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1、2020/10/29,Jia Liangding,1,1.1 Structural Determinants of Competition in Decline,CONDITIONS OF DEMAND uncertainty (in firms perceptions of future demand) rate and pattern of decline (slowly; precipitously) structure of remaining demand pockets(bargaining power) cause of decline: technological substi
2、tution; demographics; shifts in needs.,2020/10/29,Jia Liangding,2,EXIT BARRIERS durable and specialized assets; fixed costs of exit; strategic exit barriers; information barriers; managerial or emotional barriers; government and social barriers; mechanism for asset disposition;,2020/10/29,Jia Liangd
3、ing,3,VOLATILITY OF RIVALRY The volatility of rivalry can be accentuated by suppliers and distribution channels. The situation maybe worse, if there are one or two firms are relatively weak in terms of their strategic position in the industry, but they possess significant overall corporate resources
4、 and a strong strategic commitment to stay in the business.,2020/10/29,Jia Liangding,4,1.2 Strategic Alternatives in Declining Industries,LEADERSHIP The strategy is directed at taking advantage of a declining industry whose structure is such that the remaining firm or firms have the potential to rea
5、p above-average profitability and leadership is feasible vis-vis competitors. Once this position is attained the firm switches to a holding position or controlled harvest strategy, depending on the subsequent pattern of industry sales.,2020/10/29,Jia Liangding,5,Tactical steps for Leadership: invest
6、ing in aggressive competitive actions in pricing, marketing, or other areas designed to build market share and insure rapid retirement of capacity from the industry by other firms; purchasing market share by acquiring competitors or competitors product lines at prices above their opportunities for s
7、ale elsewhere; this has the effect of reducing competitors exit barriers; purchasing and retiring competitors capacity, which again lowers exit barriers and insures that their capacity is not sold within the industry;,2020/10/29,Jia Liangding,6,other ways, such as by willingly manufacturing spare pa
8、rts for their products, taking over long-term contracts, producing private label goods; demonstrating a strong commitment to staying in the business through public statements and behavior; demonstrating clearly superior strengths through competitive moves; developing and disclosing credible informat
9、ion that reduces uncertainty about future decline; raise the stake for other competitors to stay in the business by precipitating the need for reinvestment in new products or process improvements.,2020/10/29,Jia Liangding,7,NICHE,The objective is to identify a segment of the declining industry that
10、will not only maintain stable demand or decay slowly but also has structural characteristics allowing high returns. Ultimately the firm may either switch to a harvest or divest strategy.,2020/10/29,Jia Liangding,8,HARVEST,The objective is to seek to optimize cash flow from the business. It does this
11、 by: eliminating or severely curtailing new investment; cutting maintenance of facilities; taking advantage of whatever residual strengths the business has in order to raise prices or reap benefits of past goodwill in continued sales;,2020/10/29,Jia Liangding,9,curtailing advertising and research co
12、sts; reducing the number of models; shrinking the number of channels employed; eliminating small customers; eroding service in terms of delivery time, speed of repair, or sales assistance. Ultimately the business is sold or liquidated.,2020/10/29,Jia Liangding,10,QUICKE DIVESTMENT,This strategy rest
13、s on the premise that the firm can maximize its net investment recovery from the business by selling it early in decline, rather than by harvesting and selling it later or by following one of the other strategies. In some situations it may be desirable to divest the business before decline, or in th
14、e maturity phase.,2020/10/29,Jia Liangding,11,1.3 How to Choose a Suitable Strategy in Decline,The analytical steps : Is the structure of the industry conducive to a hospitable (potential profitable) decline phase ? What are the exit barriers facing each and every significant competitor? Who will ex
15、it quickly and who will remain?,2020/10/29,Jia Liangding,12,Of the firms that stay, what are their relative strengths for competing in the pockets of demand that will remain in the industry? How seriously must their position be eroded before exit is likely, given their exit barriers? What are the exit barriers facing the firm? What are the firms relative strengths vis-vis the pockets of demand that remain?,2020/10/29,Jia Liangding,13,1.4 Some Pitfalls in Decline and Preparing for Decline,Failure to Recognize Decline. A War of Attrition. Harvesting Without Clear Strengths.,
