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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 - PowerPoint PPT Presentation
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Michael SeymourMatt Anderson
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
Tend to be Extremely Difficult:◦ Exit Barriers◦ “Ripple Effect”
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.
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
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
Speed◦ Pressures to speed◦ Requirements of speed◦ Methods to speed◦ Consequences of speed
Creating Value through Innovation
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
Customer expectations Need for competitive advantage Competitor strategies Industry shifts
Refocused mission Compatible culture Communication upgrades Process reengineering New metrics
Streamline operations Upgrade technology Form partnerships
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
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