Strategy Industry Contingencies

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• Strategy Industry Contingencies

Sanjib Chowdhury, Ph.D.
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Industry Strategy Contingency

• Emerging Industries
• Characteristics of an Emerging Industry
• Strategies for an Emerging Industry
• Fast growth Industries
• Characteristics of a fast growth industry
• Strategies for a fast growth industry
• Maturing Industries
• Characteristics of a maturing industry
• Strategies for a maturing industry
• Declining Industries
• Characteristics of a declining industry
• Strategies for a declining industry
• Fragmented Industries
• Characteristics of a fragmented industries
• Strategies for a fragmented industry

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Emerging Industry

• Most companies are in start up mode
• Proprietary technology
• Many competing technology
• New and unproven market
• Low barrier to entry
• May provide experience curve cost savings
• Most consumers are first-time buyer
• Investment problem

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Strategies for an Emerging Industry

• Early mover advantage
• Bold strategy (high risk)
• Improve product quality and performance to
  achieve market dominance
• Try to create the dominant technology
• Find the right market segment
• Setup strategic relationships with key suppliers
  and distributors

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Fast Growth Industry

• Short product life cycle
• Fast technological change
• Evolving customer preferences expectations
• Rapidly changing competitive moves

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Strategies for A Fast Growth Industry

• Develop knowledge expertise
• High investment in RD
• Collaboration to develop expertise
• Develop flexibility and speed
• Quick response to customer preference changes
  in the industry
• Fast product development
• Fast new product introduction to market

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Mature Industry

• Declining industry profitability
• Declining industry Sales growth
• Competition intensifies
• Sophisticated buyers
• Very few new customers
• Most are repeat customers
• Increased mergers acquisitions
• Increased international competition

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Strategy for A Mature Industry

• Preserve profit by increasing efficiency
• Reduce product variety
• Simplify product design
• Process innovation (increase production
  efficiency)
• Purchase competitors at a low price
• Compete internationally

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Declining Industries

• Industry growth is slower than the general
  economy
• Sometimes no growth or even decline in demand
• Intense competition
• Hard to maintain market share
• In order to grow or maintain the current level of
  sales, the firm must acquire rivals market share

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Strategy for Declining Industry

• Stay in the same industry and focus on the still
  growing market segments
• Stay in the same industry and aggressively cut
  cost
• Reduce cost by increasing efficiency
• Eliminate under utilized operations
• Reduce assets
• Find ways to exit
• Reduce exit barrier by outsourcing activities

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Fragmented Industries

• Individual buyer buys small volume
• Buyers need are diverse
• Absence of economies of scale
• Low entry barrier
• Big and diverse market
• No one has a large market share
• Examples
• Restaurant, motel, auto repair, Furniture

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Strategies for A Fragmented Industry

• Focus on customizing products
• Focus on specific customers
• Focus on specific geographic location
• Focus on reducing cost