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Evaluating Environmental Opportunities

Evaluating Environmental Opportunities. Learning Objectives: Understand how the concepts of generic industry structures can inform frameworks and theories for analyzing environmental opportunities. . Fragmented Emerging Mature Declining International Network Hypercompetitive Empty-core.

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Evaluating Environmental Opportunities

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  1. Evaluating Environmental Opportunities Learning Objectives: Understand how the concepts of generic industry structures can inform frameworks and theories for analyzing environmental opportunities.

  2. Fragmented Emerging Mature Declining International Network Hypercompetitive Empty-core Identified by M. Porter Added by J. Barney Types of Industry Structure What is the structure of your firm’s industry ?

  3. Opportunities in Fragmented Industries Definition: …many small or medium-sized firms with no dominant technology or market share… Industry examples: retailing, service, restaurant Strategic opportunities: new economies of scale or governance mechanisms through consolidation Practical examples: SCI funeral homes, KOA campgrounds,La Quinta motels What causes industries to be fragmented ?

  4. Opportunities in Emerging Industries Definition: …industry formed by changes in technology, demand, customer needs … Industry examples: microprocessor, PC, medical imaging, biotechnology Strategic opportunities: first-mover advantages from technological leadership, preemption of strategically valuable assets, customer-switching costs Practical examples: Xerox, Wal-Mart, Microsoft When can a firm expect first-mover advantages ?

  5. Opportunities in Mature Industries Definition: …slowing growth rate, experienced customers, limited growth in production capacity and new products, increase in international competition… Industry examples: auto manufacturing, fast food, gaming (US) Strategic opportunities: refining current products, emphasis on service, process innovation Practical examples: Ford, GM, McDonalds, Starbucks Strategies of firms in mature industries that fit these strategic opportunities ?

  6. Process and Product Innovationand Industry Structure

  7. Opportunities in Declining Industries Definition: …absolute decline in unit sales… Industry examples: AM/FM broadcast radio, electronic vacuum tubes, hand-held calculators Strategic opportunities: market leadership, niche strategy, harvest, divestment Practical examples: GTE Sylvania, GE How can market leader foster opportunities in a declining industry ?

  8. Opportunities in International Industries Definition: …sales volume and growth comes from two or more independent countries… Industry examples: many; most businesses assume international competition will be the norm in the 21st century Strategic opportunities: Multinational – independent operations Global – seek to optimize (centralize) business functions Transnational – hybrid of multinational and global What are the pros and cons of these strategic opportunities ? How are your firms addressing international opportunities ?

  9. Opportunities in Network Industries Definition: …industry where value of product or service depends on number of total items sold…”increasing returns industry”… Industry examples: telephone, fax, VCRs Strategic opportunities: first-mover, winner take all Practical examples: VHS vs. Beta, HDDVD vs. Blue Ray Does the “best” technology win ? Other examples of network industries ?

  10. Opportunities in Hypercompetitive Industries Definition: …industry competition is unstable, unpredictable and/or constantly evolving… Industry examples: biotechnology, music download, Internet TV Strategic opportunities: flexibility, proactive disruption Attributes of successful proactive disruption: satisfy current stakeholders, anticipate customer needs, act quickly with surprise, change the bases of competition, invest in multiple efforts or a sequence of activities Examples of firms following proactive disruption ?

  11. Opportunities in Empty-core Industries Definition: …bases of competition may be stable, but industry conditions make it difficult to earn profit…buyers are shopping and sellers are selling, but transactions may not take place… Industry examples: industries with high fixed costs, low variable costs – airlines: “fixed costs with wings” Strategic opportunities: collusion, government regulation, product differentiation, better demand prediction. How have airlines addressed these industry forces ? What can we expect from deregulation of the electric utility industry?

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