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A second representative question is, Can you position your company where the forces are weakest? Consider the strategy developed by heavy-truck maker Paccar. This is another industry with an uninviting structure: There are many big, powerful buyers who operate large fleets of trucks; they are price sensitive because trucks represent a large piece of their costs. Rivalry is based on price because (a) the industry is capital intensive, with cyclical downturns, and (b) most trucks are built to regulated standards and therefore look the same. On the supplier side, unions exercise considerable power, as do the large independent suppliers of engines and drive train components. Truck buyers face substitutes for their services (rail, for example), which puts an overall cap on truck prices. Between 1993 and 2007, the industry average return on invested capital (ROIC) was 10.5 percent. Yet over the same period Paccar, a company with about 20 percent of the North American heavy-truck market, earned 31.6 percent. Paccar has developed a positioning within this difficult industry where the forces are the weakest. Its target customer is the individual owner-operator, the guy whose truck is his home away from home. This customer will pay more for the status conferred by Paccar’s Kenworth and Peterbilt brands and for the ability to add a slew of custom features such as a luxurious sleeper cabin or plush leather seats.
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Joan Magretta (Understanding Michael Porter: The Essential Guide to Competition and Strategy)