6
Industry Analysis (The Nine Forces)

Short Description

This chapter combines the two substantial topic areas of macro-environmental analysis with industry analysis and demonstrates the unique creativity that is part of the world of business and competitive analysis.

Organizations and the industries in which they operate are embedded in a broad environment, which can significantly impact the competitiveness of both industries and organizations.

The starting point then of any strategic analysis is some form of environmental analysis—generally STEEP/PEST analysis¹—followed by Industry Analysis or Porter's Five Forces,² which together provide a structural framework outlining an industry and a unique and perhaps more holistic perspective on a firm's competitiveness.

Uniting these two techniques creates a powerful framework for not only identifying the forces operating in a particular industry, but the impact of environmental factors on these very forces. These two techniques combined provide a much broader approach to business and competitive analysis. The technique is called "The Nine Forces."

Background

A firm's environment is defined generally as the broad set of forces coming or operating from outside the firm that can affect its competitive performance. Firms are open systems subject to a range of external inputs and influences. They all "import" outside resources like finances, people, raw materials, and most "export" products or services back out into that environment. Because the environment influences the form and behavior of a firm, competitively successful firms must effectively evaluate that environment.

Most environmental analysis is based on the assumption that industry forces are not the sole explanation of all that occurs within the industry. The environment beyond an industry's boundaries can be a primary determinant or will in some way influence what actually takes place within that industry. External factors for change can be among the primary determinants of competition and competitiveness in a global marketplace or economy.

On the other hand, with industry analysis, the dominant aspects of a firm's environment are assumed to exist in and around the industry or industries in which the firm completes. An industry environment would consist of a particular set of competitive forces that create both threats and opportunities. Porter's Five Forces model addresses this perspective and is shown in Figure 6.1.

Figure 6.1 Generic framework of industry analysis

The definition of a firm's environment and the approach by which it may be strategically and competitively analyzed will often differ depending on the perspective the firm's members choose to pursue. By combining both analytical techniques, differing organizational perspectives can be taken into account through the broader analysis of nine forces.

To perform the Nine Forces analysis, an analyst needs to address the three basic levels of organizational environments: the general environment, the operating or industry environment, and the internal environment. Figure 6.2 illustrates the relationship of each of these levels with each other and with the firm at large.

Figure 6.2 Three levels of the environment

General Environment

The general environment is that level of a firm's environment that is broad in scope and has long-term implications for managers, firms, and strategies. These are usually understood to be beyond the direct influence or primary control of any single organization. STEEP/PEST analysis is one way of addressing and studying the broader issues that affect the general environment in which a firm operates.

The acronym STEEP stands for social, technological, economic, ecological, and political/legal sectors. PEST represents the same approach and stands for political/legal, economic, social, and technological sectors (see Figure 6.3). Each sector operates over a large geographic area (e.g., global, international, multinational, regional, national, provincial/state, and local) and over time (i.e., past, present, and future).

Figure 6.3 STEEP/PEST factors

Note: In PEST, ecological issues are often included across the other four sectors. These sectors are described as follows:

Political/Legal—The political component of the general environment relates to government and public attitudes toward various industries, lobbying efforts by interest groups, the regulatory climate, platforms of political parties, and (sometimes) the predisposition of politicians. The legal component consists of laws that members of society are expected to follow. In most nation-states, legal constraints in the form of public policies and regulations affect an organization's discretionary ability to act. Besides being a large consumer and producer in their own right, governments can legislate for greater or lesser competition and therefore become a critical focus of the competitive and strategy analyst's efforts in this sector. For companies such as defense contractors, educational institutions, health care organizations, and not-for-profits, the actions and mood of public policy makers are vital inputs to their competitive strategy development process.

Economic—The economic component of the general environment indicates the distribution and uses of resources within an entire society. By an entire society, we also mean the impact of the global economy on any market where international factors play an influencing role. This is important because consumption patterns are largely influenced by economic trends such as employment rates, exchange rates, interest rates, inflation rates, credit availability, fiscal and monetary policies, spending patterns, and levels of disposable income both locally and internationally.

