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Driving Forces refer to the broad cluster of events, state of affairs, and/or trends that impact the firm’s future. These forces are significant as they define and drive events and trends in certain directions, and are typically quite broad in scope, long-term in nature, and associated with some degree of uncertainty as to their evolution. In order to plan appropriate strategies for change, these forces should be clearly understood and identified. Understanding them is the first step toward establishing a framework for analyzing critical trends, particularly as they may impact the competitive environment facing an industry.

Driving Forces that may seem obvious to one person but can hidden to another. Therefore, the identification of Driving Forces should be done in a team environment. It is helpful to run through this common list of categories of DFs listed below. Normally, firms have little control over Driving Forces—their ability to deal with them comes from recognizing them and understanding their effects.

Common Types of Driving Forces

• Changes in long-term industry growth rate
• Changes in who buys the product and how it is used
• Changing societal concerns, attitudes, and lifestyles
• Diffusion of expertise across more firms and locations
• Election trends, government decisions, and/or shifting regulatory influences
• Growing use of the Internet and its applications
• Important firms that enter or exit the industry
• Increasing globalization of the industry
• Innovation in communication and marketing
• Innovation in processes and products
• Changes in the long-term industry growth rate
• Major changes in customer needs and preferences
• Major changes in production costs and efficiencies
• Prominent changes in uncertainty and business risk
• Technological change and manufacturing process innovation

The above list serves as a reference to get started on identifying the Driving Forces for your industry. Once a good list of “forces” have been identified, it should be filtered and looked through to pick out the key Driving Forces. At this stage, someone will  invariably throws cold water on some of the suggested forces and suggests others. However, it is during this period of time that some of the most constructive debates occur when each member tries to identify their relevant set of forces.

Accessing the Impact of the Driving Forces

• Are they valid?
• How do we know?
• How significant are each of them?
• What is their strength?
• Which ones can be altered?
• Which ones cannot be altered?
• Which ones can be altered quickly?
• Which ones can only be altered slowly?
• Which ones, if altered, would produce rapid change?
• Which ones would only produce slow change?
• What skills and/or information are needed and are available to change the forces?
• Can you get the resources/capabilities needed to change them?

One approach is to list and rank the impacts using some forms of scores in order to determine their rankings for the severity of impacts.

Another approach is to use a matrix that separates the forces on pre-selected dimensions. The following example uses “importance” and “uncertainty” to distinguish between the set of Driving Forces.

The key facet of this stage is to determine whether these DFs are acting to make the industry environment more or less attractive. Four questions related to the DF’s impact on the industry environment that must be answered are as follows:

• Are the DFs causing demand for the industry’s product to increase or decrease?
• Are the DFs making the bargaining power of other industry participants higher or lower?
• Are the DFs acting to make competition more or less intense?
• Will the DFs lead to higher or lower industry profitability?

The next step will be to work through each of the proposed solutions–compare these options in terms of costs/benefits, risks/benefits or via a pre-determined set of criteria used for assessing the relative attractiveness and value of the options. Comparing them against the current strategy of the firm is another key task to perform at this point in order to gauge the degree of the change required should the firm adopt the proposed solution, as well as the likelihood that the firm could implement it effectively; and the final task is to analyze and identify the nature of competitor responses that the action may engender.

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