recently encountered.

Vertical/horizontal integration:
A firms upstream (suppliers) and downstream (buyers) control/ownership in a supply chain define vertical integration. The variety of outputs produced by single firm, which controls/owns different production units/divisions at the same stage of the production process defines horizontal integration.

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Further concept explanation by:

Further concept explanation by:

Further concept explanation by:

Further concept explanation by:

www.thinkbigmagazine .com/wealth/216innovation-trajectoryunderstand-makeinformed-decisions

www.economist.com/n ode/13396061

www.econlib.org/librar y/Enc/IndustrialConce ntration.html

http://www.economi cswebinstitute.org/g lossary/product.htm

Those characteristics can be measured to outline the intensity of a competition in an industry, as if it was a homogenous set of interdependent economic organizations. As a result, industries are regarded as stable and circumscribable market sub-systems, clusters of similarly organized and structured competing firms. Another approach to identify competitors is to define a strategic group, which is a collection of firms in the same industry/business-area/segment who follow similar strategies at the business or product level. Within a single industry/business-area/segment, we can find few or several strategic groups depending on which and how many strategic factors at a time we consider important to discriminate between firms. Commonly, we can recognize strategic groups by using the following strategic dimensions: Price; Quality (perceived, technical, production process/ISO certification, other); Level of integration (vertical and horizontal); Geographic scope; Market share; Size (number of employees, assets value); Consumer basin; etc.;

The core idea of Competitive Analysis is to shift from the Industrial Economics paradigm of explanation, based on the industry considered as almost stable and standardized set of competing firms, to a new perspective, that looks to firms innovation dynamics and interindustry/segment/business/product competitive reality. The reason of this shift in the perspective of analysis is due to the fact that, in recent years, more and more firms and corporates differentiate their business by entering new markets/industries/business areas in which they can exploit synergies with the original business activity and technologies. Therefore, we can expect growing competition between market organizations that have a common technological infrastructure or possess overlapping/similar sets of critical competitive factors -that can range from technical knowhow, to customer's perception of the brand-, rather than between firms that produce similar outputs using similar inputs and processes. Recently, a corporate like Disney has in such a way exploited its brand attractiveness, its TV entertainment technology and its oiled logistic structure to launch itself in the Sport TV business with ESPN. Another suggestive example of this kind of diversification, based on capabilities, comes from the overcrowded and hypercompetitive auto industry, in which Audi has used its latest motor technology and sporty design abilities to conceive and produce high-end sporty bicycles, with lightweight electric engines that can make them run up to 80 km/h (for details click here). As a result, the very concept of market and industry competition is no more based only on common outputs and inputs and similarities in the production processes, but also on the likenesses in the critical competitive factors of firms and products; that we call capabilities. Accordingly with what said previously, two corporates like Apple and Disney can be considered in competition: distinctive capabilities of firms as fundamental apparatuses for the characterization and understanding of any actual and prospective

23

Globalized organizational and logistic structure

Cool and high qualit y brand image

Strong ICT innovat ion and creat ivity

In this case, brand image is not an entry barrier but a differentiation facilitator

We can thus define a competition not only at the product or firm level, but also at corporate level. In this case, the key elements of competition are corporate distinctive capabilities. These lasts are compound groups of codependent competitive factors, which are generally molded as specific and often unique combinations of resources, abstract knowledge, know-how, organizational configurations and customers feelings for a corporate. Generally, when we look at the joint effect of those unique combinations of competitive factors, we can see that they offer unique benefits and inter-industry synergies to the corporates that possess them. For this reason, corporates who possess overlapping capabilities and related technologies are a threat to each-other, because they can easily enter one-anothers business areas, becoming dangerous competitors even if at the moment they dont seem to operate in same markets/areas.

24
Therefore, when a corporate/firm/division wants to understand its competitive arena, there are three main questions to answer: 1. 2. Which are the market agents who have the same target, mission or strategy? Which are the critical (most relevant/unique) competitive factors for those market

agents? 3. Who, besides the market agents already identified in 1), has similar or substitute

factors? The answer to those three questions is clearly a reduction of reality, which demonstrates that this kind of approach to competition can overlook to competitive capabilities and overshadow strategic interactions between players; structural, organizational and process advantages and synergies. Moreover, when answering those three questions we should always keep in mind that a firms current competitors, are not always the most important threat to a firms survival, the key potential competitors, it is thus important to understand who can become a competitor and which are its entry barriers, even if at the present state the firm doesnt operate in the same market or segment of the market. The inter-firm similarity (across cases) and development/evolution similarity (across time) of crucial competitive factors (product attributes, production organization, knowledge and skills) or capabilities, -which are unique and evolving combinations of competitive factors-, make competitive analysis a case and time dependent study. Fortunately the instruments for doing such analysis that we will soon introducecan be used with little need of adaptation to the particular case study.

Focus 1: Defining the competitive context with the Abell Model

As previously said, finding the boundaries of a competition and identifying the context can be very problematic since we have an almost infinite number of possible business variables to take into account. The Abell model (Abell D. F. & Hammond J. S.,1979) provides us an intuitive simplification by considering only three different dimensions. Given that the basic goal of every firm is selling its products, Abell model start the definition of a firms market by assessing the benefits that customers are looking for and that the product is looking forward to satisfy. The other two variables that are taken into account are the group of customers that the firms targeting and the technology/competences used to produce the goods/services. Combining these three aspects of competition gives us a better understanding of the boundaries of a firms business and its market, that can be represented on a graph: Those three variables and Since the dimensions can be both quantitative qualitative. competitive environment is time and space dependent, to be correctly updated used at the each models data need to be environmental change.

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Group of costumers (which segment of the market is being satisfied?)

Costumers needs/requirements fulfilment (what is being satisfied?)

