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Business Unit Strategy: Concepts & Special Dimensions

Business Unit Strategy: Concepts & Special Dimensions. Michael Seymour Matt Anderson. 3 Contexts (Stages) of Industry Evolution. Emerging Stage High Costs (Often Unpredictable) Technology is Immature Fierce Competition Low Barriers to Entry

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Business Unit Strategy: Concepts & Special Dimensions

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  1. Business Unit Strategy: Concepts & Special Dimensions Michael Seymour Matt Anderson

  2. 3 Contexts (Stages) of Industry Evolution • Emerging Stage • High Costs (Often Unpredictable) • Technology is Immature • Fierce Competition • Low Barriers to Entry • Undeveloped Supplier Relationships/Distribution Channels • Growth Stage • Increased Segmentation • Focus Shift to Expanding Market Shares • Customers become More Knowledgeable • Entry of ‘Follower’ Firms • Maturity & Decline Stage • Firm Must Chose Balance Between: • Low-Cost/Differentiation Strategy • Multiple/Single Industry Segments • Declining Growth → Less Forgiving Environment • Attractive Profits are Still Attainable

  3. Exit Decisions • Tend to be Extremely Difficult: • Exit Barriers • “Ripple Effect”

  4. Strategy in Fragmented Markets Fragmented Industry: No Single Company or Small Group of Firms has Large enough Market Share to Strongly Effect Industry Structure/Outcomes • Success is Dependant on Creative Strategizing Ex: H. Wayne Huizinga & Waste Management Corp.

  5. Strategy in Deregulating Environment Deregulation: Lifting of Artificial Entry Constraints that Allows New Players to Enter a Market • (1975) SEC Abolished Fixed Rates for U.S. Securities Brokers • Has both Positive & Negative Impact on Markets

  6. Strategy in Hypercompetitive Industries Hypercompetitive Market: Characterized by Intense Competitive Rivalry, Short Product Life Cycles, Emergence of New Technologies & Major Shifts in Market Boundaries • Success Often Depends on Element of Surprise • 3 Major Qualities Needed to Succeed

  7. Special Dimensions • Speed • Pressures to speed • Requirements of speed • Methods to speed • Consequences of speed • Creating Value through Innovation

  8. Speed • The key to success in more and more industries • How a company responds to meeting customer’s expectations • Public images are synonymous with speed • Ex: Domino’s, AAA

  9. Pressures to Speed • Customer expectations • Need for competitive advantage • Competitor strategies • Industry shifts

  10. Requirements of Speed • Refocused mission • Compatible culture • Communication upgrades • Process reengineering • New metrics

  11. Methods to Speed • Streamline operations • Upgrade technology • Form partnerships

  12. Creating Value through Innovation • Sustaining innovation • Some are incremental, others are breakthroughs • Disrupting innovation • Disrupts established basis of competition • Focus on growth rather than profit • Create a culture of innovation

  13. Culture of Innovation • Steps • Top-level commitment to innovation • Long-term focus • Flexible organization structure • loose and tight planning and control • Include appropriate incentives by creating an environment for innovation

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