Competitive Dynamics
Organizations must learn to compete differently if they are to achieve strategic competitiveness in this new era of competition. Already emerging third world nations are squeezing organizations who are based in mature economies. The focus of Chapter five is on competitive dynamics, or the series of competitive actions and competitive responses among firms competing within a particular industry.
The strategic management process, is a process and is dynamic, not static. The feed back loops provide leaders with important information that they will use to reevaluate the company's mission, goals, and SWOT analysis.
Strategic Actions- Are designed to help implement the organization's business-level strategy and represent significant commitments of specific and distinctive resources and are difficult to implement and to reverse.
- The introduction of a new product to market
- Compaq Computer's acquisition of DEC
- Decisions to allocate significant financial resources to build product's brand name.
Tactical Actions - Fine-tune a strategy. They involve fewer and more general organizational resources and are relatively easy to implement and reverse. Tactical actions are easier for competitors to quickly respond.
- Price increases/decreases
New, emerging entrepreneurial industries are characterized by:
- Speed is important, but access to capital is critical.
- Battles to establish a niche or a form of market dominance
- Strong competitive rivalry for customer loyalty
- Attempts to establish product quality, technology an/or advantageous relationships with suppliers to establish a sustainable competitive advantage
- Firms strive to build their reputations
- A variety of competitive strategies, making direct competition less common and enabling niche-dominance.
Growth-Oriented Industries are characterized by:
Made up of firms that have survived the emerging entrepreneurial phase.
- Many of the firms may be well-established in the industry
- A decrease in the variety of competitive strategies being implemented
- Groups of firms implementing similar strategies and directing competing with each other
- Rivalry among groups of firms that have implemented dissimilar strategies.
In a fragmented growth industry there is no dominant firm. Competition is based on offering standardized facilities and products at low cost, with value added through services provided. Franchising may be used for corporate growth.
In a non-fragmented growth industry, innovation and rapid time-to-market are key competitive weapons. Customers are more sophisticated and expect quality products that are designed to meet their needs.
Mature Industries are Characterized by:
Growth is slow or even flat. Surviving firms are few in number and larger. Competition is characterized by actions that are related to market power.
- Producing fewer products, focusing on most profitable
- Focusing on production and process innovation over product innovation (Costs)
- Increase likelihood of international expansion or increased emphasis on international sales to extend product life
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