Framework for Analyzing Market Dynamics and Strategy PPT
This PPT slide, part of the 50-slide Business Unit Strategic Plan Training PowerPoint presentation, presents the Structure-Conduct-Performance (SCP) model, a framework for analyzing the interactions between industry structure, producer conduct, and overall performance. It highlights how external shocks, such as technological breakthroughs and changes in government policy, can influence these 3 components.
The left section, labeled "Industry," outlines key factors affecting structure. It includes elements like the economics of demand, which covers aspects such as the availability of substitutes and product differentiation. The economics of supply is also critical, emphasizing the concentration of producers and import competition. Industry chain economics further explores the bargaining power of suppliers and buyers, indicating how these dynamics shape market conditions.
Moving to the center, the "Conduct" section focuses on producer behavior. It discusses marketing strategies, pricing, and volume, as well as the importance of advertising and product development. Capacity changes, including expansion or contraction, are also noted, along with strategic decisions regarding entry or exit from the market. Vertical integration is highlighted as a significant conduct strategy, which can involve various forms of joint ventures and long-term contracts.
Finally, the "Performance" section addresses the outcomes of these structures and conducts. It emphasizes financial metrics such as profitability and value creation, along with the role of technological progress and employment objectives. The feedback loop illustrated suggests that performance can, in turn, influence both structure and conduct, creating a dynamic interplay that executives must navigate.
This model serves as a valuable tool for understanding the complexities of market dynamics and guiding strategic decision-making.
This slide is part of the Business Unit Strategic Plan Training PowerPoint presentation.
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