In a rapidly changing global environment, events and economic issues that occur outside of one's market or country can still greatly impact the ability of a firm to remain competitive locally. Analytical tasks include the identification, monitoring, and forecasting of those economic variables to which the firm's strategic competitive efforts are most sensitive.

Ecological—This encompasses both the physical and biological environments within which firms operate. "Greening" of the environment illustrates the power that this factor can now exert on a firm's performance. Aspects of the ecological environment to include in this analysis are review of the global climate (e.g., effects of greenhouse gases), sustainable development (e.g., forestry practices), cradle-to-grave product life cycles, recycling, pollution, and biotechnological advances (e.g., genetic advances in agricultural products), among others.

Social—Characteristics of the societal context includes demographics, cultural attitudes, literacy rates, education levels, customs, beliefs, values, lifestyles, age distribution, geographic distribution, and population mobility. While the pace of change in this sector may be slow, its effects are quite profound and inescapable.

Technological—Digital communication, biotechnology, chemicals, energy, and medicine are only a few of the fields in which major technological changes have opened new areas to commercial competition. The technological component of the general environment is compounded by the impact of science and technology in product and process innovation as well. This includes new approaches to producing goods and services such as new procedures and new equipment.

The analytical task is to identify and monitor the effects of technological change as it affects competitive strategy. This can be seen not only in the final goods and services market, but also in new product and process innovation, and even communication, human resource attraction, and marketing methods. Interfacing with the organization's R&D functions is an obvious requirement for business and competitive analysts.

It is important to monitor and evaluate each of these nonmarket factors and their impact in terms of a firm's overall strategic directions.

Operating Environment/Industry Analysis

The operating environment, sometimes termed the competitive or market environment, is that level of the firm's external environment with components that normally have relatively specific and immediate implications for managing the firm.

The three main components of the operating environment are customers, suppliers, and competitors. Unlike the general environment, the operating environment can be influenced by individual firms.

The Customer component of the operating environment describes characteristics and behavior of those who buy or could buy the firm's goods and services. Customers are those who buy direct from a firm. They may not, however, be the final consumers of particular products or services. The customer component may therefore include direct buyers all the way to the end consumers. Analysts may want to break this group down into actual buyers (sometimes referred to as clients or customers) to retailers, wholesalers, or distributors, to end consumers.

The Supplier component refers to the role of external resources on the firm. Firms purchase and transform resources during production into goods and services, so issues like how many vendors offer specialized resources for sale, relative quality of material offered, reliability of deliveries, credit terms offered, and the potential for strategic linkages all affect managing the supplier component.

The Competitor component consists of rivals, present and prospective, that an organization must overcome in order to reach its objectives. Analysis and understanding of competitors is critical to developing an effective strategy. Competitor analysis should assist management appreciate the strengths, weaknesses, and capabilities of existing and potential competitors and predict their responses to both strategic and tactical initiatives.

The structure of key relationships in this operating environment, or environments when the firm operates in multiple industries, affects both profit potential and prospects for achieving competitive advantage.

Internal Environment

The firm's internal environment includes forces that operate inside the firm with specific implications for managing a firm's performance. Unlike externally derived components of the general and operating environments, components of the internal environment derive from the firm itself. The aspects of a firm's internal environment (production, marketing, and so on) include both trouble spots that need strengthening and core competencies that the firm can nurture and build. By systematically examining its internal activities, a firm can better appreciate how each activity might add value or contribute significantly to shaping an effective strategy. Michael Porter has proposed value chain analysis as a method for such an evaluation.³ Value chain analysis can help identify internal core competencies, which in concert with an external industry structure, are seen as the critical elements of competitive advantage and profitability.

Strategic Rationale and Implications

Macro-environmental and industry conditions affect the entire strategic management process. Effective strategic management is about making organizational decisions that correspond positively with the entire business environment. While a firm may be able to shape elements of the environment to its advantage, it will also have to adapt and react in ways that disadvantage it less than its competitors.

