Lecture 5 - Crisis and Turbulence Flashcards
What are the four basic stages of the industry life cycle?
- Introduction
- Growth
- Maturity
- Decline
What are broad structural features of the Introduction stage?
1.Demand - Early adopters
2.Tech - Competing tech, rapid product innovation
3.Products - Wide variety of features and designs
4.Manufacturing - Short-runs, skill intensive
5.Trade - production shifts for advanced to emerging countries
6.Competition - Few companies
7.KSFs - Production innovation
What are broad structural features of the growth stage?
1.Demand - Rapid increase in market penetration
2.Tech - standardisation, rapid process innovation
3.Products - Design & quality improvement, dominant design emerges
4.Manufacturing - Capacity shortage, mass-production
5.Competition - Entry, mergers exit
6. KSFs - Design for manufacture, process innovation
What are the broad features of the maturity stage?
1.Demand - Replacement/ repeat buying, price sensitive customers
2.Tech - Diffused know how, incremental innovation
3. Products - Commoditisation, brand differentiation
4. Manufacturing - over-capacity emerges, deskilling
5. Competition - Shakeout & consolidation
6.KSFs - Cost efficiency
What are broad structural features of the decline stage?
1.Demand - obsolescence
2. Tech - Little innovation
3.Products - Differentiation difficult
4.Manufacturing - Overcapacity
5.Competition - Price wars & Exit
6.KSFs - Low overheads, rationalization
What are some features of mature industries?
- Stable industries
- Low tech change
- Market saturation
- Slowing innovation
Potential for strategic innovation: - Business model innovation
- organisational ambidexterity
- Dynamic capabilities
What are features of the competitive environment of declining industries?
- Excess capacity
- Lack of tech changes
- Consolidation
- Older machines and employees
- Predictability of decline
- Barriers to exit
- Strategies of surviving firms
What are key success factors in mature industries?
- Opportunities for sustainable competitive advantage are limited
- Sources of cost advantage
- Segment and customer selection
- Sources of differentiation advantage
- Sources of innovation
What are strategy options for declining industries?
- Leadership: establish dominant market position by acquiring capacity and takeovers of rivals
- Niche: Identify attractive segment and dominate it
- Harvest: Maximise cash flow from existing market position
- Divest: get out while you can find buyers for the business
What is strategic agility?
The ability of orgs to detect, respond to strategic opportunities and threats fast and easily
What is strategic resilience?
- Rebound from significant setbacks
- Key in turbulent environments with unanticipated shocks
What is crisis?
An unexpected period of change or system shock that is extremely unlikely that it is uncertain the environment will return to its former state
What is the Icarus paradox?
A companies greatest asset can ultimately lead to its demise
How can businesses learn from the paradox?
- Success leading to failure?
- Overconfidence, carelessness, excess in strategy and structure - Causes of success become the causes of failure?
- Focus at first is efficient, may become obsession when taken too far - Strong performance promotes a defensive mindset?
- Protect current position at expense of opportunities
What are some strategic options for crisis management?
- Strategic actions
- Technical and structural actions
- Evaluation and diagnostic actions
- Communication actions
- Psychological and cultural actions
What are key factors that influence change in the business environment?
- Tech
- Competition
- Systemic risk
- Social forces and capitalism’s crisis
What is change?
- Not new
- Not singular or linear
- Business if affected by changes in: tech, politics, society, climate, economics, etc…
How can technology cause change?
- 4th industrial revolution (AI)
- Digital revolution
- Technology has become prominent in everyday life
How can competition cause change?
- As world markets coverage and tech develops competitive pressures increase
- Digital tech
- Disruptive technology
- Tech-enabled business models
- Erosion of competitive advantage
How can systemic risks cause change?
- Risk not new
- Black swan events rare but can be impactful
- Butterfly effect amplifies unpredictable risk
How can capitalism’s crisis cause change?
- Anti-business sentiment
- Corporate scandals
- Big data
- The purpose of business
What are features of the future of strategy?
- Complex
- Digital
- About choice
- Dilemmas and paradoxes
What are some tensions in strategy?
- Puzzle - finding optimal solution point
- Dilemma - Find the two ‘either-or’ solution points
- Trade-off - Strike balance, make a compromise
- Paradox - Find creative solution, multiple innovative options
Mintzberg problem solving: What are jigsaw puzzles?
- Put the proper pieces in proper place
- according to the proper rules
- to make the proper picture on the box
Mintzberg problem solving: What are puzzling puzzles?
- Are difficult and confusing
- Create new rules
- Require a ‘playful’ approach
What is the role of the strategist
- Role is broad, varied and complex
- Must determine what are the most appropriate and how they can be used and interpreted
- Must be dynamic, flexible and informed
