MNGT
Chapter 3 Continued
Learning Objectives:
10. Discuss the industry life cycle, including the different stages of industry evolution, and review the competitive implications of each stage, paying particular attention to how rivalry and barriers to entry change as an industry evolves.
20. Discuss the different forces in the wider macroenvironment that give rise to strategic opportunities and threats.
This week’s material continues our exploration of conducting an external analysis. Please refer to last to last week’s material for a review on Porter’s 5 forces as well as subgroup analysis. Here, we will explore the nature of these forces as an industry moves from an embryonic (brand new) environment to one that is more mature and even in decline.
I0. Industry Life Cycle Analysis
A0. Over time, industries pass through a series of well-defined stages with different implications for the nature of competition. Porter’s five competitive forces and competitive dynamics change as an industry evolves. Managers must learn to anticipate the changes that will occur as the industry develops over time.
See Figure 3.3: Stages in the Industry Life Cycle
B0. An embryonic industry is one that is just beginning to develop. Growth is slow because of buyer unfamiliarity with the industry’s products, poor distribution channels, and high prices stemming from the inability of companies to reap economies of scale.
10. Barriers to entry at this stage tend to be based on access to key technological know-how rather than cost economies or brand loyalty. Rivalry in embryonic industries is based on educating customers, opening up distribution channels, and perfecting the design of the product.
20. Embryonic industries provide a good opportunity for firms to capture loyal customers, capitalizing on the lack of rivalry.
C0. A growth industry is one where first-time demand is expanding rapidly as new consumers enter the marketplace. Typically, demand takes off when consumers
Learning Objectives:
10. Discuss the industry life cycle, including the different stages of industry evolution, and review the competitive implications of each stage, paying particular attention to how rivalry and barriers to entry change as an industry evolves.
20. Discuss the different forces in the wider macroenvironment that give rise to strategic opportunities and threats.
This week’s material continues our exploration of conducting an external analysis. Please refer to last to last week’s material for a review on Porter’s 5 forces as well as subgroup analysis. Here, we will explore the nature of these forces as an industry moves from an embryonic (brand new) environment to one that is more mature and even in decline.
I0. Industry Life Cycle Analysis
A0. Over time, industries pass through a series of well-defined stages with different implications for the nature of competition. Porter’s five competitive forces and competitive dynamics change as an industry evolves. Managers must learn to anticipate the changes that will occur as the industry develops over time.
See Figure 3.3: Stages in the Industry Life Cycle
B0. An embryonic industry is one that is just beginning to develop. Growth is slow because of buyer unfamiliarity with the industry’s products, poor distribution channels, and high prices stemming from the inability of companies to reap economies of scale.
10. Barriers to entry at this stage tend to be based on access to key technological know-how rather than cost economies or brand loyalty. Rivalry in embryonic industries is based on educating customers, opening up distribution channels, and perfecting the design of the product.
20. Embryonic industries provide a good opportunity for firms to capture loyal customers, capitalizing on the lack of rivalry.
C0. A growth industry is one where first-time demand is expanding rapidly as new consumers enter the marketplace. Typically, demand takes off when consumers