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Business Unit Strategy: Concepts & Special Dimensions. Michael Seymour Matt Anderson. 3 Contexts (Stages) of Industry Evolution. Emerging Stage High Costs (Often Unpredictable) Technology is Immature Fierce Competition Low Barriers to Entry

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3 contexts stages of industry evolution
3 Contexts (Stages) of Industry Evolution
  • Emerging Stage
    • High Costs (Often Unpredictable)
    • Technology is Immature
    • Fierce Competition
    • Low Barriers to Entry
    • Undeveloped Supplier Relationships/Distribution Channels
  • Growth Stage
    • Increased Segmentation
    • Focus Shift to Expanding Market Shares
    • Customers become More Knowledgeable
    • Entry of ‘Follower’ Firms
  • Maturity & Decline Stage
    • Firm Must Chose Balance Between:
      • Low-Cost/Differentiation Strategy
      • Multiple/Single Industry Segments
    • Declining Growth → Less Forgiving Environment
    • Attractive Profits are Still Attainable
exit decisions
Exit Decisions
  • Tend to be Extremely Difficult:
    • Exit Barriers
    • “Ripple Effect”
strategy in fragmented markets
Strategy in Fragmented Markets

Fragmented Industry:

No Single Company or Small Group of Firms has Large enough Market Share to Strongly Effect Industry Structure/Outcomes

  • Success is Dependant on Creative Strategizing

Ex: H. Wayne Huizinga & Waste Management Corp.

strategy in deregulating environment
Strategy in Deregulating Environment

Deregulation: Lifting of Artificial Entry Constraints that Allows New Players to Enter a Market

  • (1975) SEC Abolished Fixed Rates for U.S. Securities Brokers
  • Has both Positive & Negative Impact on Markets
strategy in hypercompetitive industries
Strategy in Hypercompetitive Industries

Hypercompetitive Market: Characterized by Intense Competitive Rivalry, Short Product Life Cycles, Emergence of New Technologies & Major Shifts in Market Boundaries

  • Success Often Depends on Element of Surprise
  • 3 Major Qualities Needed to Succeed
special dimensions
Special Dimensions
  • Speed
    • Pressures to speed
    • Requirements of speed
    • Methods to speed
    • Consequences of speed
  • Creating Value through Innovation
speed
Speed
  • The key to success in more and more industries
  • How a company responds to meeting customer’s expectations
  • Public images are synonymous with speed
  • Ex: Domino’s, AAA
pressures to speed
Pressures to Speed
  • Customer expectations
  • Need for competitive advantage
  • Competitor strategies
  • Industry shifts
requirements of speed
Requirements of Speed
  • Refocused mission
  • Compatible culture
  • Communication upgrades
  • Process reengineering
  • New metrics
methods to speed
Methods to Speed
  • Streamline operations
  • Upgrade technology
  • Form partnerships
creating value through innovation
Creating Value through Innovation
  • Sustaining innovation
    • Some are incremental, others are breakthroughs
  • Disrupting innovation
    • Disrupts established basis of competition
  • Focus on growth rather than profit
  • Create a culture of innovation
culture of innovation
Culture of Innovation
  • Steps
    • Top-level commitment to innovation
    • Long-term focus
    • Flexible organization structure
    • loose and tight planning and control
    • Include appropriate incentives by creating an environment for innovation
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