Competitive Strategy and the Industry Environment

1
Chapter 6

• Competitive Strategy and the Industry Environment

2
Life Cycle
Unit Sales
Profits
3
Life Cycle
Emerging Embryonic Introduction
Growth
Mature
Decline
4
Industry Life Cycle
5
Challenges of Emerging Industries

• Uncertain market conditions and characteristics
• Competing proprietary technologies and varied
  marketing/service/distribution tactics
• Lack of complementary products
• Limited/poor quality and high costs
• Education of users
• Innovators vs. Initial adopters
• vs. Mass-market.

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Alternatives in Emerging Industry

• Move fast/early with superior product or
  technology
• Track the Dominant Design
• Build alliances with key suppliers or those that
  provide complementary products to out position
  rivals
• Seek new customer groups, new applications for
  your product
• Make it cheap/easy for early adopters to try/buy
  your product.

7
Challenges of Turbulent Environments

• Rapid technological changes
• Short product life-cycles
• Many new entrants and strategies
• Changing customer demands/preferences.

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Alternatives in Turbulence

• Invest heavily in RD, staying on the
  technological frontier
• Develop the capability to be flexible
• Maintain strategic partnerships
• Build up lead-time advantages.

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Challenges of Mature Industries

• Slow growth fight for market share
• Sophisticated buyers
• Costs, prices and service critical
• Excess capacity
• Innovation and new uses more difficult
• International competition
• Falling profitability
• Consolidation
• Segmentation.

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Alternatives in Mature Industries

• Prune product line
• Process innovation cost reductions
• Sell more to current buyers
• Purchase rivals at low prices
• Go international.

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Alternatives in Fragmented Industries

• Fragmented industries experience low entry
  barriers, lack of economies of scale, and high
  segmentation
• Formula facilities -
• Low cost operations -
• Become the specialized vendor of choice -
• Focus on a customer type -
• Focus on a geographic segment -

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Problems for Runner-ups

• Lower economies of scale
• Lack of recognition
• Limited exposure in mass media
• Capital limitations.

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Alternatives for Runner-ups in Scale Sensitive
Industries

• Use lower price points
• Merge/acquire rivals to increase market share
• Invest in cost-saving techniques
• Pursue radical innovation to change the rules of
  the game.

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Other Runner-up Strategies

• Vacant Niche Strategy -
• Specialists Strategy -
• Superior Products Strategy -
• Distinctive Image Strategy -
• Content Follower

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Strategies to Deter Entry

• Product Proliferation
• Pricing Games
• Maintaining Capacity

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Strategies to Manage Rivalry

• Price Signaling Price Leadership
• Non-Price Competition

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Non-price Competition
Products
New
Existing
Market Penetration
Product Development
Existing
Marketing Segments
Market Development
Product Proliferation
New