Industry lifecycle and profit pools

Question 1

what are the stages of industry growth

Answer 1

intro
growth phase
maturity
decline

Question 2

introduction

Answer 2

slow sales

customer and distribution have to be found

sources of competitive advantage;

customer intimacy (cust dev)
superior tech/product

Question 3

growth stage

Answer 3

rapid increase in sales

focus on distribution

temporary high margins

lack of competition attracts competition (supernormal profits)

sources of competitive advantage;

• operational excellence
• product leadership
• alliances and distribution

Question 4

maturity stage

Answer 4

growth slows

no new customers, so firms have to steal them from each other

focus on branding

severe competition, market fragmentation and declining profits

weaker competitors exit

firms within industry follow similar strategies for similar customer groups

Question 5

decline stage

Answer 5

decline is sales

driven by better technology or changes in consumer tastes

drop out or milk a loyal segment

Question 6

profit pools

Answer 6

industries are made up of a number of value-chain activities which change over time.

therefore it is unsuccessful to focus only on product innovation

to be successful;

• begin with rapid and prolific innovation
• create and own the dominant design and build standards/community around it.
• then focus on the lowest cost products and services

=> adaptive/parallelism strategy
=> active waiting
=> strategy as ecology
=> skate to where the money will be