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Dynamic View of StrategyWrittent by Constantinos C. Markides
Presented by David and Thao
Heart and Soul
• Who should the company target?
• What products/services should be offered?
• How can this be done efficiently?
Uniqueness is Transitory
• Success stems from exploiting an unparalleled strategic position
• Uniqueness will not last– Competitors will imitate attractive positions– New strategic positions will emerge
Emerging Positions
• A new strategic position is simply another viable who-what-how combination
• As industries change, new strategic positions arise to challenge existing positions
• Existing niches expand while others die, new positions appear, markets fragement, and older niches merge to form larger markets
Two types of entry
• It is important to recognize two types of entry
– Imitative entry– Innovative entry
Imitative Entry
Could potentially erode profits in two interrelated ways:
– By increasing total industry supply (and thus driving prices down);
– Through strategy convergence, whereby new entrants imitate the strategies of incumbent firms.
The relative strength of strategy convergence (*)
• Strategic differentiation in the industry declined by 83% in the period 1992-98. This reduced industry profitability by 50%.
• By contrast, the addition of new capacity by new entry caused a 19% decline in industry profitability.
• Imitative entry and “strategy convergence” are not as beneficial as we assume.
• Uniqueness is transitory since new positions continually emerge
(*) Costas Markides. Market Dynamics and Entry. www.competition-commission.org.uk/our_role/cc_lectures/geroski_markides_pres_2.pdf
Innovative EntryHow can a company prepare for the unknown?
Innovative Entry
• Become the innovator
• Exploit Someone else’ innovation
• It’s not just new products or new technologies. It could be new business models.
The role of small Vs. Big firms*
• Small firms and new entrants are good at “creation”
• Large firms (established incumbents) are good at “scaling up”new, radical products.
(*) Costas Markides. Market Dynamics and Entry. www.competition-commission.org.uk/our_role/cc_lectures/geroski_markides_pres_2.pdf
How ready is a big stabilized company
• In most case, it fails when a technological innovation invades their market
• Unable to take advantage of the new technology
• Late adopters - Trapped in its own core competency
• Unable to effectively manage the organization transition
Dynamic Strategy
Who – What – How positions
• Strategic choices answering the basis of the buisiness– Who should the company target?
– What products/services should be offered?
– How can this be done efficiently?
• In search of un-exploited strategic position
• Innovative Technology – How can this be done differently
Elements of a dynamic strategy
•A corporate culture that welcomes changes
•Processes allowing experimenting with new ideas
•Skills allowing exploitation of the new position
•Managing the transition
Being Ready
• Ability to recognize an innovation early -
• Ability to absorb innovative ideas or employ new technologies – Appropriate technical and business
knowledge
Questions
• How does emerging positions effect the strategic landscape of a market?
• What are some ways that a company can become ready to deal with an emerging strategic position?