Matching organisation strategy to competitive conditions
Involves 3 aspects- 1. Pursuing avenues that shield the firm from as many of the different competitive pressures as possible. 2. Initiating actions calculated to shift the competitive forces in the firm’s favour by altering the underlying factor driving the 5 forces. 3. Spotting attractive arenas for expansion where competitive pressure is weaker.

Driving Forces Analysis is a way of understanding and accounting for change at the industry level, managers need to be able to react in a timely fashion to both positive and negative force changes within the industry. With early notice one can potentially influence the direction or scope of environmental change and improve the outlook. Driving forces analysis has three steps; i) identifying what the driving forces are, ii) assess whether the drivers are making the industry more or less attractive, and iii) determine what strategy changes are needed to prepare an organisation for the effects of the driving forces.

Strategic analysis of the industry dynamics involves determining how the drivers of change are affecting industry and competitive conditions. 1. Common industry i) drivers include changes in an industry’s long-term growth rate which affect the balance between industry supply and buyer demand, entry and exit and the character and strength of competition. ii) Increasing globalization, precipitated by growing consumer demand it leads to large differences in labour costs among countries forcing the supply of labour from low-wage countries. It increases the force of rivalry in an industry. iii) Technological and innovative changes cause disruptive changes in an industry by introducing substitutes that offer buyers an irresistible price/performance combination. Can cause greater economies of scale increasing barriers to entry and