Assessing Industry Attractiveness and the Competitive Environment

CHAPTER 2 ASSESSING THE EXTERNAL ENVIRONMENT
第二章 企业的外部环境分析
Identifying Opportunities, Threats, and Changes Taking Place in the External
Environment 找出在外部环境中发生的 机会，威胁，以及变化
• Barriers to Entering or Exiting the Industry. 进入或退出行业的壁垒
• Type and Rate of Technological Change in the Industry. 行业内的技术类型和技术更新速度
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INDUSTRY ASSESSMENT 行业评估 Industry Factors to Assess 需要评估的行业因素
• Is this an attractive or unattractive industry? 这是不是一个有吸引力的行业呢？
• Should we get into or out of this industry? 我们是应该进入还是退出这个行业呢？
• How do we answer this?我们如何回答这些问题呢？
• Industry Market Size and Growth Rate. 行业市场规模及其增长率
• Extent of Competitive Activity. 竞争程度
• Number of Competitors in the Industry and their size. 行业内的竞争对手及其规模
3. 请列出需要评估哪些因素来决定这个业务有 吸引力与否

GE / McKinsey MatrixIn consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below:GE / McKinsey MatrixBusiness Unit StrengthHigh Medium LowHighMediumLowThe GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:• The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as aproxy for the strength of the business unit.• The GE matrix has nine cells vs. four cells in the BCG matrix.Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry.Industry AttractivenessThe vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following:• Market growth rate• Market size• Demand variability• Industry profitability• Industry rivalry• Global opportunities• Macroenvironmental factors (PEST)Each factor is assigned a weighting that is appropriate for the industry. The industry attractiveness then is calculated as follows:Industry attractiveness = factor value1 x factor weighting1+ factor value2 x factor weighting2...+ factor value N x factor weighting N Business Unit StrengthThe horizontal axis of the GE / McKinsey matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include: • Market share• Growth in market share• Brand equity• Distribution channel access• Production capacity• Profit margins relative to competitorsThe business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness. Plotting the InformationEach business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows:• Market size is represented by the size of the circle.• Market share is shown by using the circle as a pie chart.• The expected future position of the circle is portrayed by means of an arrow.The following is an example of such a representation:The shading of the above circle indicates a 38% market share for the strategic business unit. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive. The tip of the arrow indicates the future position of the center point of the circle.Strategic ImplicationsResource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows: • Grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries.• Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industies.• Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in averageindustries.There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.While the GE business screen represents an improvement over the more simple BCG growth-share matrix, it still presents a limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation. Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units.Recommended ReadingDavid J. Collis, Andrew Campbell, Michael Goold, Harvard Business Review on Corporate Strategy(Harvard Business Review Paperback Series)。

46CHINA TODAYDEMOCRACY is the common value of hu-manity, transcending borders and social systems. Though its forms may be differ-ent, according to the specific conditionsof a country, the objective of democracy, in all its different forms, is to promote people’s well-being; it should not be weaponized to justify hegemony.By staff reporter ZHANG HUIAll Voices Should Be Heard and Heeded in a True DemocracyFor all its different forms, democracy is expected to promote people’s well-being, instead of beingweaponized to justify hegemony, as democracy is also a principle of global governance.At the third International Forum on Democracy: The Shared Human Values, held in Beijing on March 20, this was the essence of the dialogue among nearly 300 senior officials, former state leaders, and scholars from around the world. Whether a country is considered democratic fundamentally depends on whether its people truly have the power to govern themselves, Li Shulei, head of the Publicity Department of the Communist Party of China Central Committee, pointed out in his keynote speech at the forum. “It’s not only about the verbal promises people get during the election campaigns but also about how many of those promises are fulfilled after-ward.”Du Zhanyuan, president of China Interna-COMMENTARYDu Zhanyuan,president of China International Com-munications Group, attends the opening ceremony of the third International Forum on Democracy: The Shared Human Values and delivers a speech in Beijing on March 20, 2024.47May 2024conditions“It