Competences/Technology used (how is the customer being satisfied?) A step further: Using the Abell model for choosing how to expand the business

Consequently the Abell model considers only currently competing products, the ones that are here and known (time is not a dimension of the model). It focuses on the intersection of homogeneities or proximity in one of the three described dimensions as the cause and defining element of the competition between products. This model gives us an intersection point that defines the products business arena, the nearer are the other competing products to the three aforementioned characteristics of the considered product the most the competition in intense between them. The limits of this three dimension analysis are the firms needs variable, that is a to broad dimension variable to efficiently define a product/firm in its environment.

http://www.cnaexpo rter.it/percorso2d.php

b. Step Two: Gathering and interpreting information

In a system, you cannot control something unless you have a feedback, and that means measurement of the outcomes of actions. Therefore, one of the most important skills needed to undertake a competitive analysis is the capability of collecting useful data about the competitive environment. The flip side of the aforementioned statement, is the false promise that with feedback you can control anything. Even if business intelligence (BI) systems seem to be the arch embodiment of this cybernetic principle, it is clear that there are non-trivial costs, technical hitches and limitations of all processes of gathering and interpreting data. Moreover, as the Nobel prized Canneman and Tuersky observed: even if the data used to build a competitive analysis can be unbiased, the information issued from data can never be independent from the subject that interprets it. As a result, it is the interpreter, which provides meaning and use to the data. Therefore, data is always biased by the experience, knowledge and interpretative structure of the actors, which attribute significance to it, and this is the reason why the competitiveness of firms depends more on the interpretation ability of the aforementioned actors, than on the amount of data about the competitive environment to which they have access through their BI systems. There are a variety of methods and instruments that firms can use to gather information and obtain feedback. The methods and instrument one chooses and the ways they are used depend greatly on what the type of feedback one desires to obtain and for which kind of analysis or

26

We can obtain feedback and information:

From
Employees

Using
Surveys and questionnaires (by telephone, mail, e-mail, online, in-home, mall or street intercept)

On
Costumers' opinions, needs, satifaction and complaints

Competitors Comment Cards, focus groups and interviews Customers Other documentation (financial statements, reports, brochures, catalogs, web-pages, advetising)

Best Practices

Technical carachteristics of competitors' products

Other Sources of Market Research Information/data

Competitors' ressources

Moreover, as Burt (1995) outlines, the value any information and the potential benefits it can generate, depend on the following three characteristics, which describe the relationship between the information and its environment (i.e. networks, agents, situations): Access: Since players are unevenly connected with one another, information does not spread uniformly across the competitive arena. Accordingly, access refers to receiving a valuable piece of information and knowing who can use it and how. Timing: early warning and access gives the opportunity to first act on the information, reinterpreting or distorting it; and then investing it back into the network by passing/selling it to whom could benefit from it, or to whom would conceivably act (directly or collaterally) in favour of the firm after receiving the information; Referrals: The firms network of employees and relating agents directs, filters, concentrates, and legitimates incoming information; and outgoing information about/from the firm. Given the limit to the volume of information that men and machines can process, the firms network becomes also a significant screening device. It is an army of people processing information who can call attention to key events; keeping the firm up to date on developing opportunities, and warning it of imminent threats and adversities;

27

Focus 2: The Kano Questionnaire

The Kano Model (Berger C. et al., 1993) is a customer satisfaction questionnaire developed in the 80s. With this questionnaire, Professor Kano challenged the conventional belief that customer satisfaction increases only by improving every attribute of a product or service. Accordingly, the questionnaire fulfillment model of classifies product is product features and attributes not imply to
http://www.ijest.info/docs/IJE ST10-02-12-089.pdf

A step further: How to use the Kano Model for research direction and product innovation

according to their significance for the customers. When the requirements a very does

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automatically a high level of customer satisfaction, the Kano questionnaire useful instrument discriminate in categories the different features/attributes of a product, on the basis of their relative importance and weight on the customers satisfaction. In the Kano questionnaire we distinguish product features/attributes in five categories: Must-be (M) attributes: are taken for granted features, which are expected inasmuch they are considered essential attributes, which are always required by customers. They cause dissatisfaction if they arent available. It is unlikely that they are going to tell the company about them when asked about quality attributes. Attractive (A) attributes: provide satisfaction when achieved, but do not cause dissatisfaction when they are not fulfilled. These attributes are a plus, and therefore they are often unexpected and unspoken by customers; as a result they give a more than proportional (exponential) satisfaction if achieved by the product. They have the inverse effect of basic attributes. One-dimensional performance (P) attributes: provide satisfaction (dissatisfaction) if achieved (missing), the degree to which they contribute to customers judgment of the product depends on their number and quality; Indifferent/irrelevant (I) attributes: These attributes refer to aspects that are neither desired nor unwanted; accordingly, they do not result in either customer satisfaction or dissatisfaction. Therefore if costly those attributes should be ignored /not considered in the design of the product. One-dimensional reverse (R) attributes: provide dissatisfaction (satisfaction) if achieved (missing). They have the inverse effect of performance attributes. Double-edged (D) attributes: These attributes can provide either satisfaction or dissatisfaction depending on the specific character/needs/desires of a particular customer.

Customer delighted

Reverse attributes

Attractive attributes

Performance attributes

Expectations not fulfilled Irrelevant attributes

Expectations exceeded 29

Source: from Kanos model of customer satisfaction in Berger et al. (1993);

Must-be attributes Customer dissatisfied

The more the satisfaction function is steep for a given attribute, the more the fulfillment and exceeding of expectations has to be considered important for the overall competitiveness of the product and fitness to customers requirements. The Kano survey evaluates the importance of each attribute of the product by asking to the costumer to answer a dual (one functional, one dysfunctional) multiple choice question, for each conceivable attribute F(X) of the product, due to the presence of the feature X on the product, the question is the following: How do you feel if the product performs/possesses the attribute F(X)? How do you feel if the product doesnt perform/possess the attribute F(X)? with it that way; 5. I dislike it that whay) The answers to the Kano questionnaire are then interpreted through a matrix which categorizes each attribute according to the answer to the two previously mentioned questions:

List of possible answers: 1. I like it that way; 2. It must be that way; 3. I am neutral; 4. I can live

Costumer Requirements 1)Like

Dysfunctional question answer

1)Like Double-Ed. 2)Must be 3)Neutral 4)Live with 5)Dislike

Attractive Irrelevant Irrelevant Irrelevant Reverse

Attractive Irrelevant Irrelevant Irrelevant Reverse

Attractive Irrelevant Irrelevant Irrelevant Reverse

Performance
Must-be Must-be Must-be Double-Ed.

Functional question answer

2)Must be 3)Neutral 4)Live with 5)Dislike

Reverse Reverse Reverse Reverse

c.Step Three: From analysis to strategy

Once we have identified the competition and gathered sufficient information on the business environment, we can have a first outlook of the potential intensiveness of the competition by assessing some macro-characteristics on the previously identified competitive situation: Number of players: the higher i the number of players, the more intensive is generally the competiiton Concentration: the lower is the concentration rate, the more intensive is generally the competition. Normally when we talk about concentration we talk about the distribution of shares in the market, shares of the market are often quantified by the shares of sales (see Herfindell e E. Lorentz) Growth rate: the lower is the sales growth rate, the more intensive is generally the competition

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A second step may well consist in classifying competitors according to critical competitive dimensions/capabilities in which they are particularly strong or weak compared to others. In the following example, we will briefly compare Microsofts operating systems key capabilities (strengths) respect to Apples and IBMs ones, to explain the main reasons behind Microsofts leadership in the personal computers OS Market.

