AboutDr. Joseph de Beauchamp Expertise I`ve been teaching MBA students around the world for the past 15 years. I have covered over 50 stock markets and published on over 2000 public companies. I review and check on nearly 6000 financial reports a year. I would be glad to help out with questions.
I have to make an industry analysis for the textile industry.
What could be good starting points on the web for this.
I want to use the Porter 5 forces model.
regards
jules
Answer Jules,
Quite far outside my area. There are quite a few research reports out there, but very expensive on the subject. Mostly in France and Germany, I found some material.
I would suggest that you contact the Arts Institute in your area and ask for a fashion professor. I pasted a few references below. Sorry that I was not more help.
Dr. Joseph de Beauchamp
Growth and portfolio theory
In the 1970s much of strategic management dealt with size, growth, and portfolio theory. The PIMS study was a long term study, started in the 1960s and lasted for 19 years, that attempted to understand the Profit Impact of Marketing Strategies (PIMS), particularly the effect of market share. Started at General Electric, moved to Harvard in the early 1970s, and then moved to the Strategic Planning Institute in the late 1970s, it now contains decades of information on the relationship between profitability and strategy. Their initial conclusion was unambiguous: The greater a company's market share, the greater will be their rate of profit. The high market share provides volume and economies of scale. It also provides experience and learning curve advantages. The combined effect is increased profits. (The validity of the study's conclusions have recently been questioned in Tellis, G. and Golder, P. (2002)). Profit Impact of Marketing Strategy (PIMS) is a database of the market profiles and business results of major American and European companies. ... ... The learning curve effect and the closely related experience curve effect express the relationship between experience and efficiency. ...
The benefits of high market share naturally lead to an interest in growth strategies. The relative advantages of horizontal integration, vertical integration, diversification, franchises, mergers and acquisitions, joint ventures, and organic growth were discussed. The most appropriate market dominance strategies were assessed given the competitive and regulatory environment. In microeconomics and strategic management, horizontal integration is a theory of ownership and control. ... In microeconomics and strategic management, the term vertical integration describes a style of ownership and control. ... Diversification - Wikipedia /**/ @import /skins/monobook/IE50Fixes. ... Meanings of franchise: Full rights of citizenship given by a country or a town, especially suffrage (political franchise) In a wider sense: any right or privilege granted by constitution or statute. ... The phrase mergers and acquisitions (M&A) refers to the aspect of business strategy and management dealing with the merging and/or acquiring of different companies. ... Market dominance strategies are a type of marketing strategy that classifies firms based on their market share or dominance of an industry. ...
There was also research that indicated that a low market share strategy could also be very profitable. Schumacher (1973), Woo and Cooper (1982), Levenson (1984), and later Traverso (2002) showed how smaller niche players obtained very high returns.
By the early 1980s the paradoxical conclusion was that high market share and low market share companies were often very profitable but most of the companies in between were not. This was sometimes called the ¡°hole in the middle¡± problem. This anomaly would be explained by Michael Porter in the 1980s.
The management of diversified organizations required new techniques and new ways of thinking. The first CEO to address the problem of a multi-divisional company was Alfred Sloan at General Motors. GM was decentralized into semi-autonomous ¡°strategic business units¡± (SBU's), but with centralized support functions. Alfred Pritchard Sloan, Jr. ...
One of the most valuable concepts in the strategic management of multi-divisional companies was portfolio theory. In the previous decade Harry Markowitz and other financial theorists developed the theory of portfolio analysis. It was concluded that a broad portfolio of financial assets could reduce specific risk. In the 1970s marketers extended the theory to product portfolio decisions and managerial strategists extended it to operating division portfolios. Each of a company¡¯s operating divisions were seen as an element in the corporate portfolio. Each operating division (also called strategic business units) was treated as a semi-independent profit center with its own revenues, costs, objectives, and strategies. Several techniques were developed to analyze the relationships between elements in a portfolio. B.C.G. Analysis, for example, was developed by the Boston Consulting Group in the early 1970s. This was the theory that gave us the wonderful image of a CEO sitting on a stool milking a cash cow. Shortly after that the G.E. multi factoral model was developed by General Electric. Companies continued to diversify until the 1980s when it was realized that in many cases a portfolio of operating divisions was worth more as separate completely independent companies. Harry Max Markowitz (born August 24, 1927) was an influential economist and winner of the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1990. ... Capital Market Line Modern portfolio theory (MPT) proposes how rational investors will use diversification to optimize their portfolios, and how an asset should be priced given its risk relative to the market as a whole. ... In finance, a specific risk is a risk that affects a very small number of assets. ... B.C.G. analysis is a technique used in brand marketing, product management, and strategic management to help a company decide what products to add to its product portfolio. ... The Boston Consulting Group (BCG) is a management consulting firm founded by Bruce Henderson in 1963. ... G.E. multi factoral analysis is a technique used in brand marketing and product management to help a company decide what product(s) to add to its product portfolio. ...
