ch. 5: business strategies in different industries cristian marsico - larry griffin - beau gould...
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Industry Life Cycle Product Life Cycle - born, grow, maturity, decline, die Industry Life Cycle - supply-side equivalent of the product life cycle Stages: Introduction, growth, maturity, declineTRANSCRIPT
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Ch. 5: Business Strategies in Different Industries
Cristian Marsico - Larry Griffin - Beau Gould
Teresita Pinon
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Opening Case:• 1981 PC Industry value
3.0B with 150 companies.• Apple had about 20% of
the market.• IBM reacted; started PC
projects in Florida• Open strategy for third-
party complimentary products
• Fast complementary products growth led to many imitators
• Reduced barriers to entry for the industry
• Apple developed in-house only without third-party
• Over the following years, PC’s become more complex but gain more popularity
• IBMs MS/DOS operating system became the industry standard
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Industry Life CycleProduct Life Cycle - born, grow, maturity, decline, die
Industry Life Cycle - supply-side equivalent of the product life cycle
•Stages: Introduction, growth, maturity, decline
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Two FactorsDemand Growth - The life cycle stages are determined by sales, rate of market penetration, market saturation, and substitutes
Production & Diffusion of Knowledge - Product innovation and knowledge diffusion are major influences on industry evolution
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Dominant Designs and Technical Standards
Dominant Design - Product architecture that defines the look, functionality, production method, and acceptance in the industryTechnical Standards - Technology or specification that is important for compatibility
•Technical standards emerge where there are network effects (need for users to connect)
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From Product to Process Innovation
•Once in the Growth phase, there is a shift from a radical to a more incremental product innovation.
•From design to manufacturing firms seek to reduce costs and increase product reliability
•For successful market penetration, process improvements, design modifications, and scale economies are applied
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Life cycles •Duration of life cycles are becoming more
compressed. (Especially in E-commerce)•Patterns in evolution differ across
industries•Industries are in different life cycle
stages in different countries
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Introduction Phase“De novo” - new entrants (Apple)
“De alio” - firms looking to diversify (Commodore)
Born global companies (Eyeview)
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Growth Phase
• Demand
• Dominant design
• Financial resources
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Maturity Phase
• Competitive advantage
• Cost efficiency
• ‘Shakeouts’
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Decline Phase• Causes: technology, preferences, demographic
shifts, foreign competition
• Key features: excess capacity, lack of technical change (no new products), high average age or physical and human resources, aggressive price competition
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Key Success Factors• 1. INTRO: Capabilities in product development,
manufacturing, marketing & distribution
• 2. GROWTH: Scaling up
• 3. MATURITY: Cost efficiency - scale economies, low wages and low overhead costs
• 4. DECLINE: Planning for the future
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Strategy for the Public Sector• Ownership is vested in
the government• Funded at least partially
by the government• Act in national or public
interest▫ Public goods
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Differences Between Public/Private
1.Multiple, potentially conflicting goals2.Distinctive constraints/levers3.Absence of market forces4.Monopoly power5.Less autonomy and flexibility6.Increased accountability7.Less predictability
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Strategy for Not-for-profits• Organisations that do not
distribute surplus funds• Pursuing a philanthropic
goal• Do not always act in the
shareholders best interest
Social enterprise - for profit organization with a philanthropic pursuit
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Characteristics of Not-for-profitsNot-for-profits share many of the same characteristics with public orgs, but also face:
1.The need for employment of volunteers
2.FundraisingHowever, they differ in that they do not:
3.Have monopoly power4.Direct political influence
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Realogy and Public/Not-for-profit
Public Sector•Texas Real Estate Commission•Federal Housing Administration
Not-for-profits•Texas Association of Realtors•National Association of Realtors•International Valuation Standards
Council
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Stakeholder Analysis•Helps to identify importance of different
groups of stakeholders•Aids in strategy development for
company
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Creating A Stakeholder Analysis
1. Brainstorm2. Categorize3. Analyze
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Board of Directors(Manage Closely)
Employees(Keep Informed)
Customers(Keep Satisfied)
General Public(Minimal Effort)
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Scenario Planning1.Define purpose/time horizon2.Identify trends3.Identify uncertainties4.Construct scenarios5.Identify scenario indicators6.Assess strategic implications
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Conclusion•Industry Life Cycles•Key Success Factors•Strategies for Differing
Industries/Sectors•Stakeholder Analysis