1. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-1

2. Chapter Chapter Four Understanding Market Opportunities 4

3. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-3 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market Domains Industry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

4. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-4 The Seven Domains of Attractive Opportunities Market DomainsIndustry Domains Market Attractiveness Industry Attractiveness

5. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-5 Discussion Question 1.What’s a market? A group of individuals or organizations (i.e., buyers) having the willingness and ability to buy goods or services to satisfy a particular class of wants or needs

6. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-6 Discussion Question 2. What’s an industry? A group of organizations (i.e., sellers) offering goods or services that are similar and close substitutes for one another

7. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-7 Discussion Questions 3.Is the market vs. industry distinction important? Why or why not?

8. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-8 Discussion Questions 4. Do macroenvironmental trends matter? What are their implications?

9. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-9 Macro Trend Analysis: Demographic environment Sociocultural environment Economic environment Regulatory environment Technological environment Natural environment

10. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-10 Discussion Questions Let’s identify a trend or two of each type and consider what businesses might be affected.

11. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-11 Discussion Questions 5. What are the key questions a macro trends analysis should answer?

12. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-12 Discussion Questions 6. Does industry attractiveness matter? Why or why not?

13. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-13 A Tool for Assessing Industry Attractiveness: Porter’s Five Forces Rivalry among existing industry firms Threat of substitute products Bargainingpower of buyers Bargainingpower of suppliers Source: Adapted from Michael E. Porter, “Industry Structure and Competitive Strategy: Keys to Profitability,” Financial Analysts Journal, July-August 1980, p. 33. Threat of new entrants entrants 4-13

14. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-14 Discussion Questions 7. If you are preparing a marketing plan, where’s the best place to look for information about macro trends?

15. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-15 Discussion Questions 8. What’s the difference between the macro and the micro level of analysis?

16. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-16 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market Domains Industry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

17. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-17 Understanding Markets at the Micro Level Involves looking individually at customers to understand the attractiveness of the target segment

18. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-18 Understanding Industries at the Micro Level Involves looking at the company and whether it has a sustainable competitive advantage

19. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 4-19 The Team Domains Opportunities are only as good as the people who will pursue them