Hence, the key purpose of the Nine Forces model is to provide an accurate, objective insight into the significant issues and forces that surround and impact on a firm, as shown in Figure 6.4. The Nine Forces lead executive thinking beyond current activities and short-time horizons. It provides sensible links to current and near-term activities while maintaining an appropriate balance between short- and long-term issues. However, unless a filtering process is developed, the abundant environmental and industry information available can weaken a firm's strategy formulation process.

Figure 6.4 The Nine Forces

The Nine Forces technique provides a structured and systematic approach to the identification and analysis of relevant trends, events, and the influence and/or impact of each of the nine factors not only within themselves but across the other forces. Furthermore, this framework addresses the assumptions underlying strategy, which may lead to ineffective planning. Success or failure can depend on the accuracy and effectiveness of decision makers reading and responding to this more realistic environment.

Combining analysis of the broader business environment, with Porter's Five Forces, this technique enables the analyst to identify and analyze those major forces that will influence an industry's profit potential. Identifying the profit potential or attractiveness of an industry provides the foundation for building the strategy that bridges the gap between the firm's external environment and its resources.

Analysts can, within this framework, address Porter's "rules of competition,"⁴ which are as follows:

• Threat of New Entrants—Entry barriers define the level of difficulty facing those firms considering competitive entry into the industry. When barriers are low, new competition will add capacity to the industry and increase demand and prices for inputs, resulting in lower industry profitability.
• Bargaining Power of Suppliers—This force refers to the ability of the suppliers to influence the cost, availability, and quality of input materials to firms in the industry.
• Bargaining Power of Buyers—The firm's customers have a major role in defining industry structure by virtue of their ability to force down prices via comparison shopping or by raising quality expectations.
• Threat of Substitute Products or Services—This force describes the risk of market displacement by existing or potential substitutes.
• Rivalry Among Existing Competitors—Intensity of competition within an industry. This force has been empirically demonstrated in a large number of instances to be the most influential of the five forces.

By combining STEEP/PEST and Porter's Five Forces, the Nine Forces technique provides a robustness to any industry and environmental analysis and delivers a unique combination of insights that are not apparent when doing either of these analytical techniques in isolation. The purpose then of this analytical technique is to help analysts to answer the following two questions: Based on this environment, how attractive is the industry? How can your firm best compete?

Strengths and Advantages

Research has demonstrated that companies in some environments can gain an advantage over their competition based on the quality of their environmental analysis.⁵ Using the Nine Forces provides one way of integrating key personnel and cross-functional information into some facet of environmental and industry analysis. Further, this framework implies that managers should focus on broader environmental characteristics, and it encourages investment in understanding influencing industry factors and structure. This analysis can additionally identify existing and potential strengths, weaknesses, opportunities, and threats suggested by components of the firm's environment.

Throughout the firm, people can contribute to this analytical process. Various contributions can be important in and of themselves as they can create an evergreen forum for sharing and debating divergent views on relevant general environmental changes. The more individuals involved, the greater the opportunity to identify and challenge opportunities or threats in the environment. However, as the firm must gather and act on diverse information in a timely manner, cross-functional teams of internal specialists can often perform the Nine Forces analysis most effectively.

The Nine Forces analysis can assist in developing a firm's positioning strategy by matching a firm's strength and weaknesses within the current environment. Competitive forces analysis identifies sources and strengths of competitive pressures whether they be from within the industry or from the broader environment. To be successful, strategy must be designed to cope effectively with key competitive pressures to build a strong market position based on competitive advantage.

Unattractive competitive environments may exist when government plays a strong role, rivalry is intense, entry barriers are low, competition from substitutes is strong, and suppliers and customers have stronger bargaining power. Attractive competitive environments may exist when entry barriers are relatively high, no good substitutes exist, and both suppliers and customers have weak bargaining positions. In general, weak competitive forces mean greater firm profits. A company whose strategy and market position provides a good defense against these forces can earn better profits despite some or all of these forces being strong.

The Nine Forces model provides us with a broad analytical tool to develop strategies that will protect the company from competitive forces, provide a strong position from which "to play the game" of competition, and help create competitive advantage.

