Analysis driving forces in branch.

The biggest changes in the industry are caused by the so-called industry drivers. The driving forces of the industry should be identified and their impact assessed, which is an important step in the analysis of the enterprise environment. M. Porter proposed to classify the driving forces of the industry in order to identify important and secondary causes of changes in the industry.

The driving forces of the industry Porter proposed to qualify in the following way.

Change in the long-term growth rate of the industry. This affects the balance between supply and demand, the conditions for entering a new market and exiting the market.

Changes among product buyers. This causes changes in the composition of service offerings to the consumer, changes in the network of dealers and retailers, changes in the range of products, changes in approaches and costs in sales promotion.

The emergence of new products. This strengthens the market position of companies producing new products at the expense of those companies that produce old products and are late in entering the market with their new products. The emergence of new products restores the growth of the industry.

Technological changes. They can lead to a dramatic change in the situation in the industry and open up new opportunities for it.

New approaches to marketing. They can cause increased consumer interest in products, increase demand, change competitive positions companies present in this market.

Market entry or exit of large companies. This leads to a sharp change in the competitive environment.

Distribution of technical know-how. This leads to a decrease in the advantages of companies that previously owned this know-how.

Increasing globalization of the industry. Transnational corporations have the ability to transfer know-how and technology from one country to another at low cost, while gaining a significant competitive advantage over national companies. They can reduce their costs through wage differentials in different countries.

Cost and Efficiency Changes. It leads to the desire to occupy a large market share, forcing competitors to reduce prices, increase production volumes.

The emergence of consumer preferences for customized products instead of regular products (or for more standardized products instead of custom products). This occurs when a corporation succeeds, by giving its products new properties or creating a special image, to attract more buyers. At the same time, competitors strive to distinguish their products from competitors' products.

Influence of administrative bodies and changing government policy. The weakening of state intervention in the economy can lead to accelerated development and a change in strategic approaches in a number of industries.

Changes in social priorities, public attitudes and lifestyles. These factors can cause major changes in the economy. Thus, in the food industry, interest in environmentally friendly products that are healthy and with high taste has increased. This forced manufacturers to reconsider the methods of processing products, develop various nutritional supplements, reduce the amount of cholesterol, sugar, and so on.

Reducing uncertainty and business risk. Emerging industries are attractive to risk-averse companies. If they are successful, the uncertainty is reduced and other companies seek to enter this market.

The above list of key industry drivers should be considered as potential industry drivers. Several of them will be active in a particular industry.

Why analyze industry drivers

It is necessary to analyze the driving forces of the industry in order to develop an enterprise strategy that allows it to successfully operate in an external hostile competitive environment.

The driving forces of the industry have a fundamental impact on every enterprise. Therefore, the development of preventive actions in this case allows you to get ahead of competitors.

Analyzing the drivers of an industry has practical implications for strategy development. The task of analyzing the driving forces of an industry is to separate the main causes of changes in the industry from the secondary ones. Without a clear understanding of the main driving forces in the industry, it is impossible to develop an appropriate strategy that is sensitive to these changes and the consequences of their influence.

An in-depth and well-executed analysis of the driving forces of the industry and the competitive environment provides insight into the state of external environment surrounding the company and allows managers to choose an effective strategy appropriate to the current situation.

The driving forces of the industry and the speed of changes in the external environment

In conclusion, we note the following. Changes in the external environment are accelerating, so the complexity of the problems facing the enterprise management system is increasing. In this case, the driving forces of the industry have a tremendous impact on the activities of enterprises.

The more complex the problems, the more time it takes to solve them. Therefore, it is possible that while managers develop solutions and start implementing them, it turns out that they are already too late, as the problems have changed.

The driving forces of the industry have an impact regardless of the actions of enterprises. Therefore, all greater value acquires a leading factor, which means that it is necessary to increase the reliability of forecasts, which become an organic element of the management system.

