Tailoring Strategy to Fit

Specific Situations
Emerging Industries
Conditions
New and unproven market
Much speculation
Technology is proprietary or multi-faceted
No consensus on which technology will
prevail
Low barriers to entry
Strong experience curve effects
Emerging Industries
Conditions (cont.)
All buyers are first-time users
Most buyers wait for market to mature
Suppliers are not developed
Lack of capitalization
Heavy expense in R & D
Have to wait for product to catch on
Threat from larger firms
Emerging Industries
Strategic issues
How to finance operations
Which market segments to pursue
No rules of the game
Emerging Industries
Strategic avenues
Win the race for industry leadership
Perfect technology
Improve product quality
Develop additional performance features
Adopt emerging dominant technology
quickly
Form strategic alliances with key suppliers
Emerging Industries
Strategic avenues (cont.)
Acquire or ally with companies that
have related or complementary
technological expertise
Capture first-mover advantages
Exploit new customer markets and uses
Make initial products inexpensive and
easy to acquire
Use price cuts to build market share
Turbulent Markets
Conditions
Rapid technological change
Entry of new rivals
Frequent launches of competitive
moves
Quickly evolving customer needs and
expectations
Turbulent Markets
Strategic postures
Reactive
Anticipatory
Lead the change
Turbulent Markets
Strategic avenues
Invest in R & D
Develop organizational capability to
respond quickly
Rely on strategic alliances with suppliers
Initiate new actions frequently
Ensure the companys products and
services stand out in the crowd
Maturing Industries
Conditions
Slowing growth in demand
Buyers are more sophisticated
Greater emphasis on cost and service
Overcapacity in industry
Less innovation
International competition
Profitability falls
Mergers and acquisitions
Maturing Industries
Strategic avenues
Prune products and lines
Value chain innovation
Focus on reducing costs
Increase sales to current customers
Acquire rival firms
Pursue international markets
Strengthen resource base
Stagnant or Declining Industries
Strategic avenues
Focus on most attractive market
segments
Stress product quality and innovation
Emphasis on overall cost reduction
Pitfalls
War of attrition
Taking out too much cash too quickly
Overly optimistic
Fragmented Industries
Conditions
Extensive and diverse market demand
Low barriers to entry
No economies of scale
Small quantities of customized products
Market is becoming global
Explosive technological evolution requires
specialization
Industry is young and crowded
Fragmented Industries
Strategic avenues
Formula facilities
Low-cost operator
Specialize by product type
Specialize by customer type
Focus on geographic area
Sustaining Rapid Growth
Initiatives cover 3 horizons
1: Short-jump- fortify and extend current
business
2: Medium-jump- pursue growth in new
businesses
3: Long-jump- sow seeds for growth into
businesses of the future
Should focus on all 3
Tendency to focus on short-jump
Industry Leaders
Strategic avenues
Stay-on-the-offensive
Fortify-and-defend
Muscle-flexing
Runner-up Firms
Not necessarily less profitable or
unable to hold their own
Basic strategies
Lower prices to win customers
Acquire or merge with other firms
Invest in cost-saving facilities and
equipment
Runner-up Firms
Strategic avenues
Build market share
Growth-via-acquisition
Vacant-niche
Specialist
Superior product
Distinctive image
Content follower
Weak or Crisis-ridden Businesses
Turnaround strategies
Sell off assets to raise cash
Revise existing strategy
Boost revenues
Reduce costs
Combination of the above
Liquidation
End game
Crafting Successful Strategies:
10 Commandments
Emphasis on the long term
Quick to adapt and innovate
Create a sustainable competitive
advantage
Avoid optimists strategies
Dont underestimate rivals reactions or
commitment
Crafting Successful Strategies:
10 Commandments
Attack competitive weaknesses, not
strengths
Exercise caution in cutting prices
Differentiate only with real advantages in
quality and performance
Dont get stuck between low-cost and
differentiation
Aggressive moves spark costly retaliation