The marketing revolution
The 1970s also saw the rise of the marketing oriented firm. From the beginnings of capitalism it was assumed that the key requirement of business success was a product of high technical quality. If you produced a product that worked well and was durable, it was assumed you would have no difficulty selling them at a profit. This was called the production orientation and it was generally true that good products could be sold without effort. This was largely due to the growing numbers of affluent and middle class people that capitalism had created. But after the untapped demand caused by the second world war was saturated in the 1950s it became obvious that products were not selling as easily as they were. The answer was to concentrate on selling. The 1950s and 1960s is known as the sales era and the guiding philosophy of business of the time is today called the sales orientation. In the early 1970s Theodore Levitt and others at Harvard realized that the sales orientation had things backward. They claimed that instead of producing products then trying to sell them to the customer, businesses should start with the customer, find out what they wanted, then produce it for them. The customer became the driving force behind all strategic business decisions. This marketing orientation, in the decades since its introduction, has been reformulated and repackaged under numerous names including customer orientation, marketing philosophy, customer intimacy, customer focus, customer driven, and market focused. A marketing oriented firm (also called the marketing concept, or consumer focus) is one that allows the wants and needs of customers and potential customers to drive all the firms strategic decisions. ... A production orientation dominated business thought from the beginning of capitalism to the mid 1950s. ... Sales, or the activity of selling, forms an integral part of commercial activity. ... The sales orientation era ran from the mid-1950s to the early 1970s, and is therefore after the production orientation era but before the marketing orientation era. ...
The Japanese challenge
By the late 70s people had started to notice how successful Japanese industry had become. In industry after industry, including steel, watches, ship building, cameras, autos, and electronics, the Japanese were surpassing American and European companies. Westerners wanted to know why. Numerous theories purported to explain the Japanese success including:
Higher employee morale, dedication, and loyalty;
Lower cost structure, including wages;
Effective government industrial policy;
Modernization after WWII leading to high capital intensity and productivity;
Economies of scale associated with increased exporting;
Relatively low value of the Yen leading to low interest rates and capital costs, low dividend expectations, and inexpensive exports;
Superior quality control techniques such as Total Quality Management and other systems introduced by W. Edwards Deming in the 1950s and 60s. (This is detailed in Schonberger R. (1982).)
Although there was some truth to all these potential explanations, there was clearly something missing. In fact by 1980 the Japanese cost structure was higher than the American. And post WWII reconstruction was nearly 40 years in the past. The first management theorist to suggest an explanation was Richard Pascale. Dr. William Edwards Deming (October 14, 1900 - December 20, 1993) was a American physicist and statistician, attaining great influence in the field of statistical process control. ...
In 1981 Richard Pascale and Anthony Athos in The Art of Japanese Management claimed that the main reason for Japanese success was their superior management techniques. They divided management into 7 aspects: Strategy, Structure, Systems, Skills, Staff, Style, and Subordinate goals (which we would now call shared values). The first three of the 7 S's were called hard factors and this is where American companies excelled. The remaining four factors (skills, staff, style, and shared values) were called soft factors and were not well understood by American businesses of the time. (For details on the role of soft and hard factors see Wickens P.D. (1995).) Americans had not yet understood the role of corporate culture, shared values and beliefs, and social cohesion in the workplace. In Japan the task of management was seen as managing the whole complex of human needs, economic, social, psychological, and spiritual. In America work was seen as something that was separate from the rest of one's life. It was quite common for Americans to exhibit a very different personality at work compared to the rest of their lives. Pascale also highlighted the difference between decision making styles; hierarchical in America, and consensus in Japan. He also claimed that American business lacked long term vision, preferring instead to apply management fads and theories in a piecemeal fashion.
One year later The Mind of the Strategist was released in America by Kenichi Ohmae. (It was originally published in Japan in 1975.) He claimed that strategy in America was too analytical. Strategy should be a creative art: It is a frame of mind that requires intuition and intellectual flexibility. He claimed that Americans constrained their strategic options by thinking in terms of analytical techniques, rote formula, and step-by-step processes. He compared the culture of Japan in which vagueness, ambiguity, and tentative decisions were acceptable, to American culture that valued fast decisions.
Also in 1982 Tom Peters and Robert Waterman released a study that would respond to the Japanese challenge head on. Peters and Waterman, who had several years earlier collaborated with Pascale and Athos at McKinsey & Co. asked ¡°What makes an excellent company?¡±. They looked at 62 companies that they thought were fairly successful. Each was subject to six performance criteria. To be classified as an excellent company, it had to be above the 50th percentile in 4 of the 6 performance metrics for 20 consecutive years. Forty-three companies passed the test. They then studied these successful companies and interviewed key executives. They concluded in In Search of Excellence that there were 8 keys to excellence that were shared by all 43 firms. They are: Tom Peters is a business management guru of the late 1970s to the present. ... Robert Whitney Waterman (December 15, 1826¨CApril 12, 1891) was Governor of California from September 12, 1887 until January 8, 1891. ... McKinsey & Company is a privately owned management consulting firm. ...
A bias for action ¡ª Do it. Try it. Don¡¯t waste time studying it with multiple reports and committees.
Customer focus ¡ª Get close to the customer. Know your customer.
Entrepreneurship ¡ª Even big companies act and think small by giving people the authority to take initiatives.
Productivity through people ¡ª Treat your people with respect and they will reward you with productivity.
Value oriented CEOs ¡ª The CEO should actively propagate corporate values throughout the organization.
Stick to the knitting ¡ª Do what you know well.
Keep things simple and lean ¡ª Complexity encourages waste and confusion.
Simultaneously centralized and decentralized ¡ª Have tight centralized control while also allowing maximum individual autonomy.
The basic blueprint on how to compete against the Japanese had been drawn. But as J.E. Rehfeld (1994) explains it is not a straight forward task due to differences in culture. A certain type of alchemy was required to transform knowledge from various cultures into a management style that allows us to compete in a globally diverse world. He says, for example, that Japanese style kaizen (continuous improvement) techniques, although suitable for people socialized in Japanese culture, have not been successful when implemented in the U.S. unless they are modified significantly. Kaizen (Japanese ¸ÄÉÆ, literally improvement) is an approach to total quality management originating in Japan, a method of (industrial) cost cutting by continuously making small improvements in process. ...