Industry drivers and their analysis are of practical importance for strategy development. The task of analyzing the driving forces of an industry is to separate the main causes of changes in the industry from the secondary ones. Without a clear understanding of the main driving forces in the industry, it is impossible to develop an appropriate strategy that is sensitive to these changes and the consequences of their influence.

A very important analytical task is to identify key success factors in the industry, that is, control variables common to all organizations in the industry, the implementation of which gives the organization the opportunity to improve its competitive position in the industry. The key factors of success in the industry and the alignment of the strategy with them makes it possible to acquire a stable competitive position. At the same time, the key success factors change according to the stages of the industry life cycle.

Five Competitive Forces Model . Although competitive conditions in different markets are never the same, the processes of competition in them are similar enough that a common analytical framework can be used to determine the nature and intensity of competitive forces. As Professor Michael Porter of Harvard Business School has convincingly demonstrated, the state of competition in an industry is the result of five competitive forces:

1. Rivalry between competing sellers in an industry.

2. Market attempts by companies from other industries to win over consumers

with their substitute products.

3. Potential emergence of new competitors.

4. Bargaining power and leverage used by suppliers

5. Bargaining power and leverage used by consumers

products.

The Porter Five Forces Model is a powerful tool for systematically diagnosing competitive market conditions and evaluating how intense and important each of the competitive forces is. This is not only the most popular method for analyzing competition, but also one that is relatively easy to apply.

Main sources of barriers to entry into the industry

Entry barriers include control of restricted species economic resources, the best distribution channels, criminal influence on the market, including the division of spheres of influence between criminal structures.

Entrance barriers are also erected when obtaining copyrights, issuing patents and licenses by the state. The absence of a patent deprives the inventor of any privileges. This is how the legal nature of this barrier is manifested: if there is a patent, there is a right; if there is no patent, there are no rights.

The barriers associated with scientific and technological achievements have not only a legal, but also an economic component. Their owner has unique knowledge that is inaccessible to competitors, regardless of legal norms, but simply because only the inventor knows all the details of the innovation. This special knowledge ("know-how") protects the inventor's monopoly on innovation.

Certain government policies can also give rise to a monopoly. Thus, the introduction of import duties limits competition from foreign firms and stimulates the monopolization of the domestic market.

Competition takes on a pronounced aggressive character when, with the advent of new types of goods, new market segments are formed, penetration into which can bring high profits. Under these conditions, larger enterprises, seeking to increase their market share, act aggressively, buying up smaller enterprises, introducing new technologies to them and expanding the production of products under their own brand.

Entry barriers keep new competitors from trying to establish themselves in the market. The point is to make the costs of market penetration so high that the very return on investment is jeopardized. Thus, barriers to entry exist to increase entrepreneurial risk for potential competitors.

· Environmental management system in accordance with the requirements of the international standard ISO 14001:2004). Basic principles and elements.

The purpose of the environmental management system is to ensure effective and efficient management of the environmental aspects of the organization's activities (control and minimization of the negative impact on environment activities, products and services of the organization)

The introduction of an environmental management system can bring a wide range of benefits to an organization of almost any profile. Traditionally, the motives for implementing an EMS and the expected effects (structural, market, risk, environmental, resource) are described as follows:

• the contribution of the EMS to the formation of the success of the organization is determined by the fact that it allows you to systematize approaches to the prevention and solution of environmental problems in all aspects of the functioning of the organization;

reduction of costs caused by the irrational use of resources and materials, losses, etc., acts as one of the most significant benefits implementation of SEM. Activities in the field of environmental management can lead to a significant economic effect by saving and saving raw materials, materials, energy resources, reducing payments and penalties;

EMS should work like component a common management system, to be a mechanism for ensuring and making decisions, therefore, improving the management of an organization and the resulting increase in sustainability and mobility can be attributed to the systemic benefits of introducing an EMS;

· the view of a “third party” during certification and supervisory audits helps to identify problems that have not been given due attention before, to find original ways to solve pressing issues;

dissemination of information about the environmental performance of the organization creates additional marketing opportunities, adds new aspects to the image of the organization;

The EMS is implemented on an initiative voluntary basis, and it is gradually beginning to be perceived by the staff as an integral part of daily work, which positively affects the status of the environmental activities of the organization as a whole.