This technique can also be used to develop a proactive strategy influencing industry dynamics in a firm's favor. Industry evolution is an important component of the Nine Forces model since it allows us to identify windows of opportunity to capitalize on changes in force of industry structure or the influencing factors from the general environment.

The Nine Forces are interrelated to such an extent that a change in one force may impact the other forces. The essential tasks in this analysis are to identify the following:

• Forecasted changes in each of the nine competitive forces.
• How these changes impact other forces.
• How results of interrelated changes will impact future profitability of the industry.
• The predicted strength of the firm's position in this future scenario when employing the current strategy.
• How strategy might be changed to exploit changing industry structure and environmental factors by either reacting to competitor actions or by proactively seeking to secure competitive advantage through strategic change.

Because both the STEEP/PEST and Five Forces models place a strong emphasis on environmental and industry evolution respectively, they provide strong foundations for scenario analysis. By first examining each of the Nine Forces and then understanding the mutual dependency between the various forces, analysts can establish the proper mindset for long-range analysis.

The Nine Forces uniquely combines the strengths of both STEEP/PEST and the Five Forces analysis, while addressing some of the more common weaknesses of each technique.

Weaknesses and Limitations

Nine Forces analysis is not an easy analytical task because differing perceptions of the environmental context come into play. Apart from the identified weaknesses and limitations of both STEEP/PEST and the Five Forces, analysts may find that decision makers often have difficulty in defining what their environment is and in placing limits around it. Difficulties may also exist in interpreting the results and specific impacts, which in turn will affect choosing effective responses. Potential interpretation weaknesses include: structuring robust studies; showing financial impact; understanding both short- and long-term implications; insufficient senior management involvement in the analysis; difficulties in translating potential opportunities into action plans; and the time and resources required to do accurate analysis. As a result, the analytical output can be inaccurate.

With many firms also focused on the short-term perspective, executives may forestall the environmental analysis process. Many decision makers dislike spending "real" money today for speculative actions about tomorrow. Many firms also cut back their resources for in-depth analysis during tough economic times, viewing it as a luxury rather than a necessity. However, this is often when the analysis is most needed.

Many companies do not accept the value of the Nine Forces analysis and therefore do not take the time to do it well. It can be poorly understood and thus under-valued by management. The failure to link the Nine Forces analysis to competitive implications is common. The key goal of this process is the identification of competitive implications for the firm based on this broader environment analysis.

In his book, The Fifth Discipline, Peter Senge⁶ stated, "More specifically, new insights fail to get put into practice because they conflict with deeply held internal images about how the world works, images that limit us to familiar ways of thinking and acting." Many decision makers hold narrow, limited, or invalid perceptions about the world in which they operate. For example, they think in local terms as opposed to global terms, or since this type of analysis was not covered in their formal training, it must be of lesser importance.

Finally, diversified businesses can bring great complexity for analysts, as they seek to grasp the implications of many environmental and organizational dynamics. Biases, prior experience, and human limitations will affect their approach. Particularly in multinational environments, home-country biases and attitudes often lead organizations to assume and superimpose their own experiences, views, and understandings on variables operating in other countries.

Process for Applying the Technique

Begin with the firm's decision makers defining environmental and industry boundaries to limit the breadth, depth, and forecasting horizon of the analysis. Breadth refers to the topical coverage of the environmental data that are collected. Depth determines the amount of detailed data sought and analyzed in the Nine Forces. Forecasting horizons span short, medium, and long terms, as dictated within the firm's specific environment.

To establish the boundaries of the firm, management may look at the organization's strategic posture with respect to its geographic diversity (i.e., where it does and does not compete), its product or service market scope, its return horizon on its fixed resource commitments, technology and innovation, sources of its resources (capital, human, other financial, and raw materials), regulatory mandate, and flexibility.

Once definition and delimitation have occurred, the process essentially involved three key steps. First, collect information to identify the characteristics of each force (refer to Figure 6.4). The objective is to understand each force being analyzed and its relationship to the other forces.

