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Foundations of Strategy Chapter 5: . Team 3: Taylor Carroll, Jessica Sharpless , Andrea Lapotaire , Andrew Stack, Andrew West. Opening Case: The Evolution of Personal Computers. Came about in early 70s First used mainly by hobbyist who assembled their own

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Foundations of strategy chapter 5

Foundations of Strategy Chapter 5:

Team 3:

Taylor Carroll, Jessica Sharpless, Andrea Lapotaire, Andrew Stack, Andrew West

Opening case the evolution of personal computers
Opening Case: The Evolution of Personal Computers

Came about in early 70s

First used mainly by hobbyist who assembled their own

Apple, Tandy, Commodore first to market pre-assembled product

1981 market estimated worth $3Billionwith 150 companies world wide

Apple 20%, Tandy 15%, Commodore 7%

Early 1980’s IMB focuses on mainframe computers, exploded in popularity

Opening case the evolution of personal computers cont
Opening Case: The Evolution of Personal Computers cont.

IBM became standard PC

Apple lostlead in market share to IBM

Standard PC lead to growing software market

Apple’s iPod, iPhone, iPadnewhits to old idea

The industry life cycle
The Industry Life Cycle

  • Product Life Cycle-products are born, their sales grow, they reach maturity, they go into decline and they ultimately die

  • Industry Life Cycle- the supply-side equivalent of the product life cycle

The industry life cycle1
The Industry Life Cycle

  • The Life Cycle comprises four phases:

    • Introduction

    • Growth

    • Maturity

    • Decline

  • Two factors are fundamental: demand growth and the production and diffusion of knowledge

Demand growth
Demand Growth

Introduction stage- sales are small and the rate of market penetration is low because the industry’s products are little known and customers are few

Growth stage- accelerating market penetration as technical improvements and increased efficiency open up the mass market

Maturity stage- caused by increasing market saturation. Once saturation is reached, demand is wholly for replacement

Decline stage- happens when the industry becomes challenged by new industries that produce technologically superior substitute products

The production and diffusion of knowledge
The Production and Diffusion of Knowledge

  • Knowledge creation and knowledge diffusion exert a major influence on industry evolution

  • Over the course of the life cycle, customers become increasingly informed about the product and the market expands

    • But as customers become more knowledgeable about the performance attributes of manufacturers’ products, so they are better able to judge value for money and become more price sensitive

Dominant designs and technical standards
Dominant Designs and Technical Standards

  • Dominant design refers to the overall configuration of a product or system

    • Example: the Underwood Model 5

  • Technical Standard is a technology or specification that is important for compatibility

    • Emerge when there are network effects- the need for users to connect in some way with one another

How general is the life cycle pattern
How general is the life-cycle pattern?

  • Duration of the lifecycle varies from industry to industry

  • Industries supplying basic necessities may never enter decline phase

    • Residential construction

    • Food processing

    • Clothing

  • An industry is likely to be at different stages of its life cycle in different countries

Strategy at different stages of the life cycle
Strategy at Different Stages of the Life Cycle

Changes in demand growth and technology over the cycle have implications for industry structure, competition and the sources of competitive advantage (key success factors).

The introduction phase
The Introduction Phase

  • The number of firms in an industry increases rapidly during the early stages of an industry’s life cycle.

  • ‘de novo’ entrants- Start up companies

    • Born global companies

  • ‘de alio’ entrants- Established firms diversifying

    • PC industry

The growth phase
The Growth Phase

  • As demand grows both in the domestic market and other countries a dominant design usually emerges.

  • Key success factors:

    • Manufacturing capabilities

    • Access to distribution

    • Financial resources

The m aturity phase
The Maturity Phase

  • Competitive advantage is increasingly a quest for efficiency; particularly in industries that tend toward commoditisation.

  • Key success factors:

    • Cost efficiency through scale economies

    • Low wages

    • Low overhead

The decline phase
The Decline Phase

  • Shrinking market demand gives rise to acute strategic issues.