Microsoft
If Microsoft reigned as leader in the OS market with DOS and Windows for the last 20 years; it is because, the aforementioned has been able to establish its dominance in this industry thanks to its marketing and research skills; as well as its superior ability to develop and maintain key strategic partnerships with a large majority of the hardware vendors that produce personal computers. This has allowed Windows to become the operating environment, maybe not of choice, but of necessity for the majority of personal computers in the world. Microsofts primary competitors, Apple and IBM, both have more stable and light operating systems with a great deal of promotion to accompany them. However, both suffer the same weaknesses that Microsoft has been able to exploit: Apple's operating system for its Macintosh line of computers, while superior in many ways (design, reactivity, functioning intuitiveness) to DOS and Windows, is limited to the Macintosh personal computers. In addition, it does not run many of the popular applications and games that are readily available to DOS and Windows. To an extent, IBM's OS/2 operating system suffers for the same problem; even if it will run on all of the personal computers DOS and Windows can run on, the number of programs produced for IBMs OS/2 in its native environment is very limited.

The aforementioned strengths and weakness analysis can be integrated with an opportunities and threat analysis in what we call a SWOT analysis (for details see: Harvard Business School, 2005). By listing favourable and unfavourable internal and external issues in the four quadrants of a SWOT analysis grid, planners can better understand how strengths can be leveraged to realize new opportunities and understand how weaknesses can slow progress or magnify organizational threats. [In addition] it is possible to postulate ways to overcome threats and weaknesses (Helms M. M., 2010). Accordingly, by doing a SWOT analysis for each of the competing firms which are object of study we can recognize the differences in the competing perspectives of the different players in competition; and understand the relative threat, influence and power that each competitor exerts or could exert on others (relationship which is generally asymmetric). Since there is a causal relation between competitors

31

strengths/weaknesses and the presence/absence of key skills, assets or capabilities needed to compete in a specific market. An analysis of strong performers in a group of competitors should reveal us the foundations behind a successful record of business accomplishments. This kind of analysis, in conjunction with an examination of unsuccessful companies and the reasons behind their failures, should provide us good understanding of which are the critical factors for success required in a given competition. As a result, such analysis reveals to be a useful basis for choosing with whom you should or shouldnt create a benchmark (for benchmarking techniques see: Boxwell R. J., 1994). In the following pages we will introduce the Five Forces model by Porter, which can give us an comprehensive overview of the main competitive forces at work in the competitive environment of a firm. Here follow a set of competitive analysis tools that for reasons of brevity have been omitted in this report, which that can result complementary to the business level competitive analysis tools that we will describe in this report. Balanced Scorecard Balanced Scorecard Basics SWOT Analysis SWOT analysis method and examples, with free SWOT template SOSTAC Model What Is The SOSTAC Model Of Marketing? Ansoff matrix The Ansoff Matrix - Understanding the risks of different options An organizations capacity to improve existing skills and learn new ones is the most defensible competitive advantage of all. C. K. Prahalad

http://www.balanceds corecard.org/bscresou rces/aboutthebalance dscorecard/tabid/55/ default.aspx

http://www.businessb alls.com/swotanalysisf reetemplate.htm

http://corporateskills. co.uk/?p=315

http://www.timeanaly zer.com/lib/ansoff.ht m

Focus 3: Five Forces to identify the structure of inter-firm competition and shape the business strategy
In his articles Porter (1980, 2008) illustrates by what means the industry structure has a strong influence in defining the rules of the competitive game as well as the strategies potentially available to a company (M.E. Porter, 1980). To do so he identifies five major forces that jointly shape the competitive environment of a firm. According to the author, those forces should be carefully considered and evaluated when designing and planning a competitive strategy; because strategies pay-offs are determined or at least biased by those forces.

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Potential entrants

1. Rivalry among existing firms; 2. Threat of new entrants; 3. Threat of substitute products; 4. Bargaining power of suppliers; 5. Bargaining power of buyers;

Suppliers

The "industry"

Buyers

Sobstitutes

As we can see from the scheme above, for each of the five forces identified by Porter we have a category of agents affecting directly (competitors in the industry) or indirectly (suppliers, buyers, substitutes and potential entrants) the competitive arena of a firm, and its economic performance. To undertake a structural analysis of companys competitive position, and recognize the way in which the five forces are affecting its business performance and strategies, we need to identify the collection of factors that jointly determine the intensity of each of the aforementioned forces. Some of these factors are common to all or many firms, but, their specific weight and relevance changes from industry to industry, segment to segment, firm to firm and product to product. Thus, the importance of each of these factors that affect the intensity of competition is case specific/dependent; and, is influenced by a firms objectives, strategies, relations with other agents in its environment, constraints, opportunities and boundaries of the context in which it operates. Therefore, the weaknesses and strengths that emerge from any structural analysis of the five forces change from case to case. Nevertheless, for each competitive force we can recognize some general factors that commonly affect (positively or negatively) the intensity of the competitive forces to which a firm is subject (see next page):

Intensity of rivalry among exist ing

-High fix costs/exit barriers; -Intense marketing battles/retaliations between competitors; -Several competing firms of similar size/ with balanced resources; -Chronic overcapacity; -Slow industry growth; -Small differentiation of products/firms; -Low fix costs/exit barriers; -Polite or gentleman competitors; - Few competing firms of dissimilar size/ with unbalanced resources; -Fast industry growth; -Strong differentiation of products/firms;

Concreteness of t hreat of new ent rant s

-Permissive regulation of patents, licenses and open-source technology; -Small capital requirements; -Small minimum efficient scale (MES); -Open/unsecured distribution channels; -Perception of new technological possibilities. -Extensive regulation of patents, licenses and proprietary product technology; - Experience/scale economies; -Large MES; -Vigorous retaliations to entrants; -Joint costs and switching cost; -Brand identification and customer loyalty;

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Concreteness of threat of subst it utes

- Existence of function/use substitutes; - Attractive price/performance tradeoff of substitute products; -Government regulations, subsidies and standards; -Small switching costs for buyers; -Effectiveness of collective industry action; - No substitute product for the usage/function; -Trend analysis ability; - High switching costs for buyers and distributors;