Questions that may be addressed include:

What are the interrelationships between trends? This requires the analyst to use his or her creative capacity in identifying interrelationships between environmental and industry segments. The analyst should be looking for areas where trends are suggesting redefinitions or changes from the expected evolutionary path or where trends are reinforcing one another.

What are the conflicts between trends? Trends often push in opposite directions. For example, people are becoming more committed to their work at the same time that they are seeking more family time outside of the workplace.

Not all trends are of equal importance to a firm or an industry. Some will have a direct impact, while others may have only tangential impact depending on how the trend interacts with the firm's strategy. It is crucial that the analyst identify those trends and trend combinations that are likely to have the highest impact on the firm's goal pursuits. Critical trends are "issues" for the organization.

Forecasting the future evolution of a trend or set of trends within the issue requires analysis of the driving forces behind the issue. It is critical to distinguish between symptoms and causes, but it may be very difficult. Often driving forces work against one another and push simultaneously in multiple directions. Once the causes are accurately identified, the analyst can then develop alternative projections of the issue's evolution.

The objective is to examine and assess the impact of all Nine Forces on the industry and/or firm. Secondary sources can provide much of the information in this step; however, primary sources should be consulted to improve objectivity.

The process for analyzing the nine competitive forces looks to identifying the main sources of power or competitive pressures among each force.

For the next step, the analyst needs to determine the relative strength of each force by ascribing a value to each, indicating if it is strong, moderate, or weak. Another way is to rank the forces using a scale of 1 to 10, with 10 indicating a strong force and 1 a weak force. Again, important to the analytical process is the need to determine a logical explanation of how each competitive force works and understand its role in the overall competitive picture.

Next, collectively assess and evaluate the nine forces in light of your firm's competitive ability. The ultimate goal is to identify the ability of your firm to successfully compete within this industry and environment, given the collective strength of these forces. Further, making a comparison between the firm's resources and strengths against the "fit," or gaps, with the Nine Forces will provide valuable insights to the firm's opportunities and threats. The need here is to integrate the entire analysis within the broader context of corporate strategy—find the tightest fit between the firm's resources and capabilities and the broad external environment.

This involves three types of strategic analysis: reactive strategy against likely competitor moves; proactive strategy to manipulate changing forces already in motion; and proactive strategy to explicitly force change in one or all of the Nine Forces.

To improve the usefulness of this technique, identify long-term environmental and industry trends and determine whether industry profitability is sustainable. Further, determine effects of long-term trends on your firm's competitive position.

Each competitive force should be constantly monitored for its impact on the current strategy and the opportunities it represents for extending competitive advantage. Finally, not all industries are alike. Therefore, for companies with product portfolios across numerous industries, this model must be repeated for each unique industry served.

Case Study: Rating the Nine Forces Model in the Australian Airline Industry

(10 = strong, 1 = weak)

Barriers to Entry—Weighting 9

• While deregulation reduced legislative barriers, the small size of the Australian market means great efficiencies must be achieved to make this a viable market for any player.
• Capital intensity offset to some extent by ability to lease aircraft and hire ground crews on contract.
• Limited availability of terminal slots in major capital cities.

Bargaining Power of Buyers—Weighting 6

• The Internet has made air travel a readily accessible commodity (i.e., price driven).
• Price sensitivity of consumers has not been significantly offset by loyalty programs.
• Market share warfare is the industry norm.
• Domestic travel within Australia almost always involves long distances.

Bargaining Power of Suppliers—Weighting 6

• Airport authorities, pilot, flight attendants, and other aviation unions have eroded economic rent associated with producer surplus.
• Aircraft manufacturing companies compete heavily for new sales providing alternative financing.

Government—Weighting 6

• Government ownership of many international airlines makes exit or capacity reduction unlikely due to conflicting sociopolitical considerations.
• Government protection policies impact the level of new entrants and their local operational effectiveness.
• Competition Commission, on the other hand, forces the establishment and maintenance of a competitive choice for travelers.
• Privatization of airport infrastructure management and services.