The EMS model is based on the Deming cycle Plan-DoCheck-Act, abbreviated as PDCA or Plan-Action-Check-Adjust. AT general view, ISO 14001:2004 requires an enterprise to:

• ƒ availability of an environmental policy (availability in a documented form and
• public availability)
• ƒ availability of the Environmental Management Program (presence in the documented
• format or as an electronic file)
• ƒ organization and implementation of activities within the framework of the environmental
• management (availability of appropriate procedures and records),
• ƒ assessment of compliance with the requirements of environmental legislation and
• standards, as well as those requirements with which the organization voluntarily
• agreed
• ƒ carrying out internal audits and correcting the ongoing
• EMS activities (availability of relevant procedures and records),
• ƒ analysis of performance results within the framework of the EMS (availability of relevant
• procedures and records)
• ƒ Consistent performance improvement (demonstration
• consistent improvement on the environmental goals and targets included in
• environmental management program).

It is also necessary to note the key principles of the ISO 14001:2004 standard, on

on which the environmental management system is based.

These are the following principles:

• ƒ the principle of preventing the negative impact of the enterprise on
• environment (pollution prevention);
• ƒ the principle of continual improvement of results
• environmental activities of the enterprise;
• ƒ the principle of compliance with the requirements of environmental legislation and other
• requirements to which the organization has agreed.

Ticket 12

· Factors that determine the trading power of the buyer. The impact of the buyer on the strength of competition in the industry. Buyer analysis. Buyer characteristics and profile. Supplier analysis. Characteristics of the activities of suppliers. The influence of suppliers on the organization.

Buyer Trading Power Factors

Availability of substitute products;

When measuring the indicator, it is important to pay attention to who pays, who buys and who consumes, since not all three functions necessarily perform the same face.

Influence of buyers on the strength of competition in the industry

Buyers can largely influence the strength of competition in an industry. This power increases in the following cases:

products are standardized and not differentiated;

The purchased goods do not occupy an important place in the priorities of the buyer;

The buyer has good information about all possible suppliers.

The influence of buyers weakens with the expansion of the boundaries of the industry market, product differentiation and specialization, coordination of efforts of industry producers, and the absence of substitute products.

Buyer Analysis

Analyzing buyers as components of the organization's immediate environment is primarily concerned with profiling who buys the product sold by the organization. Studying buyers allows an organization to better understand which product will be most accepted by customers, how much sales the organization can expect, how much buyers are committed to the product of this particular organization, how much it can expand the circle of potential buyers, what the product expects in the future, and much more. .

A buyer profile can be compiled according to the following characteristics:

geographic location;

demographic characteristics (age, education, field of activity, etc.);

socio-psychological characteristics (position in society, style of behavior, tastes, habits, etc.);

the attitude of the buyer to the product (why he buys this product, whether he himself is a user of the product, how he evaluates the product, etc.).

By studying the buyer, the firm also understands for itself how strong his position is in relation to it in the bargaining process. If, for example, the buyer has a limited opportunity to choose the seller of the goods he needs, then his bargaining power is significantly lower. On the other hand, the seller should seek to replace the given buyer with another who would have less freedom in choosing the seller. The trading power of the buyer also depends, for example, on how important the quality of the purchased product is to him.

There are a number of factors that determine the trading power of the buyer, which must be uncovered and studied in the analysis process. These factors include:

the ratio of the degree of dependence of the buyer on the seller with the degree of dependence of the seller on the buyer;

the volume of purchases made by the buyer;

level of customer awareness;

availability of substitute products;

the cost to the buyer of switching to another seller;

the buyer's sensitivity to price, which depends on the total cost of his purchases, on his orientation towards a certain brand, on the presence of certain requirements for the quality of the goods, on the amount of his income.