Bargaining power of buyers

-Large purchase volumes relative to sellers sales; -Buyer has information about market conditions and suppliers costs of production; -Backward integration threat. -Tapered integration; -Small purchase volumes relative to sellers sales; - High switching costs for the buyer; -High impact of suppliers product on the quality of buyers products. -Forward integration threat;

Bargaining power of suppliers

-Small purchase volumes relative to sellers sales; - High switching costs for the buyer; -High impact of suppliers product on the quality of buyers products. -Forward integration threat; -Large purchase volumes relative to sellers sales; -Buyer has information about market conditions and suppliers costs of production; -Backward integration threat. -Tapered integration;

Generally, the

more the

five

forces are

intense

for a given

firm/industry, the more the potential profitability is narrow and subject to uncertainty. Still, the point of industry analysis is not to declare the industry attractive or unattractive but to understand the underpinnings of competition and the root causes of profitability. [Therefore, if possible] analysts should look at industry structure quantitatively, rather than be satisfied with lists of qualitative factors. [Moreover,] while a myriad of factors can affect industry profitability in the short runincluding the weather and the business cycle industry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. [Consequently, a] good industry analysis looks rigorously at the structural underpinnings of profitability [and] distinguishes temporary or cyclical changes from structural changes (Porter M. E., 2008).

Porters Five Forces Assessing the Balance of Power in a Business Situation

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http://www.mindtools.com/ pages/article/newTMC_08. htm

Yet, analysing mathematically the factors influencing each of the forces necessitates very detailed quantitative or qualitative information and the ability to perform a multicriteria analysis for each force. Therefore, in many Five Forces competitive analysis, as in the following example of Porters Five Forces Analysis of Coca-Cola (personal review of the example from: Valuation Academy) we only define and briefly describe the main factors constituting each of the forces, to recognize their overall intensity/pressure. In view of that, we will be here concerned only with the relative positioning of Coca-Cola in the soft drink bevarege industry and appraise the forces to which it is subject.

Coca- Cola
Rivalry among existing firms:
In the soft drink beverage industry the level of rivalry is relatively moderate. The main reason for this is the small number of major global players controlling the beverage market. The leaders are Coca-Cola and PepsiCo. Brand loyalty is a determinant of the rivalry between competitors. In the end the consumers chooses the product, so the rivalry comes in the form of advertising and marketing strategies to gain market value. Products in the industry are easily differentiated (brand logo, casing colours, bottle shape, flavours). This differentiation lowers the level of rivalry because all major companies try to develop unique products with high consumer appraisals and fidelity. The ability for end-consumers to control the market greatly boosts rivalry between competitors. For the reason that stores stock their shelves with the most popular products, competitors are always fighting for their product to be the most visible and easiest to recognize. Expansion opportunities are moderate. The best way to gain market shares in the beverage industry is to enter into a market segment that is not already occupied by strong competitors.

Threat of new entrants:

The level of new entrants is measured by multiple factors including: brand loyalty, advertising ability, access of distribution channels, and supplier availability. These factors create a high threat for new entrants in the soft drink beverage industry. Customer and brand loyalty make it very problematic for new competitors to enter into the beverage industry. Coca-Cola is the most famous beverage brand throughout the world, which has been made possible through endless advertising and marketing campaigns. Advertising and marketing are a key component for a new company to gain recognition from consumers. However, both these components require large amounts of funding to produce broad scale marketing campaigns that will gain the recognition needed to compete with industry leaders, such as Coca-Cola. Access to distributing channels is an important factor when entering into a new market. It can be tiresome for new entrants to find retailers that will carry their product before they are established. Shelf space will rarely be made for products that cannot prove they have consumers to regularly buy their product. Coca-Cola and other industry leaders have strict bottling contracts in all of their sales areas. These contracts block the bottling company from doing business with companies producing a similar product. One of the only alternatives for the new company is to do the bottling themselves, which requires high amounts of capital.

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Threat of substitute products:

In the beverage industry there are many substitutes for each category of soft drink. This allows the consumer to help shape what the retailers put on the shelves. Examples of substitute products to Coca-Cola are Pepsi products, , tea, coffee, energy drinks, beer, wine, etc. The substitute products create a moderate threat in the industry. Marketing and advertising have a major impact on the substitute products. If the consumers do not know about a particular product, then retailers do not want to stock that product. The switching cost for retailers is low, so retailers can easily switch to more appreciated products. This can create an advantage for the retailer from a cost standpoint and for the producers of the substitute product. Throughout the beverage industry, competing product lines of products have very similar prices. Consequently differentiation practices are very important to maintain fidelized consumers, which otherwise would experience substitute product. This can give substitute products the opportunity to use promotional influences to gain consumers favor.

Bargaining power of buyers:

Buyers, especially retailers, are the key to success of the soft drink beverage producers. Buyers include fast foods, fountain vending, convenience stores, and super markets. The bargaining power of the buyers ranges from low to moderate (depending on the relative size of the buyer). Fast food chains have the highest bargaining power, because they buy in bulk. This method of purchasing provides least profit for unit for Coca-Cola due to small mark-up margins. Vending machines provide a straight line approach from getting the product directly into the hands of the consumer. There is literally no bargaining power for the buyer. Convenience stores, bars, shops and local wholesalers have low bargaining power and pay high unitary prices for the products since they are buying small quantities. Super markets have low bargaining power. The contractual power they possess originates from the size of orders and shelf space exposure/placement decisions.

Bargaining power of suppliers:

The bargaining power of the suppliers, in the soft drink beverage industry, is very low because the ingredients used to create these beverages are readily available. The basic ingredients (sugar, water, caffeine, caramel, coca extract, glycerine) used to make Coca-Cola products are coomon and easily found. This ease of access gives a huge advantage to Coca-Cola because the company can set prices with the suppliers. Switching costs are very low, so drink manufacturers can easily change their suppliers. The industry utilizes large quantities of raw materials, accordingly the suppliers must remain in good standing with the buyers.