Social—Weighting 5

• Total growth is limited to the size of the Australian market and international tourism to Australia. Main growth appears to be in price-sensitive, low-cost economy travel class.
• The combined impact of terrorism, viruses, wars, and the heightened need for security has increased the reticence of travelers for particular destinations.

Competitors—Weighting 9

• Predominantly a duopoly—Qantas and Virgin.
• Majority of costs are fixed regardless of load. Resulting variable cost pricing through heavy discounting to maximize contribution margin from excess capacity.
• Growth in low-cost airlines results in substantial capacity increases and lower margins.
• Long history of Qantas as the major airline in Australia for both domestic and international travel.

Technology—Weighting 8

• The business travel market is being impacted by video conferencing and other technology, reducing the need for physical face-to-face communication.
• New airplane technology allows for greater load capacity, better fuel consumption, and longer distances, reducing requirements for airlines to operate through hubs.

Substitutes—Weighting 3

• Ships, trains, buses, and cars—with the time-pressed individuals of today, these substitutes have a weakened competitive position when it comes to travel across long distances. There is presently minimal loss of industry revenue to substitutes.

International—Weighting 6

• Competitive international airfares and a strong Australian dollar has encouraged strong growth in outbound travel by Australians.
• Australia is seen as a "safe" holiday destination increasing inbound travelers.
• Conflicts in the Middle East and North Africa impact on the cost of airline fuel.

Conclusion: Competitive forces are strong and evolving. Profitability of the airline industry in Australia is not bad as a result of the duopoly and Qantas' long previous history as a government-owned entity.

This analysis can be represented diagrammatically, as shown in Figure 6.5.

Figure 6.5 Australian airline industry

FAROUT Summary

Figure 6.6 Nine Forces FAROUT Summary

Future orientation—Medium to high. Focuses on trends and driving forces. Their evolutionary development ensures that it is a highly anticipatory method. Because the forces are not static, analysis must be reviewed regularly.

Accuracy—Medium. The method requires understanding and tracking of a wide variety of interacting qualitative and quantitative elements. Accuracy depends upon sources of information used. Cross validation with industry experts will increase accuracy of the analysis.

Resource efficiency—Medium to high. Much information can be gleaned from secondary sources such as government agencies, specialist publications, consulting firms, and census data. There may also be some information already available in the firm. Cost of analysis will depend on the number and positions of analysts employed.

Objectivity—Low to medium. Depends on the information used. Use of subjective data reduces objectivity. There is also a high emphasis placed on qualitative analysis. Understanding of trend interactions and driving forces requires insight combined with useful and reliable data.

Usefulness—Medium. Valuable technique. Provides an overview of an industry and its environment; highlights key competitive factors and elements that require close monitoring for strategies to be successfully implemented. If effectively undertaken can provide opportunities to achieve strategic advantage.

Timeliness—Medium. Method requires firm to collect and track data. Time is required to undertake a close analysis of each of the forces, particularly if primary sources are addressed.

Related Tools and Techniques

• Competitor analysis
• Experience curve analysis
• Financial analysis
• Issue analysis
• Product life cycle analysis
• Scenario analysis
• S-curve analysis
• Stakeholder analysis
• Strategic group analysis
• SWOT analysis
• Technology forecasting
• Value chain analysis

References

Ackoff, R. (1981). Creating the Corporate Future. New York, NY: John Wiley & Sons.

Aguilar, F. (1967). Scanning the Business Environment. New York, NY: Macmillan.

Arrington, C., and R. Sawaya (1984). "Issues management in an uncertain environment," Long Range Planning, 17(6), pp. 17–24.

Bain, J.S. (1956). Barriers to New Competition. Cambridge, MA: Harvard University Press.

Bates, D., and D. Eldridge (1984). Strategy and Policy: Analysis, Formulation, and Implementation, 2nd edition. Dubuque, IA: Brown.

Black, J.A., and K.B. Boal (1994). "Strategic resources: Traits, configurations, and paths to sustainable competitive advantage," Strategic Management Journal, [Special summer issue], 15, pp. 131–148.

