Week 2 - External Analysis

Porter's Five Forces Model is often used to analyze competitive forces in the industry environment to identify opp and threats.
In the case study, "Price Wars in the Breakfast Cereal Industry", the leading traditional cereal manufactures like Kellogg and General Mills are dominating breakfast market and making good profit. However new competitors with private label like Walmat's entering the market and new substitutes like bagels becoming American's breakfast. Both new competitions made all major cereal manufactures facing huge challenge and have to reduce their price and suffer from losing market shares.

In another case, "Circumventing Entry Barriers into the Soft Drink Industry", a small soft drink maker, RC Cola, whose strategy when facing big giants Pepei and Coca-Cola is to work with low price retailers like Walmat to offer much-lower price soft drink when still keep high quality. RC Cola saves big marketing cost and transfer the saving to customers which give them a niche market.


Industry Life Cycle Analysis is another important analysis needed to be done earlier as possible. In different cycle, company needs to have different strategy for pricing and marketing. In earlier cycle, how to keep company alive and market for growing could be more important than late cycle. In late cycle, strategy could be like how to attract customers from other competitors.