Competitive Strategy in Emerging Industries

**Competitive Strategy in Emerging Industries.Competitive Strategy in Emerging Industries

Competitive Strategy in Emerging Industries.

*Competitive Strategy in Emerging Industries.*Competitive Strategy in Emerging IndustriesThe Structural Environment Problems Constraining Industry DevelopmentEarly And Late MarketsStrategic ChoicesTechniques For ForecastingWhich Emerging Industries To Enter


*Competitive Strategy in Emerging Industries.*The Structural EnvironmentCommon Structural CharacteristicsEarly Mobility Barriers


*Competitive Strategy in Emerging Industries.*The Structural Environment - Common Structural CharacteristicsTechnological UncertaintyStrategic UncertaintyHigh Initial Costs But Steep Cost ReductionEmbryonic Companies And Spin-offs


*Competitive Strategy in Emerging Industries.*The Structural Environment - Common Structural CharacteristicsFirst-time BuyersShort Time HorizonSubsidy


*Competitive Strategy in Emerging Industries.*The Structural Environment Early Mobility BarriersPredictably Different Common Early Barriers:Proprietary TechnologyAccess To Distribution ChannelsAccess To Raw Materials And Trained Manpower


*Competitive Strategy in Emerging Industries.*The Structural Environment Early Mobility BarriersCost Advantages Due To Experience, Made More Significant By Technological And Competitive UncertaintiesRisk, Which Raises Effective Opportunity Cost Of Capital And Thereby Effective Capital Barriers


*Competitive Strategy in Emerging Industries.*Problems Constraining Industry DevelopmentInability To Obtain Raw Materials Or Components.Period Of Rapid Escalation Of Raw Materials Prices.Absence Of Infrastructure.Absence Of Product Or Technology Standardisation.Perceived Likelihood Of Obsolescence.


*Competitive Strategy in Emerging Industries.*Problems Constraining Industry DevelopmentCustomers Confusion.Erratic Product Quality.Image And Credibility With Financial Community.Regulatory Approval.High CostsResponse Of Threatened Entities.


*Competitive Strategy in Emerging Industries.*Early and Late MarketsA crucial question of strategic importance in an emerging industry is the assessment of which markets will open up early and which will come later. This assessment not only has bearing on product development and marketing efforts but also on forecasting strategic evolution.


*Competitive Strategy in Emerging Industries.*Early and Late MarketsMarkets, market segments and even particular buyers within market segments may have greatly different receptivity to a new product. A number of criteria seem to be crucial in determining this receptivity, some of which can be influenced or overcome by firms in the emerging industry.


*Competitive Strategy in Emerging Industries.*Early and Late Markets Criteria for Determining ReceptivityNature Of Benefit:Performance AdvantageCost AdvantageState Of The Art Required To Yield Significant BenefitsCost Of Product FailureIntroduction Or Switching CostsSupport Services


*Competitive Strategy in Emerging Industries.*Early and Late Markets Criteria for Determining ReceptivityCost Of Obsolescence.Asymmetric Government, Regulatory Or Labour Barriers.Resources To Change.Perception Of Technological Change.Personal Risk To The Decision Maker.


*Competitive Strategy in Emerging Industries.*Strategic ChoicesFormulation of strategy in emerging industries must cope with the uncertainty and risk of this period of an industrys development. The rules of the competitive game are largely undefined, the industry structure unsettled and probably changing and competitors not defined.


*Competitive Strategy in Emerging Industries.*Strategic Choices Strategic Freedom and LeveragesShaping Industry StructureExternalities in Industry Development Clash of Interest with others.Changing Role of Suppliers and Channels.Shifting Mobility Barriers early mobility barrier may erode with time.


*Competitive Strategy in Emerging Industries.*Strategic Choices Timing Entry: Appropriate Conditions for Early EntryGood Image And Reputation Where Experience Curve Is Important Experience Difficult To ImitateCustomer Loyalty Will Be Great First Firm Will Benefit.Cost Advantage Through Early Commitments To Suppliers and Dealers.


*Competitive Strategy in Emerging Industries.*Strategic Choices Timing Entry: Early Entry is Risky when :Early competition and market segmentation are likely to be different to that which will be important later.Cost of opening up the market is great including customer education.Small early competitors likely to be replaced later by formidable ones.Technology change will make early investments obsolete.


*Competitive Strategy in Emerging Industries.*Strategic Choices Coping With CompetitorsNewly formed entrants and spin-offs may cause resentment.External factors make a firm dependent on competitors for development of industry.Pioneers expend excessive resources in defending high market shares.Monopoly or near monopoly cannot be defended and it may be wiser to encourage sensible known competitors than unknown small players.


*Competitive Strategy in Emerging Industries.*Forecasting appropriate StrategyThe device of SCENARIOS is a particularly useful tool in emerging industries. Scenarios are discrete, internally consistent views of how the world will look in the future, which can be selected to bound the probable range of outcomes that might feasibly occur.


*Competitive Strategy in Emerging Industries.*Forecasting appropriate Strategy The starting point for forecasting is estimating the future evolution of product and technology in terms of costs, product variety and performance. Thereafter the analyst chooses a small number of internally consistent product/technology scenarios that encompasses the range of possible outcomes.


*Competitive Strategy in Emerging Industries.*Forecasting appropriate StrategyFor each of the scenarios, the analyst then creates a scenario of which markets will open up and what their characteristics will be. Here the first feedback loop occurs , since the nature of the markets that open up early can shape the way in which products and technology evolve.


*Competitive Strategy in Emerging Industries.*Forecasting appropriate StrategyThe next step is to develop the implications for the competition for each product/technology/market scenario and then forecast the probable success of different competitors.The firm can examine its own position vis--vis competitors for each scenario and decide to bet on A SCENARIO.


*Competitive Strategy in Emerging Industries.*Which Emerging Industry to EnterThe choice of which emerging industry to enter is dependent on the outcome of a predictive exercise done by the firm. An emerging industry is attractive if its ultimate structure ( not its initial structure) is one that is consistent with above average returns and if the firm can create a defendable position in the long run.


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Competitive Strategy in Emerging Industries