When measuring the indicator, it is important to pay attention to who pays, who buys and who consumes, since not all three functions are necessarily performed by the same person.

The driving forces of the market are the main reasons leading to a change in the conditions of competition and the situation as a whole.

Economic characteristics industries say a lot about the environment in which the industry is located, but give little idea of ​​how this environment can change. The environment changes because certain forces are in motion and contribute to or directly lead to change. The forces that have the greatest influence and determine the nature of change are called driving.

The analysis of driving forces includes: - determination of the composition of driving forces;

Identification of the main driving forces;

Evaluation of the consequences of the action of forces on the industry and the strategy of the enterprise.

The most commonly encountered driving forces are listed below.

1. Changes in the long-term economic growth trends of the market. An increase or decrease in market growth is an important factor, as it affects the balance of supply and demand, the ease of entry into and exit from the market. The constant growth in demand causes an influx of new firms into the market and encourages investment by existing firms in the market. In a shrinking market, companies may decide to leave or close

few efficient industries.

2. Change in the composition of consumers and in the ways of using the product. Demographic changes, as well as the emergence of new ways of using a product, may lead to changes in the range of services provided to consumers, cause changes in the approach to sales and advertising, and push manufacturers to expand / narrow the range of products produced. For example, consumer interest in cordless phones has opened up a new market segment for telephone equipment manufacturers.

3. Introduction of new products. The introduction of new products can expand the circle of consumers, give impetus to the development of the market. Successful introduction of a new product strengthens the company's position. Markets where innovation is the main driving force, is the production of copying, photo-graphic equipment, video cameras, computers, electronic video games, toys, medicines, frozen food and software for personal computers.

4. Technological changes. The advantage in technology can fundamentally change the situation within the market, making it possible to produce new and / or the best goods at lower cost, and open up new prospects for the market as a whole.

5. Changes in the marketing system. Firms that introduce new marketing techniques can expand demand, increase product differentiation, and reduce unit costs. All this can change the position of competing companies or force them to change their strategy.

6. Entry into the market or exit from it by large firms. The entry of foreign companies into a market previously dominated by local firms almost always changes the conditions of competition. The activities of a large firm can not only cause a reshuffle among competing companies, but also entail changes in the very nature of competition. In a similar way care

from the market of a large company changes the structure of competition, reducing the number

leaders, and intensifies the struggle of the remaining firms for the consumers of the departed company.

7. Distribution of know-how. As advanced production methods spread, the competitive advantage of the know-how firm decreases. Firms often acquire companies that have the required technology, patent, or manufacturing capability. In recent years, the flow of technology across national borders has become one of the most important driving forces. The more access to know-how companies from different countries get, the higher their ability to expand production and lead the competition. The spillover of technology has led to the globalization of many industries (eg, telecommunications, automotive, tire, consumer electronics, computers).

8. Increasing globalization of the economy. The globalization of the economy can be different reasons. National firms can act in accordance with a long-term aggressive strategy for gaining a leading position in the world market. There may suddenly be demand for the industry's products in other countries. Trade barriers can be removed. Technology spillover can enable more companies to make full-scale penetration into a new market. A significant difference in the cost of labor in different countries may be the reason for the construction of industrial enterprises specializing in the production of labor-intensive products in countries with low average wages.

Economies of scale in production can also increase significantly when the company expands from the national market to the world. The ever-increasing ability of transnational corporations (TNCs) to transfer products, marketing and management know-how from country to country at significantly lower costs gives TNCs major competitive advantages. The consequence of this is that globalization

tion changes the conditions of competition between the leading firms in the industry, creating

vaya favorable situation for some firms and unfavorable for others. This makes globalization a driving force.