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As alleged previously, since industries structure evolves over time, industries and markets should be considered and therefore analyzed as dynamic open systems. This has to be done in order to identify long-lasting trends, predict forthcoming transformations and anticipate and prepare to compete in upcoming competitive scenarios. Accordingly, once the structural factors affecting each of the forces have been detected, measured, weighted, examined in their trends and causally related one another with systemic approach; analysts and managers can develop new competitive strategies, designed specifically to: Increase the present and upcoming market/profit shares of the firm; Reduce or redistribute the present and upcoming share of profits/revenue of competitors/buyers/sellers/substitutes; Improve the posture (ability/facility to react to others strategies) of the firm within in its competitive arena; Improve the positioning (concrete strategic advantage over competitors) of the firm within in its competitive arena; Limit the threat of substitutes; Other;

By using the information about the five forces gathered in porters analysis, firms can take consequently benefit of this informative advantage while designing their strategies. Thus, firms who undertake the difficult task of examining each competitive force and forecasting their intensity and causes will be able to create a meticulous and all-inclusive representation of their business environment, which can be used to shape the industry itself, and thereby overcome the profit potential limits due to the competitive structure of the industry in which a firm operates. As a result, firms capable of finding a distinctive position in their context by understanding, coping-with and governing the competitive forces identified by Porters model will most likely reveal to be successful in designing effective strategies and realizing their objectives. In reshaping structure, a company wants its competitors to follow so that the entire industry will be transformed. A firm can [in such a way] lead its industry toward new ways of competing that alter the forces for the better (Porter M. E., 2008).

When analysing a competition at the product level the previously mentioned tools are no longer useful, because their approach is too broad and doesnt considerate the importance of consumers in the process value/quality recognition. As Rossi F. (2013) clearly outlines in his Competitiveness Assessment report: the most simple way to find out which product is the more effective for customers is to find out which of the products gets sold the most. Even if simple, this method doesnt give us any information on how to improve the competitiveness of our products, because it focuses only on the outcomes of competition and not on its means. To better understand what determines competitiveness we have to understand that products are sets of features [attributes] and consequently proceed to analyze these characteristics of products separately or in bundles. [] Indeed not all of these characteristics are easily measurable and sometimes their perception may vary from customer to customer. Consequently to perceive these subjective / objective perceptual differences in the process of assessment and recognition of consumers preferences we should classify attributes according to two strategic dimensions for products competitiveness assessment: 1. 2. The Variability in preferences; Measurability and distinguishability of preferences;

37

DIFFICULT/ SUBJECIVE

FUNCTIONALS Ease of use; Safet y; Or i gi nal i t y; Novel t y; TECHNICALS Dur abi l i t y; War r ant y; Wat er r esi st ance;

EMOTIONALS Artistic quality; Design; Sentiment and memory revival; PERSONALS Col or ; Fl avor ; Si ze; Mat er i al s;

MEASURABILITY AND DISTINGUISHABILITY OF A CHARACTERISTIC/ FEATURES OF A PRODUCT

EASY/ SHARED CRITERIA

HOMOGENEUS

DIFFERENTIATED

VARIABILITY ABOUT THE OPINIONS AND PREFERENCES FOR A CHARACTERISTIC/FEATURE OF A PRODUCT

For each of the four categories of characteristics/features of products, previously differentiated in the Measurability/Variability matrix, we should choose the specific competitive analysis technique/tool that fits the best to the characteristics taken into account. If the product is complex, it possesses several characteristics belonging to different categories. Then, to be properly examined the product could require the use of several techniques. Otherwise, the use of a single technique, the most suitable to the characteristics, is generally sufficient. We have already presented the Kano Model, and we will soon introduce two other instrument (Means-End Chain, Quality Function Deployment) to analyse the competiveness of products. Each one is particularly relationship: appropriate to understand the competing dynamics of a particular kind of product; the following matrix summarizes this

38

DIFFICULT/ SUBJECIVE

FUNCTIONALS: Kano Model

EMOTIONALS: Means-End

MEASURABILITY AND DISTINGUISHABILITY OF A CHARACTERISTIC/ FEATURES OF A PRODUCT

TECHNICALS: Techni cal Compar i son

PERSONALS: Qual i t y Funct i on Depl oyment

EASY/ SHARED CRITERIA HOMOGENEUS DIFFERENTIATED

VARIABILITY ABOUT THE OPINIONS AND PREFERENCES FOR A CHARACTERISTIC/FEATURE OF A PRODUCT

Focus 4: Quality Function Deployment

As Hauser J.R. and Clausing D. (1988) summarize, the QFD focuses and coordinates skills within an organization, first to design then to manufacture and market goods that customers want to purchase and will continue to purchase. The QFD model is nowadays used in countless businesses, ranging from clothing industry to electronics, construction equipment and automobile companies. Firms such as Ford, General Motors and Toyota started applying it to their products in the late 80s. The key assumption of the Quality Function Deployment model is that product quality is a multidimensional concept dependent on customers experiences. As a result, we can talk about quality products and compare them only if we can understand how specific (valuable/measurable) Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality. Drucker P.

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engineering characteristic of products are satisfying customers needs. This because, technical and conceptual engineering aspects are visible in a unique form for the customers: the usage experience form. The usage of products by customers is therefore the only mean by which qualities of products express themselves and can consequently be evaluated by customers and thus implemented by firms.

The viewpoint of this model is that products should be designed to reflect customers desires and tastes so marketing people, design engineers, and manufacturing staff must work closely together from the time a product is first conceived (Hauser J.R. & Clausing D., 1988). Companies should therefore be able to learn from customers experiences, and sumup the latters to help engineers in developing and improving products, by answering to the customers needs and problems, which emerge from the usage involvement. In concrete, the QFD is a conceptual map that illustrates the links between technical characteristics and customers usage experiences. For that reason, the patterns in evidence on the houses grid are a powerful mean to engineers, managers and marketing people with different problems to evaluate the design priorities and develop a coherent marketing strategy for the product. If there was no formalized instrument of coordination between the managerial functions, those functions would remain disconnected, and the end result would be a set of isolated and discouraged business functions incapable of identifying their particular role and responsibilities in the development and improvement of a product; moreover if there is no communication and coordination between business functions, there can be no common idea/view on the factors that determine the overall perceived quality of a product.

