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2019/8/31JiaLiangding1第十七讲CompetitiveStrategyDuringtheTransitiontoIndustryMaturity1.1IndustryChangesDuringtheTransitiontoMaturity1.2SomeStrategicImplicationsofIndustryTransition1.3StrategicPitfallsDuringtheTransitiontoMaturity1.4OrganizationalImplicationsofIndustryMaturity2019/8/31JiaLiangding21.1IndustryChangesDuringtheTransitiontoMaturity•Aspartoftheirevolutionaryprocess,manyindustriespassfromperiodsofrapidgrowthtothemoremodestgrowthofwhatiscommonlycalledindustrymaturity.Industrymaturitydoesnotoccuratanyfixedpointinanindustrydevelopment,anditcanbedelayedbyinnovationsorotherevents.Moreover,inresponsetostrategicbreakthroughs,matureindustriesmayregaintheirrapidgrowthandtherebygothroughmorethanonetransitiontomaturity.2019/8/31JiaLiangding3Importantchanges：⑴Slowinggrowthmeansmorecompetitionformarketshare.⑵Firmsintheindustryincreasinglyaresellingtoexperienced,repeatedbuyers.⑶Competitionoftenshiftstowardgreateremphasisoncostandservice.⑷Thereisatopping-outprobleminaddingindustrycapacityandpersonnel.⑸Manufacturing,marketing,distributing,selling,andresearchmethodsareoftenundergoingchange.2019/8/31JiaLiangding4⑹Newproductsandapplicationsarehardertocomeby.⑺Internationalcompetitionincreases.⑻Industryprofitsoftenfallduringthetransitionperiod,sometimestemporarilyandsometimespermanently.⑼Dealers’marginsfall,buttheirpowerincreases.2019/8/31JiaLiangding51.2.SomeStrategicImplicationsofIndustryTransition⑴OverallCostLeadershipVersusDifferentiateVersusFocus—theStrategicDilemmaMadeAcutebyMaturity.–Rapidgrowthtendstomaskstrategicerrorsandallowthatstrategicexperimentationbehighandawidevarietyofstrategiesbeabletocoexist.Strategicsloppinessisgenerallyexposedbyindustrymaturity,however,maturitymayforcecompaniestoconfront,oftenforthefirsttime,theneedtochooseamongthethreegenericstrategies.Itbecomesamatterofsurvival.2019/8/31JiaLiangding6⑵SophisticatedCostAnalysis–Costanalysisbecomesincreasinglyimportantinmaturitytorationalizetheproductmixandpricecorrectly.–Summary:anenhancedlevelof“financialconsciousness”alongavarietyofdimensionsisoftennecessaryinmaturity,whereasinthedevelopmentalperiodoftheindustryareassuchasnewproductsandresearchmayhaverightlyheldcenterstage.2019/8/31JiaLiangding7⑶ProcessInnovationandDesignforManufacture–Therelativeimportanceofprocessinnovationsusuallyincreasesinmaturity,asdoesthepayofffordesigningtheproductanditsdeliverysystemtofacilitatelower-costmanufacturingandcontrol.⑷IncreasingScopeofPurchases⑸BuyCheapAssets2019/8/31JiaLiangding8⑹BuyerSelection–purchasingneedsversuscompanycapacities;–growthpotential;–structuralposition:intrinsicbargainingpower;propensitytoexercisethisbargainingpowerindemandinglowprices;–costofservicing.⑺DifferentCostCurves⑻CompetingInternationally⑼ShouldTransitionBeAttemptedAtAll?2019/8/31JiaLiangding91.3StrategicPitfallsDuringtheTransitiontoMaturity⑴Acompany’sself-perceptionsanditsperceptionoftheindustry.–Theself-perceptions,suchas“wearethequalityleader”,“weprovidesuperiorcustomerservice”,maybeincreasinglyinaccurateastransitionproceeds,buyers’prioritiesadjust,competitorsrespondtonewindustryconditions.Similarly,firms’assumptionsabouttheindustry,competitors,buyers,andsuppliersmaybeinvalidatedbytransition.2019/8/31JiaLiangding10⑵Caughtinthemiddle.–Transitionoftensqueezesouttheslackthathasmadethisstrategyviableinthepast.⑶Thecashtrap—investmentstobuildshareinamaturemarket.–Arelatedpitfallisplacingheavyattentiononrevenuesinthematuringmarketinsteadofonprofitability.2019/8/31JiaLiangding11⑷Givingupmarketsharetooeasilyinfavorofshort-runprofits.–Inthefaceoftheprofitpressuresintransition,thereseemstobeatendencyforsomecompaniestotrytomaintaintheprofitabilityoftherecentpast—whichisdoneattheexpenseofmarketshareorbyforegoingmarketing,R&D,andotherneededinvestments,whichinturnhurtsfuturemarketposition.Aperiodoflowerprofitsmaybeinevitablewhileindustryrationalizationoccurs,andacoolheadisnecessarytoavoidoverreaction.2019/8/31JiaLiangding12⑸Resentmentandirrationalreactiontopricecompetition(“wearenotcompeteonprice”).–Itisoftendifficultforfirmstoaccepttheneedforpricecompetitionafteraperiodinwhichithasnotbeennecessary,thenavoidingitmayhavebeenasacredrule.Somemanagersevenviewitasunseemlyorbeneaththeirdignity.Thiscanbeadangerousreactiontotransition.2019/8/31JiaLiangding13⑹Resentmentandirrationalreactiontochangesinindustrypractices(“theyarehurtingtheindustry”).–Theresistancecanputafirmseriouslybehindinadaptingtonewcompetitiveenvironment.2019/8/31JiaLiangding14⑺Overemphasison“creative”,“new”productsratherthanimprovingandaggressivelysellingexistingones.–Theonsetofmaturityoftenmeansthatnewproductsandapplicationsarehardertocomeby.Itisusuallyappropriatethatthefocusofinnovativeactivityshouldchange,puttingstandardizationratherthannewnessandfinetuningatapremium.2019/8/31JiaLiangding15⑻Clingingto“highquality”asanexcusefornotmeetingaggressivepricingandmarketingmovesofcompetitors.–Highqualitycanbeacrucialcompanystrength,butqualitydifferentialshaveatendencytoerodeasanindustrymatures.⑼Overhangingexcesscapacity.2019/8/31JiaLiangding1