9. Changing cost structure and productivity. In industries where the firm's economies of scale are great importance, firms that increase output can outperform competitors by lowering prices and increasing their market share. A sharp increase in the cost of the main factors of production (raw materials, wages) can cause a struggle for reliable sources of supply at affordable prices or a search for cheaper substitute goods. With any major change in cost structure or productivity, the positions of firms in the industry can change dramatically.

10. The transition of consumer preferences from differentiated to standard products (or vice versa). If consumers begin to believe that a standard product at a bargain price satisfies them in the same way as expensive goods, the demand for cheaper mass goods increases and price competition arises. On the other hand, when sellers are able to win more loyal customers by introducing new models, creating a bright image for their products, there is a departure from standard products. In this case, the task of the company is to make its product more different from the products of competing firms. The development of an industry largely depends on whether the forces operating in it cause an increase or decrease in interest in differentiated products.

11. The impact of changes in legislation and government policy. National laws and government actions can cause major changes in the behavior of firms and in their strategy. Deregulation has been a major driving force in industries such as banking, natural gas, air travel, and telecommunications.

12. Changing social values, orientation and lifestyle.

The emergence of new problems that concern society, a change in attitudes towards various products - all this is a powerful source of change in the industry. Consumer concerns about the quality of products are forcing food industry enterprises to introduce new technology, refocus R&D and introduce healthier products.

13. Reducing the influence of uncertainty and risk factors. A new growth industry is typically characterized by an untested cost structure and uncertainty about potential market size, R&D spending and distribution channels. New industries attract, as a rule, the most enterprising companies. But, if pioneering firms are successful, then conservative firms also tend to penetrate the industry. Their goal is to gain a foothold in an attractive, growing industry. In the world market, conservatism is characteristic of the first stage of globalization. Firms seek to reduce risk by relying first on exports, the sale of licenses, the creation of joint ventures. Then, as their experience grows and the risk to which they are exposed decreases, companies begin to act more decisively, creating subsidiaries and pursuing a strategy of full-scale competition in several countries at once.

The analysis of driving forces is of practical importance in the development

strategies. First, the driving forces show managers which external forces will have the greatest impact on the company's performance. Second, in order to adjust the company to the action of driving forces, managers must determine the size and consequences of the influence of each of them. Thirdly, the strategists must adapt it to the action of the driving forces.

One way to predict what driving forces will operate in the future is to use the technique of studying the environment.

The study of the environment includes the study of processes in the field of economic

mics, politics, ecology, technology, and social processes. The study of the environment is carried out using a systematic monitoring

ring and studying events, creating scenarios and using the Delphi method (a method that allows you to find a consensus between the assessments of qualified experts).

Driving force analysis

We will determine the factors that have the greatest impact on changes in the industry (driving forces) based on the Porter structure, where we will justify the degree of their influence, after which we will evaluate their impact on the industry according to three criteria: importance for the industry, the degree of influence on the organization, and the direction of influence.

1) Change in the long-term growth rate of the industry. In the industry as a whole, there is an increase in demand for all types of pumps, due to the sharp obsolescence of this equipment and its depreciation at enterprises. According to preliminary data, the depreciation of production assets for this group of equipment is 70-80%. Therefore, many manufacturers, in order to prevent emergency situations due to an increase in failures in the operation of pumps that have exhausted their service life, on the one hand, and in order to save electricity, on the other hand, are increasingly inclined to purchase new equipment and, as a rule, more reliable imported equipment. The driving factor will have a strong impact on changes in the industry in the long run.

2) Changes in the composition of buyers and ways of using the product. Since then, there have been some changes in these characteristics, especially for those groups of buyers who are in profitable growing industries, where the opportunities for modernization and expansion of production are associated with a large influx of investments (Appendix 1). In addition, vacuum technology itself is now gaining momentum, replacing compressed air and hydraulic technologies. Due to the ongoing shift in the industry differentiation of buyers, due to the change in the flow of investment and the spread of technology, a very noticeable driving factor in terms of the strength of the impact.

