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Strategy in Aging/Declining Industry. Amin Wibowo FEB UGM. Tantangan Strategik dalam New Competitive Landscape.

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Tantangan Strategik dalam

New Competitive Landscape

Para manajer dan pemimpin semakin dituntut untuk mempunyai kapasitas menavigasi perusahaan dalam menghadapi new competitive landscape, dengan mengembangkan fleksibilitas strategik dan keunggulan kompetitif berkelanjutan

Old Competitive Landscape

New Competitive Landscape

Visi Strategik:

Misi, Visi, Nilai-nilai

Keunggulan kompetitif berbasis proteksi pasar, monopoli, produk dan sebagainya

Keunggulan kompetitif berbasis kompetensi dan knowledge

Agenda Strategik

dan Transformasi organisasional

declining industries
Declining Industries

A declining industry is one in which market demand has leveled off or is falling and the size of total market starts to shrink. Competition tends to intensify and industry profits tend to fall.

  • Reasons for and severity of the decline
    • Reasons: technological change, social trends, demographic shifts
    • Intensity of competition is greater when:
      • The decline is rapid versus slow and gradual.
      • The industry has high fixed costs.
      • The exit barriers are high.
      • The product is perceived as a commodity.
    • Not all industry segments typically decline at the same rate
what does aging declining industry mean
What does aging/declining industry mean?

The size of total market starts to shrink:

- Technological advances (railroads, steel vs. plastic, vacuum tube vs. transistor)

- Lower cost or high quality (synthetics for leather)

- Customer groups shrinks (baby foods)

- Change in life-style, buyers’ need, or tastes (cigars and hatmaking)

the life cycle portfolio matrix
The Life-Cycle Portfolio Matrix
  • Wide range of strategic options
  • Caution: selective development
  • Danger: withdraw to market niche, divest or liquidate

Industry Maturity (External)

Embryonic

Growth

Aging

Mature

Dominant

Strong

Favorable

Competitive Position (Internal)

Tenable

Weak

Nonviable

criteria of competitive position
Criteria of Competitive Position

Dominant: Dominant competitors are very rare. Dominance often results from a quasimonopoly or from a strongly protected technological leadership.

Strong: Not all industries have dominant or strong competitors. Strong competitors can usually follow strategies of their choice, irrespective of their competitors’ moves.

Favorable: When industries are fragmented, with no competitor clearly standing out, the leaders tend to be in a favorable position.

Tenable: A tenable position can usually be maintained profitably through specialization in a narrow or protected market niche. This can be a geographic specialization or a product specialization.

Weak: Weak competitors can be intrinsically too small to survive independently and profitably in the long term.

Nonviable: Represents the final recognition that the firm relly has no strength whatsoever, now or in the future, in that particular business. Therefore, exiting is the only strategic responses.

the life cycle portfolio matrix3
The Life-Cycle Portfolio Matrix
  • Market share thrust

Mature

Embryonic

Growth

Aging

Dominant

Strong

Favorable

Tenable

Weak

Nonviable

the life cycle portfolio matrix4
The Life-Cycle Portfolio Matrix
  • Investment Requirements

Mature

Embryonic

Growth

Aging

Dominant

Strong

Favorable

Tenable

Weak

Nonviable

the life cycle portfolio matrix5
The Life-Cycle Portfolio Matrix
  • Profitability and Cash Flow

Mature

Embryonic

Growth

Aging

Dominant

Strong

Favorable

Tenable

Weak

Nonviable