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1、Life Cycle ApproachAPPLIED STRATEGIC MANAGEMENT SEMINARPresenter:Adrian Kuah Lecturer in Strategic Management What is a Market?What is Market Concentration and Market Leader? Product Life Cycle in a marketWho are your competitors?Define your industryWhat is industry concentration?The Spectrum of Ind
2、ustry StructuresStructuralFeaturesNo. ofproducersEntry & ExitbarriersProductdifferentiationInformationManyNoneNonePerfectAvailabilityPerf. Comp.FewSignificantExtensiveRestrictedOligopolyTwoHigh Moderate RestrictedDuopolyOneHighLowRestrictedIndustry TypeMonopolyIndustry ConcentrationPerfect competiti
3、on many firmsMonopoly one firmno market powerhigh market powerOligopoly few large competitorsWestern Economies high industry concentration levelsUK has high concentration level - most markets dominated by large firmsFinancial Services, Supermarkets, FMCGsWhere a mix of large and small firms market (
4、lower concentration) is more competitiveHouse buildersIndustry/Product Life CycleIndustry and market concentration/s, in part, are determined or affected by the industry/ product life cycleSales, cashflow and profits over the industry life-cycleSalesProfitCashflow0Source: Arthur D Little, IncDevelop
5、mentGrowthMaturityDeclineFragmented - many suppliers No Brand LoyaltyPoor Quality - High Risk Changing Production TechniquesHigh Prices - high profits as volume growthCash required for growth. UndercapacityMergers and Failures. Recession ResistantHigh AdvertisingSome overcapacity Lower (relative) pr
6、icesand profitability FEW LARGE competitorsProduct standardisation Service importantAdvertising less importantPoor climate for acquisitionsSusceptible to recessionSignificant overcapacity price wars and lower profitabilityMove to commodity like products, little or nodifferentiation Very susceptible
7、to a recession Me - tooModerately Competitive ProductFocus on Qualityand ReliabilityEstablish BrandLoyaltyAcquisitionAttack a segmentBecome lowest cost producerAcquisition but only at the right priceSeek significant competitive advantage D O N Tunless you can fundamentally change the industryVery Ea
8、syFairly EasyDifficultVeryDifficultDevelopmentGrowthMaturityDeclineStage in the PLCKey CompetitiveCharacteristicsMeans of EntryEase of EntryProduct Life Cycle & Corporate StrategyA STRATEGIC GROUP IS “the group of firms in an industry following the same or similar strategy along the strategic dimens
9、ions”Strategic Groups Companies with similar characteristics and products. SG analysis can identify: the most direct competitorsstrategic opportunities/spacesDimensions of strategic groupsproduct /geographical rangenumber of segments servedextent of vertical integrationMapping can reveal Strategic S
10、paceMapping can reveal Strategic SpaceQualityGeographic coverageHighlowlocalinternationalBCASpace?PRODUCT RANGEbroadnarrowGEOGRAPHICAL SPACENationalGlobalSTRATEGIC GROUPS IN THE WORLD AUTOMOBILE INDUSTRYNational small specialistsMorgan (UK)National ProducersKia, ProtonRegional broad line producersFi
11、at, RenaultGlobal broad line ProducersFord, Toyota, VWPerformance car manufacturersPorche, LotusLuxury car ManufacturersJaguar, Rolls RoyceGlobal suppliers narrow model rangeVolvo, Saab1Strategic alternatives Strategic alternatives for declining for declining businessesbusinessesDivestmentHarvestLea
12、dershipNicheStrategies for declining Strategies for declining businessesbusinessesLeader-Leader-Ship or Ship or nichenicheHarvestHarvestor divestor divestquicklyquicklyNiche Niche or or harvestharvestDivestDivestquicklyquicklyHas competitiveHas competitivestrengths forstrengths forremaining pocketsr
13、emaining pocketsLacks competitiveLacks competitivestrengths forstrengths forremaining pocketsremaining pocketsFavourableFavourableindustryindustrystructure forstructure fordeclinedeclineUnfavourableUnfavourableindustryindustrystructure forstructure fordeclinedeclineSource: PorterLeadership StrategyL
14、eadership StrategyA company with some market-share leadership will try to become one of the few companies remaining in a declining industry.Once a company attains this position, depending on the subsequent pattern of industry sales, it usually switches to holding position or controlled harvest strat
15、egy.Achieving a Achieving a leadership positionleadership positionEnsure that other companies rapidly retire from the industryReduce competitors exit barriersDevelop and disclose credible market information. Raise the stakes.Niche StrategyNiche StrategyTo identify a segment of the declining industry
16、 that will either maintain stable demand or decay slowly and that has structural characteristics allowing high returns.Niche StrategyNiche StrategyA company then moves pre-emptively to gain a strong position in this segment while disinvesting from other segments.Harvest StrategyHarvest StrategyIn th
17、e harvest strategy, management seeks to get the most cash flow it can from the business. with a controlled disinvestment intent Common harvest Common harvest tactics include:tactics include:reducing the product differentiation,cutting the number of distribution channels,eliminating small customers,
18、anderoding service in terms of delivery time (thus reducing inventory) speed of repair, or sales assistance.Quick divestmentQuick divestmentExecutives employing this strategy assume that the company can recover more of its investment from the business by selling it in the early stages of the decline.