3) Product update. This driving factor can be taken into account mainly in relation to imported pumps, the number of offers for which is increasing every day. The renewal of product groups in this case is usually associated either with the entry of new players into the market, trying to occupy their niche in the industry with the help of new specialized pumps, or with the desire of competitors to expand the range and thus maintain falling interest in themselves. As a result, this driving force is due to the intention of many firms, through the implementation of a differentiation strategy, to achieve strong competitive advantages. This is mainly true for the more specialized vacuum pump market, where the growth in new product designs is particularly noticeable. This growth of novelties has an impact on the changing preferences of customers. And this depends on the ability of sales organizations to communicate these changes to customers and at the same time focus on significant differences in their products. These may be some qualitative, operational differences that actually play a greater role in customer decisions than price ones (clause 1.2 of Appendix 1). In general, we can talk about an average or lesser impact on the dynamics of the industry, since the change in preferences is rather slow.

4) Technological changes. If we talk about domestic products, then some changes are made with great difficulty due to the technological lag behind developed countries. As for imported equipment, there are not so many of these changes already due to years of proven technology, and there are not so many obvious breakthroughs in this area. Weak factor in terms of the strength of influence on the dynamics of the industry.

5) Marketing innovations. It should be noted that this driving force is very significant, both due to objective reasons related to the development of market relations in our country, and due to the fact that without taking into account this factor, the enterprise simply cannot compete with dignity.

6) Entry and exit of large firms. The entry of such organizations into the market can create a situation where a newly arrived firm This assumption applies to trade organizations will begin to engage in already "hyped" famous brands and, thus, will take a significant share of the segment from small suppliers supplying this equipment. As a result, this circumstance can significantly change the ratio of competitors' positions. The same goes for exiting organizations, as it allows other followers, as well as firms that know their place in the market, to dramatically expand their activities and begin to control a larger market share. The appearance of new assembly plants of foreign manufacturers can also noticeably change the situation on the pump market. This factor can greatly change the balance of power in the industry.

7) Diffusion of technical "KNOW-HOW". As mentioned above, all innovations in recent times come from the West, which causes their partial borrowing from Russian manufacturers, but due to technological backwardness, not all of them can be put into practice. Therefore, the effect of this factor is too long in time, but at the same time serves as an additional incentive to improve the efficiency of domestic enterprises.

8) Changes in costs and efficiency. The toughening of competition forces the domestic manufacturer, in order to reduce the cost or maintain it at the same level, to minimize all possible costs through the purchase of cheaper materials, the development of more productive technology, and the reduction of transaction costs. Intermediaries are also interested in reducing the latter type of costs and optimizing the entire supply chain to increase their profitability. This leads to the fact that many who did not have time to come to a new understanding of the problems of efficiency leave the industry. In recent years, this driving force has become more tangible, especially after the introduction of many high-quality substitute products on the pump market and the increase in the number of competitors.

9) The emergence of consumer preferences for differentiated products. Characteristics of consumer preferences can be addressed, as was done above, to two submarkets: water and vacuum pumps, the most differentiated of which is the second. This submarket is characterized by large differences inherent in pumps from different manufacturers. There are categories of customer groups whose consumer preferences have already developed and are a kind of determinant, which is practically impossible to influence. For example, this is typical for furniture industry enterprises, where preferences for suppliers of vacuum equipment are strictly associated with the German company BUSCH, whose product prices are quite high. However, this criterion is not decisive for the buyer, unlike a well-established brand, the image of which among customers is associated with very high quality and reliability. And the offer of new cheaper substitutes does not affect the change in customer preferences. In other customer segments (the glass and plastics market), where there are large volumes of investment, construction, customers are more willing to introduce new pump designs, and the price criterion already plays a role. At the same time, the offer of a wide model range and additional services, which is exactly what the company we are considering specializes in, allows to some extent to influence the change in customer preferences. The impact of this factor is slightly below average.