should be rooted and developed in the concrete conditions of a country, and not imposed by others following the so-calledformula.”tional Communications Group (CICG), pointed out that democracy can’t be simply regarded as a mathematical formula with a standard answer. “It should be rooted and developed in the concrete conditions of a country, and not imposed by oth-ers following the so-called formula,” he said. Only the democratic path independently blazed by a country and formed in the process of solving its development problems can endure the test of so-ciety and history, he added.The Academy of Contemporary China and World Studies, a think tank of the CICG, had conducted a survey in 23 countries across five continents on democratic practices and mod-ernization in China. The findings of the survey supported Du’s view, with over 95.7 percent of the respondents agreeing that all countries should choose the path to democracy and moderniza-tion best suited to their national conditions. The forum participants also called for reform-ing the international governance system for a fairer and more equitable international order. The influence of Chinese wisdom and traditional cul-ture on democracy in both the East and the West was part of the dialogue as well.True Democracy Should WorkSince democracy can take various forms, the different democratic systems and diversity of civilizations should be respected. The point was stressed at the forum, which also lauded China’s whole-process people’s democracy and unique path of development that had brought tangible benefits to its people.“The survey found that the common values of humanity advocated by Chinese modernization, namely ‘peace, development, fairness, justice, democracy, and freedom,’ have continued to gain recognition globally,” Yu Yunquan, president of the Academy of Contemporary China and World Studies, said at the forum. Over 90 percent of the respondents responded positively.The China report of the 2023 Edelman Trust Barometer, an annual trust and credibility sur-vey, found 89 percent of the Chinese respondents trusted their government, the highest among all the countries surveyed. In the U.S., only about 42percent said they trust their government.Democracy is based on people’s trust, said Georgios Katrougalos, former Foreign Minister of Greece. A survey by the Organization for Eco-nomic Co-operation and Development found that in Western countries, most people think that their government protects only the interests of the rich instead of promoting the well-being of the public, he pointed out in his keynote speech at the forum. The high trust the Chinese have in their government attests to how China has effec-tively addressed the concerns of its citizens and promoted the overall development of the whole society, Katrougalos observed.The Chinese narrative, supporting the diversity of democratic practice, sees a connection be-tween people's aspirations and the level of social development. This is particularly important for developing countries as they have to give prior-ity to the basic subsistence needs, noted Ong Tee Keat, former deputy speaker of Malaysia’s Lower House of Parliament.“Many in the West think that democracy is a Western value. (But the Western model) cannot be exported and imposed in other parts of the world as the experiences in Afghanistan, Iraq, and the Middle East have shown in recent years,” former Italian Prime Minister Massimo D’A lemasaid. “Our model of Western democracy has lostA parallel session themed “Democ-racy and Global Governance in a Multipolar World” at the third Inter-national Forum on Democracy: The Shared Human Values is held in Beijing on March 20, 2024.48CHINA TODAYcredibility and attractiveness.”In the Academy of Contemporary China and World Studies survey, the respondents gave a higher evaluation of China’s state governance ca-pacity, an important indicator assessing the effec-tiveness of democracy, according to Yu Yunquan. The average approval rate was 94 percent.Call for More Democratic International OrderWith the U.S. hegemonistic interference in in-ternational affairs fueling rising ideological con-frontation and wreaking havoc in some regions, the call for the democratization of international relations is getting louder. It was heard at the fo-rum as well.In his video speech, Mauro Alboresi, general secretary of the Italian Communist Party, said it was time to reform the international organiza-tions which were reinforcing U.S. hegemony in the global arena. The changing international situ-ation demanded a change of the unilateral inter-national order, he pointed out.Former Thai Prime Minister Abhisit Vejjajiva echoed him. "In the last three decades, we have been unable to reform the international organi-zations that make up the system of global gov-ernance," he said in his video speech. "We don'thave an effective or democratic system of global governance," he added, as he highlighted the de-ficiencies