To build a QFD we need information on consumers attributes or requirements (CAs). Those CAs are expressions customers use to describe products and product characteristics. Those attributes can be categorized, by separating them in general to specific groups or bundles; generally we have at least three levels of CAs. This grouping process can be done either directly from a customers response or by consensus (Hauser J. R. & Clausing D., 1988) on the specific consumer attribute. It is important to understand that customers and users arent the same thing, customers are a category of people that contains users but is larger the this last, customers could even be regulators, retailers, members of the scientific community, vendors, social medias, and others. Thanks to sophisticated marketing techniques companies can measure, track, and compare customers perceptions of products with great accuracy, and use this information to compete on quality with other firms products. Accordingly, CAs can generally be defined by interviews of customers and surveys: a) By looking what people says on forums and social networks about the product in general terms or about their personal use experiences; b) By placing a product in a open to public area and listening what people say about it or looking how people interact with, or react to the characteristics of the product; c) By looking what is said about the product in specialized reviews and other medias. Even if generally CAs are of easy interpretation for product designers and product planners, in some case the inference from specific customer opinions to technical qualities and engineering characteristics can be misleading simply for misunderstandings due to the customers specific use and meaning of language who can strongly diverge from one social group to another. Two persons that answer with the same words to a specific question of the interview, or in a survey, could thus have very different opinions and levels of appreciation (preference) for the concerned attribute of the product. For example: the noisiness of the engine of a motorbike that two different customers could have both signaled by the expression: Impossible to not be noted with such a powerful noise from the engine could for one be a quality (lets say a twenty years old fellow that would use it to show off in front of his college) and for the other a defect (lets say a thirty-five years old married women, who likes powerful motorcycles but knows that his husband would never let her take such a noisy bike that would attract the glance of all men passing nearby).

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QFD in practice: QFD and Voice of Customer Analysis: QFD Examples and Case Studies by Glenn Mazur

http://www.mazur.net/publishe.ht m

To avoid language misunderstandings it can thus be useful to have in surveys, beside the CA phrase spaces, two other indicators: 1. The first, for the personal appreciation of the described attribute, better if in a numerical min-max scale where the min and the max are respectively the best and the worst seen by the customer in the same segment of the market for that particular attribute. It could even be functional for the future improvement of the product to have listed the min-attribute and the max-attribute products indicated by the customers, in such a way product developers can know which product attributes are taken has current market references by customers. 2. The second, for the relative (to other CAs) importance, or priority given to each attribute. This indicator is important because when developing a product there is always a trade-off between the payback (in terms of customer appreciation) of the different attributes. Weighting the attribute importance is the easiest way to understand where the efforts have can generate most important marginal benefits for the competiveness of the product. Weightings are displayed in the house next to each CA- usually in terms of percentages, a complete list totaling 100% (Hauser J.R. & Clausing D., 1988) In addition, if surveys make emerge the fact that various customer segments evaluate products differently product planning team should get assessments for each segment. (Hauser J.R. & Clausing D., 1988) Once obtained the customers attributes and relative importance values, we can employ the QFD process to align different teams members and management, increasing transparency and coherence at/between each step of the product development process, before moving forward. In such a way QFD coordinates the product development process by linking: 1. Consumer attributes to technical (engineering) characteristics; 2. Technical characteristics to components characteristics; 3. Components characteristics to process and test planning characteristics; 4. Process and test planning characteristics to production characteristics; The house of the QFD is a large relationship matrix that ties the characteristics of one phase (column at the left) of the product development process to the successive (raw on the top), "hows" of one stage become the "whats" of the next, until all phases are connected in a cyclic development process. On the top of the matrix we have the characteristics interaction triangle, which highlights trade-offs (positive or negative) between characteristics, some will leverage (positive correlation) one-another others will be in conflict (negative correlation) with eachother. Beneath the relationship matrix we have the target and gap analysis area, which is used to track deviations from the desired performance values of characteristics, and to analyze the technical difficulty of a particular solution. At the right of the matrix we compare the characteristics of the firms products to the competitors ones, in such a way we can have a multidimensional measure of the competitive performance of a product respect to others.

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Schematic summary of QFD houses and product development/improvement processes

Hows Whats

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Performance comparaison

Source: cake from XR Training and Consultancy ,

QFD - Quality Function Deployment;

II. When values become a competitive dimensions

In the last two decade, we have seen the emergence of a new socio-cultural actorhood dimension for firms, which was accompanied by the diffusion of environmentally sustainable and socially responsible practices in private business organizations. The diffusion of corporate social values in the business arena is a forthcoming consequence of worldwide circulation and common acceptance of the Globalization-era principles of sustainability, corporate social responsibility (CSR) and corporate citizenship (CC). These new ideals led to the formalization of new business models (called social and sustainable entrepreneurship), which, if widely adopted, could produce in their environment a much more significant re-evolution than the however important- organizational one that will take place in the competing structure and modus-operandi of single firms.

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a. CSR and the benefits for being sustainable

As the United Nations Global Compact Office (2011) highlights, business interests are increasingly overlapping with societal objectives, and there is a growing need for collaboration between the private sector and other stakeholders such as governments, the United Nations system, civil society, local communities, among others. It is increasingly clear that the private sector does only capitalize to on not engage in risks partnerships to better manage

World class corporate image Market leadership, world brand Innovation, challenging environment

associated with negative externalities, but opportunities. Through engaging local and global actors in partnerships, companies can acquire a better understanding of the nature of their operations, such as expanding the license to operate, improving access to markets and increasing operational efficiencies.

Shareholder value

Turnover, cashflow, profit, ROE, etc.

Source: The Maslow hierarchy of managers values
and needs Fig. 1 pp. 37 in Stocchetti A. (2012)

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Source: http://upload.wikimedia.org/wikipedia/commons/6/67/CSR_framework_-_value1.jpg
Attention to CSR as an element in corporate strategy led to examining CSR activities through the lens of the resource-based-view (RBV) of the firm. The RBV, [] presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly mobile across firms. Accordingly, the imperfect mobility of heterogeneous resources can result in competitive advantages for firms that have superior resources or capabilities. [As a result] CSR activities and attributes may be used in a differentiation strategy. Applying the RBV to CSR naturally leads to the question of whether firms can use CSR to achieve a sustainable competitive advantage. [] A firm engaging in a CSR-based strategy could sustain an abnormal return if it could prevent competitors from imitating its strategy. This is consistent with the VRIS formulation of the RBV, which posits that sustainable competitive advantage requires that resources be valuable (V), rare (R), inimitable (I) and non-substitutable (S). [Since] In competitive markets it is unlikely that a firm can prevent competitors from imitating a CSRbased strategy, so competitive advantage based on CSR activities/attributes will be short lived. However, this also means that competing firms may be forced to imitate CSR activities to gain competitive parity. This raises the question of whether such competition-meeting activities should be considered responsible rather than simply strategic. (McWilliams A., Siegel D., Wright P. M., 2006)

b. Towards a possible integration of values in products and firms?

The following excerpt from the University of Bonn suggests us that the problem of integrating moral and social values in market and business decisions should be considered not only under the perspective of firms (and their CSR policies); but probably, much more under the prospective of consumers and their willingness to pay a surplus for the respect/diffusion of their values and beliefs. the Means-End chain theory helps us to understand more from this point of view.

