8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 1/21

Leticia Williams - Presenter 1

CHAPTER SEVENCHAPTER SEVENCHAPTER SEVENCHAPTER SEVENSUMMARYSUMMARY

REVIEWREVIEW

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 2/21

2

This chapter comprises of various

Headings & Sub-heading such as:Fragmented IndustriesChaining

Franchising

Horizontal MergerEmbryonic & Grow Industries

Complementary Assets

Heights of Barrier ImitationCapacity ControlDeclining Industries

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 3/21

3

*A Fragmented Industries is one

composed of a large number ofsmall & medium sized companies.eg. Video Rental, Auto Repair,

Agriculture, Computercomponents/Hardware retail and

the Construction Industries.New entry in the industry can keep

the industry fragmented and highcost in transportation.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 4/21

4

In this industry customers·needs are so specialized that

only small job lots arerequired. You would use yourcustomer group, customer

needs and geographic region.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 5/21

5

*Chaining Industries are establishednetworks of linked merchandising

outlets that are so interconnectedthey function as one large entity.

eg. Department Stores,

Supermarkets etc. they would openbranches in different areas forminga chain of stores operating under one

headquarters.Chaining strategy is pursue to obtainthe advantage of cost leader in the

market.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 6/21

6

*Franchising Industries is whenthe parent company grants the

franchise the right to use theparent name, reputation andbusiness skills.

eg. Fast food Industries (KFC,

Juici Patties etc)

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 7/21

7

*Horizontal Merger this occurswhen two companies in the same

market join together. The merger

can either have a very large effector little or no effect on the

market.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 8/21

8

eg. If a small drug store merge with

another local small drugstore thiswould have minimal effect (S&S &

Simpsons Pharmacy). But if a large

company with say for instant a60%

 of the market should merge withanother large company with another30%, that would give them a 90% 

market share, which would be unfairmarket over there competitors

(Digicel merging with Claro).

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 9/21

9

*Embryonic Industry this simplymeans that they are the first in a

new market. High profit in thisindustry can attract potential

imitators and second movers. The

imitator or second movers wouldusually enter this market in thegrowth stage and may cause thefirst mover company to losses

some of its commanding position.Three strategies are available to

the company:

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 10/21

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 11/21

11

Complementary Assets are thoseassets required to exploit (make full

use of & derive benefit from) a newinnovation & gain a competitive

advantage successfully. Patent are

easy to imitate and study shows that60% of patented innovations within 4  yrs.

For you to imitate effectively youwould need R&D Skills (research and

development), Access to

Complementary Assets.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 12/21

12

*Mature Industry is often

dominated by a small number oflarge companies. It can also be many

medium size and a host of smallspecialized ones, the large

companies determine the nature ofthe industry·s competition.

Competitive advantage in a Mature

Industry - employees to permitthem to adjust their work to meet

changing circumstances.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 13/21

13

Strategies to deter entry inthis industry: ProductProliferation, Price Cutting,Maintaining Excess Capacity.

Product Proliferation ² thestrategy of pursuing a broadproduct line to deter entry.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 14/21

14

Price Cutting ² in some cases pricingstrategies involve price cutting this willdeter other companies from entering

the market due to fair of losing.Maintaining Excess Capacity- isproducing more of a product thancustomer can currently demand.

In general the profitability of a MatureIndustry can be strained by:

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 15/21

15

1. Sluggish demand growth,2. Lack of product differentiation

&3. Customers bargaining power.

How to manage Rivalry in MatureIndustries:Pricing Signalling ² is a message

sent to consumers and producersin the form of a price charged for

a commodity.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 16/21

16

Price Leadership- taking on by onecompany of the responsibility for

setting industry prices.eg. Grace Kennedy & Digicel.

Non-price Competition- is amarketing strategy in which onefirm tries to distinguish its

product or service from competing

products on the basis ofattributes like design and

workmanship.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 17/21

17

This normally involves promotionalexpenditure, (such as advertising,

selling staff, the location

convenience, sales promotion,coupons, special orders or freegifts) marketing research, new

product development, and brandmanagement costs.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 18/21

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 19/21

19

Product Development- is thecreating of new or improvedproducts to replace existing

ones.eg. McDonald is always in the

fast food industry butfrequently markets new

burgers.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 20/21

20

*Declining Industries ² industries

start declining for several reasonsincluding technological changes, socialtrends and demographic shifts.

eg. Railroad and Sugar Industries.

The railroad decline because of nonservicing of trains and railroad, andtechnology and social trends. Person

want to be in there own cars andSUV·s, and taxi·s becomes morefrequent and available.

8/6/2019 Chapter Seven Review[1]

http://slidepdf.com/reader/full/chapter-seven-review1 21/21

THE END2

1

Sugar factories building andequipment are outdated and

dilapidated.

And because of the crop metalindustry equipment and rail roads

theft are rampant and this lead to a

further decline in these industries.