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Life Cycles, Size, and Decline

Life Cycles, Size, and Decline. BA 152. Industry Life Cycles. Industry Evolution Entry strategies Survival Strategies Specialist Generalist. Entry Strategies. Entering the market early. Entry Strategies. Entering the market later. Survival Strategies. Specialists

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Life Cycles, Size, and Decline

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  1. Life Cycles, Size, and Decline BA 152

  2. Industry Life Cycles • Industry Evolution • Entry strategies • Survival Strategies • Specialist • Generalist

  3. Entry Strategies • Entering the market early

  4. Entry Strategies • Entering the market later

  5. Survival Strategies • Specialists • Concentrate skills in a single niche • Develop core competencies • Can provide better customer service • and superior products, but • Trouble if the niche disappears or others enter. • Generalists • Spread skills across many niches • Providing greater brand recognition • Can succeed when environment is uncertain, • If risk is spread across a number of niches

  6. Organizational Life Cycle • Stages of Life Cycle Development • Pre-Birth Stage • first idea • commitment and early planning • implementation

  7. Organizational Characteristics During the Life Cycle • ENTREPRENEURIAL STAGE: • Personal control systems • Innovation by owner/manager • Goal: • Management style: • Crisis:

  8. Organizational Characteristics During the Life Cycle • COLLECTIVITY STAGE: • Personal rewards aimed at individuals who contribute to organizational success • Innovation from employees and managers • Goal: • Management style: • Crisis:

  9. Organization Size: Is Bigger Better? • Pressures for Growth

  10. Size and Structural Characteristics • As Organizations get bigger: • Complexity • Centralization • Formalization • Flexibilty

  11. Large Vs. Small:How can you be both?

  12. Organizational Characteristics During the Life Cycle • FORMALIZATION STAGE: • Impersonal rewards through formalized systems • Innovation from separate innovative groups • Goal: • Management style: • Crisis:

  13. Organizational Characteristics During the Life Cycle • ELABORATION STAGE: • Extensive rewards tailored to product and department success • Innovation by institutionalized R & D • Goal: • Management style: • Crisis:

  14. Organization Life Cycle Large Streamlining Continued maturity Decline Development of Teamwork Addition of Internal Systems Size Provision of Clear Direction Crisis: Too much red tape Creativity Crisis: Need for revitalization Crisis: Need for delegation with control Crisis: Need for Leadership Small Entrepreneurial Collectivity Formalization Elaboration ?????????

  15. Organizational Decline and Downsizing: The Causes • Organizational Atrophy • Loss of ability to respond to changing environment • Inefficient, bureaucratic, fat, and happy • Organizational Vulnerability • Loss of resources • Loss of market share • Loss of legitimacy • Environmental decline • Stagnating economy • Flat/shrinking market • Increased competition

  16. Successful Organizational Performance Declining Organizational Performance Stages of Decline Blinded Inaction Faulty Action Crisis Dissolution

  17. Managing the Downsizing • Implementation approaches must be a function of the severity and speed of decline. • Implementation issues to consider • Consider voluntary programs with incentives (but be careful - who might leave?) • Over communicate - “The best surprise is no surprise.” • Allow employees to leave with dignity • Assist those leaving • Use ceremonies to reduce anger/confusion • Remember those who stay!

  18. Next Time Case: Sunflower, Inc.

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