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Markets Erode Moral Values? Researchers from the Universities of Bamberg and Bonn present causal evidence on how markets affect moral values. Many people express objections against child labor, exploitation of the workforce or meat production involving cruelty against animals. At the same time, however, people ignore their own moral standards when acting as market participants, searching for the cheapest electronics, fashion or food. Thus, markets reduce moral concerns. This is the main result of an experiment conducted by economists from the Universities of Bonn and Bamberg. [] both economists, have shown in an experiment that markets erode moral concerns. In comparison to non-market decisions, moral standards are significantly lower if people participate in markets. "Our results show that market participants violate their own moral standards," says Prof. Falk. In a number of different experiments, several hundred subjects were confronted with the moral decision between receiving a monetary amount and killing a mouse versus saving the life of a mouse and foregoing the monetary amount. "It is important to understand what role markets and other institutions play in moral decision making. This is a question economists have to deal with. To study immoral outcomes, we studied whether people are willing to harm a third party in exchange to receiving money. Harming others in an intentional and unjustified way is typically considered unethical. [] A significantly higher number of subjects were willing to accept the killing of a mouse in market conditions. In markets with many buyers and sellers, subjects may justify their behavior by stressing that their impact on outcomes is negligible. "This logic is a general characteristic of markets," says Prof. Falk. Excuses or justifications appeal to the saying, "If I don't buy or sell now someone else will "

Focus 5: Means-End Chain Theory

Mens choices are unquestionably driven by social and cultural factors: Socially similar people, even in the pursuit of independent interests, spend time in the same places. Relationships emerge. Socially similar people have more shared interests. Relationships are maintained. Further, we are sufficiently egocentric to find people with similar tastes attractive. Whatever the etiology for strong relations between socially similar people, it is to be expected that the resources and opinions of any one individual will be correlated with the resources and opinions of his or her close contacts. (R. Burt, 1995) As a result, countless market goods and services were invented for the purpose of satisfying those socio-cultural identity and relational needs of individuals. Accordingly, goods and services can be: In accordance with some social or cultural values: those goods can confirm and strengthen the "apparent belief" in a value of an individual, and therefore support its belonging to a culture or social group which claims to share and support that value; In conflict with some social or cultural values: those goods can deny and weaken the "apparent belief" in a value of an individual, and therefore deny its access to those cultures or social groups which claim to share and support that value; Furthermore, since many ethnical and cultural groups have, or at least pretend to have, the same basis of values; it is possible that this common basis of values is also determining their consumption decisions, and therefore influencing the concrete expression of their customs and habits through the purchase of analogous bundles of goods and services. Besides this, since one of the reasons of existence of values, is to be socially expected in people with the same customs and habits, the abovementioned argument could also be true the other way round: people consuming similar/common bundles of goods could involuntarily generate innovative modes and progressively shared new customs and habits; those lasts could be culturally interpreted as the emergence of a new combination of values, associated to a new culture. As alleged before, apparent values are immaterial characteristic and identity masks acquired through the purchase and exhibition of some goods. Those identity masks can also be incoherent or conflicting with ones true personal beliefs and values. Accordingly, in several cases, it is possible to see individuals buying and using goods with conflicting values, generally in different moments of their lives. This can happen either because people artlessly change their values, or because the outcome of the exhibition of a value -through the purchase and use of a good- are situation dependent; and consequently the exhibition of the same value can reveal to be useful in one situation and harmful in another. Since it is the situation that :determines the outcomes of exhibiting a value, values are both, humans means and ends. Beliefs: something that a person is convinced that is true; Values: abstract aims and ends desirable in our existence and society;

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The means-end theory has the objective to systematically link consumer preference for some attributes of products/services and purchase/use situations to social and psychological consequences of consumption. The relation between the two is circular and is mediated by the individuals values and beliefs system. To do so, we must start by considering consumers choices as a cognitive processes, in which concrete or abstract product attributes are linked to expected social, psychological or functional consequences; which produce an effect on ones value code; which in turn can transform the attributes associated to other products and the expected consequences of attributes.

Attributes

Consequences
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Values

Consumers are generally not aware of this cognitive process. On the other hand, since the comprehension of consumer decision-making processes is one of the more relevant aspects of marketing research from the scientific as well as the operative standpoint, firms are increasingly aware of it. Firms knowledge on decision-making processes can then be used to segment consumers on the basis of common attribute identification process, common desired consequences of consumption and common final or instrumental values. From the Means-End perspective it is assumed that the values are culturally absorbed in order to create and use conditions of morality and competence, to create social interaction and to support the rationalization of beliefs, attitudes and behaviors. Once internalized the values become - whether consciously or not - a pattern of criteria which guides action and develops and sustains attitudes towards objects and situations. It is in this respect that this can be understood as a synthesis between what would be a sociological vision and a psychological one. Even if the values "dwell" within people, they are forged socially. Therefore, values are as central to the lives of individuals as to society as a whole. In fact, values can be classified into two categories: personal (individual) and social (institutional, cultural, organizational). For example, the attribution made about someone being a helpful person can also fit into organizations. Nonetheless, they are like two sides of the same coin, each socially shared. Whereas the former are presented as cognitive representations of institutional objectives, the latter show themselves to be cognitive representations of personal needs and the means to fulfill them. In other words, social values are shared beliefs that characterize a group of people and define the acceptable normal behavior to a society or group; personal values on the other hand, define the acceptable normal behavior of an individual (de Souza Leo A .L. M., Bencio de Mello S. C., 2007).

Situations Attitude towards the surrounding individuals and environment

Products Technical, functional and emotional sets of attributes

Values Preferences for modes of conduct or end-states of existence.

48 Attribute categorizing process: represent the way in which consumers segment their environments into meaningful groups by creating equivalences among non-identical stimuli. Grouping is determined by the object's properties, but the choice of properties to be focused on is influenced by values
Interviews to consumers are used to rebuild the mental categorization process

At each level we build and implication matrix ladder which represents the number of times each element leads to another, of the successive level

Product Knowledge

Consumer Knowledge

A hierarchical value map chains the data aggregated in the implication matrixes.

Once the hierarchical value map is built, the existing paths from the base to the top are considered as representative chains of perceptual orientation.