We will evaluate the impact according to three criteria based on the above justification (Table 3).

Table 3

Assessing the drivers of the industry

As can be seen from the table, factors 1, 2, 5, 6, 8 have the greatest influence on the dynamics of the industry, so they must be taken into account when developing possible strategic alternatives. Factors 3 and 6 should be feared, since not taking them into account in the development concept of our enterprise can lead to disastrous consequences, up to curtailing activities in this area. A possible way out of this situation can be the diversification of activities in the long term. In the future, however, the firm should not take a too narrow approach to the definition of business, as this may create problems in the sale of goods, despite the fact that the need will increase. This means that we may miss emerging development opportunities that competitors will not fail to take advantage of. This circumstance is connected with the generic needs of customers, the essence of which is that business should be approached from the standpoint of the generic needs of the buyer, and not from the standpoint of the product.

marketing management small business

The considered economic indicators and the structure of the industry describe its current state, without explaining the changes taking place in it.

Concept driving forces industry comes from the fact that there are environmental factors whose actions determine the direction and intensity of industry changes.

The analysis of the driving forces of the industry is carried out in two stages:

Identification of driving forces;

Study of their impact on changes in the industry.

M. Porter identified eleven types of driving forces that have the ability to change market conditions and intensity of competition in the industry:

· Changes in the long-term growth rate of the industry. A strong rise in long-term demand attracts new firms, the expectation of a recession encourages firms to leave the market.

· Changes in the composition of buyers and ways of using the product. These factors are the reasons for changing consumer requirements for services (credits, repairs, maintenance), creating other distribution channels, changing marketing tactics, expanding or narrowing the range of products.

· Product update. Helps expand the market and stimulate demand. Increases the degree of differentiation among competing sellers. Influences production methods, effective output scales, distribution channels, etc.

· Technological changes. They can greatly change the relative costs of production, the amount of investment, the minimum effective size of production. They tend to be vertically integrated. All this can lead to a change in the number of companies operating in the market.

· Marketing innovations. Set in motion new forces that change the conditions of competition and the positions of rival firms.

· Entry or exit of large firms. It means a redistribution of roles and the selection of new key players.

· Diffusion of technical know- how. Becomes an important driving force in competition.

· Changes in Costs and Efficiency. Change the strategic behavior of companies in the industry.

· The emergence of consumer preferences differentiated product instead of a consumer product (or vice versa). It can limit the freedom to choose any other strategies, except for price ones.

· Changes in public policy and regulation. Can greatly change the market and competitive conditions.

· Changing Uncertainty and Risk. New industries are characterized by great uncertainty and a fairly high risk of failure. As an industry ages, uncertainty and risk decrease.

Driving forces must be constantly monitored and analyzed.

Alternatively, you can use the method development of alternative scenarios. It involves a description of a sequence of events leading with a certain probability to a predicted end state; or, conversely, it takes into account the possible consequences of the choice made.

Another approach to identifying the drivers of an industry and their impact on it is to use the Delphi method. Its essence: selected experts fill out written questionnaires, then these materials are circulated within the group until a universal agreement is reached.

The driving forces of the industry, as well as other factors in the external environment of the organization, can be assessed according to three criteria: importance for the industry, impact on the organization, direction of influence. The importance of this type of driving force is then determined (see Section 7.1).

Bibliographic description:

Nesterov A.K. The driving forces of the industry [Electronic resource] // Educational encyclopedia site

The biggest changes in the industry are caused by the so-called industry drivers.

Industry driving forces their impact should be identified and assessed, which is an important step in the analysis of the enterprise environment.

Industry driving forces have a fundamental impact on every business. Therefore, the development of preventive actions allows in this case to get ahead of competitors.