he thought required urgent fixing. "We have so many emerging countries and economies that are now very influential and more relevant to global affairs, yet continue to be underrepre-sented in these (international) organizations. It is time to correct this imbalance," he said.Many of the participants spoke about the need to build an effective and democratic global gov-ernance system in keeping with globalization and the changing world situation. Democracy is not only embodied in domestic governance but is also a principle of global governance. “The democrati-zation of international relations is a value which should be embodied in a certain system and prac-tice model,” said Chen Bo, president of the China Institute of International Studies. “To achieve democratization of international relations, we need to promote global governance based on extensive consultation, joint contribution, and shared benefits.” This means the legitimate rights and interests of developing countries should be respected and their opinions and reasonable de-mands should be considered, she added.Charisma of Chinese WisdomThe Global Risks Report 2024, published by the World Economic Forum, presents a gloomy outlook for the next decade, highlighting the like-lihood of social upheavals and high risks of global catastrophes as well as growing dissatisfaction with the continued political, military, and eco-nomic dominance of the Global North.“Faced with this scenario, the Chinese govern-ment suggests a new approach to international relations and new ideas for global governance,” said Evandro Menezes de Carvalho, a scholar of the Getulio Vargas Foundation at the Fluminense Federal University, Brazil. He lauded the China-proposed concept of building a global community with a shared future, which, he said, was a de-parture from the old Western path of colonialism and hegemonism.Carvalho traced the origin of the concept to the Chinese notion of harmony, a key term forunderstanding Chinese culture. “Harmony pre-principleDemocracy is not only embodied in domestic gov-ernance but is also a prin-ciple of globalgovernance.Yu Yunquan, president of the Academy of Contemporary China and World Studies, releases the “Global Survey Report on China’s Democratic Prac-tice and Modern-ization Develop-ment 2023” at the third International Forum on Democ-racy: The Shared Human Values in Beijing on March 20, 2024.49May 2024supposes diversity and complementarity between different things,” he said at the forum, quoting Chinese President Xi Jinping: “Just as we do not expect all flowers to be violets, we cannot demand that countries with diverse cultural traditions, historical experiences and contempo-rary national conditions should adopt the same development mode. That would make for a dull world.”The Academy of Contemporary China and World Studies survey shows that the internation-al appeal of Chinese culture is more recognized, with an average approval rate of 92.8 percent, up 4.3 percent from 2022, Yu Yunquan told the forum. In developed countries, the respondents thought traditional Chinese culture is an impor-tant contribution to the progress of civilization. Ong Tee Keat underscored the role of benevo-lence in state governance which was propounded by Chinese philosopher Mencius (372-289 B.C.). “(It) speaks volumes of the relevance of people-centric governance in ancient China even before the word democracy was being promoted,” he said. “This millennium-old wisdom now finds its resonance in the whole-process people’s de-mocracy in China.” People’s participation and the results of governance matter most in the practice of democracy, he added.Alfred Hornung, a member of the London-headquartered Academia Europaea, spoke about how Confucian thought has influenced the West-ern ideas on democracy. “(It’s) a case of history in which the collaboration between China, Europe, and America already was working… This is also the way in which (they) should collaborate in the 21st century.” CFormer Thai Prime Minister Abhisit Vejjajiva delivers a speech at the third International Forum on Democ-racy: The Shared Human Values in Beijing on March 20, 2024.。

1. Communications and media quality in most countries for general public and business readers has a great influence in shaping broad social attitudes and values
is a group of organisations, companies (mobile phone industry businesses) offering goods or services that are similar and close substitutes for one another
: is the long term business prospects of the needs and attitudes of customers, suppliers and competitors, therefore your strategic plans depend on these future long term forecasts and risks or guess-estimates a business makes.
4-2
Case study on Mobile phone
• First mobile phones in 1983, were big, limited networks, low quality reception and bulky
• By 2000 less than 1 million users, more networks, better quality in all aspects • By 2005 more than 2 BILLION users !!!!! The world has gone mad, bizerk for