References
Papers:
Beard D. W. & Dess G. G. (1981), Corporate-Level Strategy, Business-Level Strategy, and Firm Performance, The Academy of Management Journal, Vol. 24, No. 4, pp. 663688; Berger C. et al. (1993),"Kanos Methods for Understanding Customer-defined Quality", Center for Quality Management Journal, Vol. 4, pp. 3 36; Bevins F. & De Smet A. (2013) Making time management the organizations priority, McKinsey Quarterly; Burt R. (1995), Structural Holes, The Social Structure of Competition, Harvard University Press; Despand R. & Gatignon H. (1994), Competitive Analysis, Marketing Letters, Kluwer Academic Publishers; Deutsch, M. (1949), A theory of cooperation and competition, Human Relations, Vol.2, pp.129152; Deng W. (2007),Using a revised importanceperformance analysis approach: The case of Taiwanese hot springs tourism, Tourism Management, Volume 28, Issue 5, Pages 12741284; Gutman J. (1982), A Means-End Chain Model Based on Consumer Categorization Processes, Journal of Marketing; Harvard Business School (2005), WOT Analysis I: Looking Outside for Threats and Opportunities, Harvard Business School Press; Hauser J. R. & Clausing D. (1988), The House of Quality, Harvard Business Review; Helms M. M. (2010), Exploring SWOT analysis where are we now?, Journal of Strategy and Management, Vol. 3 No. 3, pp. 215-251; Kilduff G. J., Elfenbein H. A. & Staw B. M. (2010), The Psychology Of Rivalry: A Relationally Dependent Analysis Of Competition, Academy of Management Journal , Vol. 53, No. 5, pp.943969; Lane D. A. (1994), Models And Aphorisms, Working Paper, Santa Fe Institute Business Network; Mamunur R. (2010), A Review Of State-Of-Art On Kano Model For Research Direction, International Journal of Engineering Science and Technology, Vol. 2 (12), pp. 74817490; Martilla J. A. & James J. C. (1977), Importance-Performance Analysis, Journal of Marketing; Matzlera K., Bailomb F., Hinterhubera H. H, Renzla B.,3, Pichlerb J. (2004), The asymmetric relationship between attribute-level performance and overall customer satisfaction: a reconsideration of the importanceperformance analysis, Industrial Marketing Management Vol. 33, pp. 271 277; McFadden D. (September 1998), Rationality For Economists?, Berkeley University; McWilliams A., Siegel D., Wright P. M. (2006), Corporate Social Responsibility: International Perspectives (PDF). Working Papers (0604), Department of Economics, Rensselaer Polytechnic Institute; Namwongse P. & Limpiyakorn Y. (2011), Application of Bayesian Network Model for Enterprise Risk Management of Expressway Management Corporation, IPEDR vol.14; Porter M. E. (1980), Industry Structure and Competitive Strategy: Keys to Profitability, Financial Analyst Journal;

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Sauerwein E., Bailom F., Matzler K. & Hinterhuber H. H. (1996), The Kano Model: How to delight your customers, International Working Seminar on Production Economics; Schmalensee R. (Sep., 1988), Industrial Economics: An Overview, The Economic Journal, Vol. 98, No. 392, pp. 643-681; de Souza Leo A .L. M., Bencio de Mello S. C. (2007), The means-end approach to understanding customer values of a on-line newspaper, Brazilian Administration Review Vol.4 No.1; Stocchetti A. (2012), The Sustainable Firm: from Principles to Practice, International Journal of Business and Management; Vol. 7, No. 21; United Nations Global Compact Office (May 2011), Global Compact Local Network Report 2011, United Nations Press; Uzzi B. (1996), The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect, American Sociological Review,Vol.61 P.674-698;

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Slides:
Stocchetti A. (2013) Competitive Analysis: - slides first 2 weeks: http://static.unive.it/isa/file/download/elementId/10231315; - slides 3rd week: http://static.unive.it/isa/file/download/elementId/10239123; - slides 4th week: http://static.unive.it/isa/file/download/elementId/10252102; - slides 4th week b: http://static.unive.it/isa/file/download/elementId/10252103; - slides 5th week: http://static.unive.it/isa/file/download/elementId/10258863;

Books:
Abell D. F. & Hammond J. S. (1979), Defining business and making the bridge to other strategic decisions, Ch. 8 [p389-407] in Strategic Market Planning: Problems and analytical approaches, Prentice-Hall; Boxwell R. J. (1994), Benchmarking for Competitive Advantage, McGraw-Hill Professional Publishing; Parsons, T. (1970), The Social System, Routledge & Kegan Paul Ltd; Keeney R. L. (1993), Decisions with Multiple Objectives: Preferences and Value TradeOffs, Cambridge University Press;

Reports:
Rossi F. (2013), An Analysis of the Notions and Tools for the Study of the Competitive Environment, Class Report; Ruozhou R. (2012), Competitive analysis, final report, Class Report;

Websites:
CIDP, PESTLE analysis,<http://www.cipd.co.uk/hr-resources/factsheets/pestleanalysis.aspx>; CNA Exporter, Definizione di business e del segmento da espandere, <http://www.cnaexporter.it/percorso-2d.php>; Library of Economics and Liberty, Industrial Concentration, <www.econlib.org/library/Enc/IndustrialConcentration.html>; Economics Web Institute, Product differentiation, <www.economicswebinstitute.org/glossary/product.htm>; Mind Tools, Porters five forces, <http://www.mindtools.com/pages/article/newTMC_08.htm> Online Etymology Dictionary, Etymologic definition of competition, <http://etymonline.com/?term=compete>; Online Philosophy Club, The philosophy of competition, <http://onlinephilosophyclub.com/forums/viewtopic.php?f=1&t=6680>; PM HUT, Project Milestones, <http://www.pmhut.com/category/timemanagement/project-milestones>; The Economist, Vertical integration,<www.economist.com/node/13396061>; Think BIG, Innovation Trajectory, <www.thinkbigmagazine.com/wealth/216innovation-trajectory-understand-make-informed-decisions>; Tom Graves Web-blog, NOTES actors, agents and extras in the enterprise, <http://weblog.tetradian.com/2013/06/10/notes-actors-agents-extras-inenterprise/>; Wikibooks, Business Strategy The three processes of strategy, <http://en.wikibooks.org/wiki/Business_Strategy/The_Three_Processes_of_Strategy>; XR Training and Consultancy , QFD - Quality Function Deployment, <http://www.gtwebpublisher.co.uk/clients/wp/xrconsulting/main/showpage.php?tier 1=six%20sigma%20and%20quality%20tools&path=sixsigmaandqualitytools&page=QFD ___Quality_Function_Deployment.htm>;

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