Black and Boal (1994), paraphrasing Porter, M.E. (1991). "Towards a dynamic theory of strategy," Strategic Management Journal, [Special summer issue], 12, pp. 95–117.

Carr, C. (1993). "Global, national, and resource-based strategies: An examination of strategic choice and performance in the vehicle components industry," Strategic Management Journal, 14(7), pp. 551–568.

Diffenbach, J. (1983). "Corporate environmental analysis in large U.S. corporations," Long Range Planning, 16(3), pp. 107–116.

Dill, W. (1958). "Environment as an influence on managerial autonomy," Administrative Science Quarterly, 2(2), pp. 409–443.

Fahey, L. (1989). "Understanding the macroenvironment: A framework for analysis," In L. Fahey, (ed.), The Strategic Planning Management Reader, Englewood Cliffs, NJ: Prentice Hall, pp. 38–43.

Fahey, L., King, W., and V. Narayanan (1981). "Environmental scanning and forecasting in strategic planning—The state of the art." Long Range Planning, 14(1), pp. 32–39.

Fleisher, C.S, and Bensoussan, B. E. (2003), 'Strategic and Competitive Analysis', Prentice Hall, Upper Saddle River, N.J

Grinyer, P.H., and D. Norburn (1977/1978). "Planning for existing markets: An empirical study," International Studies in Management and Organization, Vol 7, pp. 99–122.

Lenz, R., and J. Engledow (1986). "Environmental analysis: The applicability of current theory." Strategic Management Journal, 7, pp. 329–346.

McWilliams, A., and D.L. Smart (1993). "Efficiency v. structure conduct performance: Implications for strategy and practice," Journal of Management, 19, pp. 63–79.

Miller, D., and P. Friesen (1977). "Strategy making in context: Ten empirical archetypes," Journal of Management Studies, 14(3), pp. 253–280.

Porter, M.E. (1979). "How competitive forces shape strategy," Harvard Business Review, 57(2), pp. 137–145.

Porter, M.E. (1979). "The Structure within Industries and Companies Performance," The Review of Economics and Statistics, 61(2), pp. 214–227.

Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. London: Collier Macmillan Publishers.

Porter, M.E. (1980). "Industry structure and competitive strategy: Keys to profitability," Financial Analysts Journal, 36(4), pp. 30–41.

Porter, M.E. (1985). Competitive Advantage : Creating and Sustaining Superior Performance. London: Collier Macmillan Publishers.

Roquebert, J., Phillips, R., and C. Duran (1993). "How much does strategic management matter?," Presentation at the meeting of the National Academy of Management, Atlanta, GA.

Rumelt, R.P. (1991). "How much does industry matter?," Strategic Management Journal, 12(3), pp. 167–185.

Scherer, F.M. (1970). Industrial Market Structure and Economic Performance. Chicago, IL: Rand McNally.

Schumpeter, J.A. (1943). Capitalism, Socialism, and Democracy. London: George Allen and Unwin Ltd.

Senge, P. (1992). The Fifth Discipline. New York, NY: Currency DoubleDay.

Starbuck, W. (1976). "Organizations and their environments." In M. Dunnette (ed.), Handbook of Industrial and Organizational Psychology. Chicago, IL: Rand McNally.

Stubbart, C. (1982). "Are environmental scanning units effective?," Long Range Planning, 15(3), pp. 139–145.

Suutari, R. (2000). "Understanding industry structure," CMA Management, 73(10), pp. 34–37.

Thompson, J. (1967). Organizations in Action. New York, NY: McGraw-Hill.

Wilson, I. (1982). "Environmental scanning and strategic planning." In G. Steiner et al. (eds.) Management Policy and Strategy (Reading 7). New York, NY: Macmillan.

Endnotes

¹ See Fleisher and Bensoussan (2003), Chapter 17.

² See Fleisher and Bensoussan (2003), Chapter 6.

³ See Fleisher and Bensoussan (2003), Chapter 9.

⁴ See Fleisher and Bensoussan (2003), Chapter 6.

⁵ Miller and Friesen, 1977; Grinyer and Norburn, 1977/78.

⁶ Senge, P. (1992).