Many companies are setting their strategy against a flawed view of the markets in which they compete.
How sure are CEOs that their current growth strategy will achieve a competitive advantage and sustainable value over the next two to three years?
In this article, we look at how to understand a company’s true competitive position, how technology is rapidly making current market assumptions outdated and how companies can use market context to drive sustainable growth.
A market context analysis (such as EY-Parthenon’s Full Potential Paradigm framework) provides a view of the company’s unique position in scale and profitability compared with its competitors, any adjacent segments and new market entrants. Given today’s competitive dynamics, correctly determining market context is difficult. Properly done, though, it largely answers the following critical questions:
- What are the drivers of growth and profitability for the business and industry?
- Is the industry concentrated or fragmented? Is it consolidating or stable?
- Who are the top competitors? Has there been any turnover at the top, and why?
- Which industry boundaries are under attack?
- What is your market position vs. the leader and runner-up? What are the main sources of relative market share change for your business? How are these factors changing?
By answering these questions, you can determine from where growth will likely emanate, and which M&A targets should be pursued to deliver long-term value.
The full article can be accessed here.
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