Analyzing the drivers of an industry has practical implications for strategy development. The task of such an analysis is to separate the main causes of changes in the industry from the secondary ones. Without a clear understanding of the main drivers of change in the industry, it is impossible for an enterprise to develop an appropriate strategy that is sensitive to these changes and the consequences of their influence. On the contrary, a deep and well-executed analysis of the competitive environment provides an understanding of the state of the external environment surrounding the company, and allows managers to choose an effective strategy appropriate to the current situation.

The driving forces of the industry according to M. Porter

M. Porter proposed to classify them in order to identify important and secondary causes of changes in the industry.

The above list should be considered as potential drivers of the industry. Several of them will be active in a particular industry.

Porter classification:

• Change in the long-term growth rate of the industry. This affects the balance between supply and demand, the conditions for entering a new market and exiting the market.
• Changes among buyers of products. This causes changes in the composition of service offerings to the consumer, changes in the network of dealers and retailers, changes in the range of products, changes in approaches and costs in sales promotion.
• The emergence of new products. This strengthens the market position of companies producing new products at the expense of those companies that produce old products and are late in entering the market with their new products. The emergence of new products restores the growth of the industry.
• Technological changes. They can lead to a dramatic change in the situation in the industry and open up new opportunities for it.
• New approaches to marketing. They can cause increased consumer interest in products, increase demand, change the competitive position of companies present in this market.
• Market entry or exit of large companies. This leads to a sharp change in the competitive environment.
• Distribution of technical know-how. This leads to a decrease in the advantages of companies that previously owned this know-how.
• Increasing globalization of the industry. Transnational corporations have the ability to transfer know-how and technology from one country to another at low cost, while receiving significant competitive advantage to national companies. They can reduce their costs due to differences in wages in different countries.
• Cost and efficiency changes. It leads to the desire to occupy a large market share, forcing competitors to reduce prices, increase production volumes.
• The emergence of consumer preferences for customized products instead of conventional products (or for more standardized products instead of customized products). This happens when a corporation manages to attract a larger number of buyers by giving its products new properties or creating a special image. At the same time, competitors strive to distinguish their products from competitors' products.
• Influence of administrative bodies and changes in government policy. The weakening of state intervention in the economy can lead to accelerated development and a change in strategic approaches in a number of industries.
• Changes in social priorities, public attitudes and lifestyles. These factors can cause major changes in the economy. Thus, in the food industry, interest in environmentally friendly products that are healthy and with high taste has increased. This forced manufacturers to reconsider the methods of processing products, develop various nutritional supplements, reduce the amount of cholesterol, sugar, and so on.
• Reducing uncertainty and business risk. Emerging industries are attractive to risk-averse companies. If they are successful, the uncertainty is reduced and other companies seek to enter this market.

These forces should be analyzed to develop an enterprise strategy that allows it to successfully operate in an external hostile competitive environment.

The driving forces of the industry and the speed of changes in the external environment

Changes in the external environment are accelerating, so the complexity of the problems facing the enterprise management system is increasing. In this case, they have a huge impact on the activities of enterprises.

The more complex the problems, the more time it takes to solve them. Therefore, it is possible that while managers develop solutions and start implementing them, it turns out that they are already too late, as the problems have changed.

Industry driving forces influence regardless of the actions of enterprises. Consequently, the lead factor is becoming increasingly important, which means that it is necessary to increase the reliability of forecasts, which become an organic element of the management system.

The task of analyzing the driving forces of an industry is to separate the main causes of change from the secondary ones. Without a clear understanding of the main driving forces, it is impossible to develop an appropriate strategy that is sensitive to these changes and the consequences of their influence.

A very important analytical task is to identify key success factors in the industry, that is, control variables common to all organizations in the industry, the implementation of which gives the organization the opportunity to improve its competitive position in the industry. in the industry and coordinating the strategy with them makes it possible to acquire a stable competitive position. At the same time, the key success factors change according to the stages of the industry life cycle.