  • Key features of declining industries:

    • Excess capacity

    • Lack of technical change

    • Declining number of competitors

    • High average age of capital

    • Aggressive price competition

Strategy in public sector and not for profit contexts
Strategy in Public-sector and Not-for-profit Contexts

  • Public-sector:

    • Public goods

    • Market failure

  • Not-for-profit:

    • Fund disbursement

    • Tax, legal, and regulatory differences

    • Social enterprise

Key differences that impact strategy public private sectors
Key Differences that Impact Strategy (Public & Private Sectors)

Multiple, potentially conflicting goals

Distinctive constraints and different levers

An absence of market forces

Monopoly power

Less autonomy and flexibility

Increased accountability

Less predictability

Key differences that impact strategy not for profit private sectors
Key Differences that Impact Strategy (Not-for-profit & Private Sectors)

The employment of volunteers


Stakeholder analysis
Stakeholder Analysis Private Sectors)

  • Needs and Goals of stakeholders can conflict

  • Stakeholder analysis- process of identifying, understanding and prioritizing the needs of key stakeholders

    • Participation in strategy formulation

    • Relationships with stakeholders

Stakeholder analysis cont
Stakeholder Analysis Cont. Private Sectors)

Bryson’s Key Steps:

Identification of the list of potential stakeholders

Ranking stakeholders according to their importance and influence on the organization

Identifying the criteria that each stakeholder is likely to use to judge the organization's performance

Deciding how well the organization is doing from its stakeholders’ perspective

Identifying what can be done to satisfy each stakeholder

Identifying and recording longer term issues with individual stakeholders and stakeholders as a group

Stakeholder analysis cont1
Stakeholder Analysis Cont. Private Sectors)

Responses to stakeholders’ Power/Interest Grid

Stakeholder Power/Interest Grid

Level of Interest

Level of Interest



Scenario planning
Scenario Planning Private Sectors)

-a systematic way of thinking about how the future might unfold that builds on what we know about current trends and signals

Pioneered by the oil company Royal Dutch Shell, who’s investment projects far exceeded the time horizon for forecasting

Approach is to conduct several distinct, internally consistent narratives of how the future may look 5 to 25 years ahead.

Quantitative scenario analysis models events and runs simulations to identify likely outcomes.

Qualitative scenarios typically take the form of narratives and are particularly useful in engaging the insight and imagination of decision-makers.

Scenario planning key steps
Scenario Planning Key Steps Private Sectors)

Defining the purpose of the analysis

Deciding on the time horizon

Identifying key trends

Identifying key uncertainties

Creating the scenarios and checking that they are internally consistent

Identifying indicators that might signal which scenario is unfolding

Assessing the strategic implications of each scenario

Walmart s swot analysis
Walmart’s Private Sectors) SWOT Analysis

  • Strengths:

    • large selection of goods with very competitive prices

    • Size of company allows for huge discounts from suppliers that allow Walmart to keep prices low

    • Have their own brand of goods supplied along with local supplier’s products and major brands

    • Size and buying power

    • Frugal management

Frugal video
Frugal Video Private Sectors)


    • Startat 1:50

Walmart s swot analysis cont
Walmart’s Private Sectors) SWOT Analysis Cont.

  • Weaknesses:

    • Huge responsibility

    • Suppliers under pressure

    • Questionable quality from customers

  • Opportunities:

    • Expansion

    • Partnerships

    • Home deliveries

    • Creation of a convenience store

Walmart s swot analysis cont1
Walmart’s Private Sectors) SWOT Analysis Cont.

  • Threats:

    • Competing vendors

    • Local convenience stores

    • Similar companies in other countries

    • Ethical attacks due to success


Competitors Private Sectors)


Area groceries

Clothing stores

Automotive stores

Hardware stores


Competitive advantages and strategy
Competitive Advantages and Strategy Private Sectors)

  • Advantages:

    • Low price

    • Convenience

  • Strategy:

    • Cost leadership strategy

    • Walmart also has been successful in creating an integrated low cost-differentiation strategy

The world wide foundation for nature wwf
The World Wide Foundation for Nature Private Sectors)(WWF)

Established in 1961 by Sir Julian Huxley after seeing thriving areas barren in Africa

Worked with several governments to pass laws protecting certain species that were in danger of extinction (tigers,whales, dolphins, turtles, etc.)

1990s lack of interest in organization led to restructuring

New structure made specific priorities and broke those down into smaller, achievable goals

Lead to more involvement and goal achievement

The world wide foundation for nature wwf cont
The World Wide Foundation for Nature Private Sectors)(WWF) cont.

“The world’s leading conservation organization, WWF works in 100 countries and is supported by 1.2 million members in the United States and close to 5 million globally. WWF’s unique way of working combines global reach with a foundation in science, involves action at every level from local to global, and ensures the delivery of innovative solutions that meet the needs of both people and nature.”