Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • 37
  • 38
  • 39
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 3rd-chap10.ppt

    1. 1. Competitive Advantage and Industry Evolution <ul><ul><ul><li>The industry life cycle </li></ul></ul></ul><ul><ul><ul><li>Industry structure, competition, and success factors over the life cycle. </li></ul></ul></ul><ul><ul><ul><li>Anticipating and shaping the future. </li></ul></ul></ul>OUTLINE
    2. 2. The Industry Life Cycle <ul><li>Drivers of industry evolution : </li></ul><ul><ul><ul><li>demand growth </li></ul></ul></ul><ul><ul><ul><li>creation and diffusion of knowledge </li></ul></ul></ul>Introduction Growth Maturity Decline Industry Sales Time
    3. 3. Product and Process Innovation Over Time Time Rate of innovation Product Innovation Process Innovation
    4. 4. Standardization of Product Features in Autos FEATURE INTRODUCTION GENERAL ADOPTION Speedometer 1901 by Oldsmobile Circa 1915 Automatic transmission 1st installed 1904 Introduced by Packard as an option, 1938. Standard on Cadillacs and other luxury cars, early 1950s Electric headlamps GM introduces in 1908 Standard equipment by 1916 All-steel body Adopted by GM, 1912 Becomes standard early 1920s All-steel enclosed body Dodge, 1923 Becomes standard late 1920s Radio Optional extra 1923 Standard equipment, 1946 Four-wheel drive Appeared 1924 Only limited availability by 1994 Hydraulic brakes Introduced 1924 Became standard 1939 Shatterproof glass 1st used in cars 1927 Standard features in Fords 1938 Power steering Introduced 1952 Adopted as standard equipment 1969 Antilock brakes Introduced 1972 Standard on GM cars in 1991 Air bags Introduced by GM 1974 By 1994 most new cars equipped with air bags
    5. 5. How Typical is the Life Cycle Pattern? <ul><li>Technology-intensive industries (e.g. pharmaceuticals, semiconductors, computers) may retain features of emerging industries. </li></ul><ul><li>Other industries (especially those providing basic necessities, e.g. food processing, construction, apparel) reach maturity, but not decline. </li></ul><ul><li>Industries may experience life cycle regeneration. </li></ul><ul><li>Sales Sales </li></ul><ul><li>1900 ‘50 ‘60 ‘90 1930 50 60 90 </li></ul><ul><li>MOTORCYCLES TV’s </li></ul><ul><li>Life cycle model can help us to anticipate industry evolution---- but dangerous to assume any common, pre-determined pattern of industy development. </li></ul>Color B&W Portable HDTV ?
    6. 6. Evolution of Industry Structure over the Life Cycle <ul><li>INTRODUCTION GROWTH MATURITY DECLINE </li></ul><ul><li>DEMAND Affluent buyers Increasing Mass market Knowledgeable, </li></ul><ul><li>penetration replacement customers, resi- </li></ul><ul><li>demand dual segments </li></ul><ul><li>TECHNOLOGY Rapid product Product and Incremental Well-diffused </li></ul><ul><li>innovation process innovation innovation technology </li></ul><ul><li>PRODUCTS Wide variety, Standardization Commoditiz- Continued comm- </li></ul><ul><li>rapid design change ation oditization </li></ul><ul><li>MANUFACT- Short-runs, skill Capacity shortage, Deskilling Overcapacity </li></ul><ul><li>URING intensive mass-production </li></ul><ul><li>TRADE -----Production shifts from advanced to developing countries----- </li></ul><ul><li>COMPETITION Technology- Entry & exit Shakeout & Price wars, </li></ul><ul><li> consolidation exit </li></ul><ul><li>KSFs Product innovation Process techno- Cost efficiency Overhead red- logy. Design for uction, ration- alization, low </li></ul><ul><li> cost sourcing </li></ul>
    7. 7. The Driving Forces of Industry Evolution Customers become more knowledgeable & experienced Demand growth slows Diffusion of technology Customers become more price conscious Products become more standardized Production becomes less R&D & skill-intensive Production shifts to low-wage countries Distribution channels consolidate Excess capacity increases Quest for new sources of differentiation Price competition intensifies Bargaining power of distributors increase BASIC CONDITIONS INDUSTRY STRUCTURE COMPETITION
    8. 8. Competing for the Future : The Role of Scenario Analysis in Preparing for a Industry Change <ul><li>Stages in undertaking multiple Scenario Analysis: </li></ul><ul><ul><ul><li>Identify major forces driving industry change </li></ul></ul></ul><ul><ul><ul><li>Predict possible impacts of each force on the industry environment </li></ul></ul></ul><ul><ul><ul><li>Identify interactions between different external forces </li></ul></ul></ul><ul><ul><ul><li>Among range of outcomes, identify 2-4 most likely/ most interesting scenarios : configurations of changeforces and outcomes </li></ul></ul></ul><ul><ul><ul><li>Consider implications of each scenario for the company </li></ul></ul></ul><ul><ul><ul><li>Identify key signposts pointing toward the emergence of each scenario </li></ul></ul></ul><ul><ul><ul><li>Prepare contingency plan </li></ul></ul></ul>
    9. 9. BCG’s Strategic Environments Matrix Small Big SIZE OF ADVANTAGE Many Few SOURCES OF ADVANTAGE FRAGMENTED SPECIALIZATION apparel, housebuilding pharmaceuticals, luxury cars jewelry retailing, sawmills chocolate confectionery STALEMATE VOLUME basic chemicals, volume jet engines, food supermarkets grade paper, ship owning motorcycles, standard (VLCCs), wholesale banking microprocessors
    10. 10. BCG Analysis of the Strategic Characteristics of Specialization Businesses high low ENVIRONMENTAL VARIABILITY ABILITY TO SYSTEMATIZE low high CREATIVE EXPERIMENTAL fashion, toiletries, magazines general publishing food products PERCEPTIVE ANALYTICAL high tech luxury cars, confectionery paper towels