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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
TAILORING STRATEGY TO
FIT SPECIFIC INDUSTRY
AND COMPANY SITUATIONS
CHAPTER 8
Competing in the marketplace is like
war. You have injuries and casualties,
and the best strategy wins.
John Collins
Quote
2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Chapter Outline
Strategies for Emerging Industries
Strategies for Turbulent, High Velocity Markets
Strategies for Maturing Industries
Strategies for Fragmented Industries
Strategies for Sustaining Rapid Growth
Strategies for Weak Businesses
Ten Commandments for Crafting Strategies
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Most important
drivers shaping
a firms strategic
options fall into
two categories
Firms competitive
capabilities,
market position,
best opportunities
Nature of industry
and competitive
conditions
Overview: Matching Strategy
to a Companys Situation
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Features of an Emerging Industry
The capabilities that lead to True False
competitive advantage are well known.

The necessary technology is easily True False
available.

Are the entry barriers typically high or low in an
emerging industry?

Buyers are first-time users. True False
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Strategy Options for Competing
in Emerging Industries
What type of marketing initiatives should be taken
to win customers to the industrys product?

Which value chain activities (both primary and
secondary) are critical?

The product attributes in an True False
emerging industry are standard.

The industry conditions surrounding True False
an emerging industry require alliances.

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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Features of High Velocity Markets
Technology changes take True False
a long time.

Product life-cycles are short . True False
Competitive moves are True False
frequent.

Customer expectations do not True False
change often.
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Standard Velocity Industry
Time (years)
10
Launch
Exploitation
Counterattack
Returns
from a
Sustained
Competitive
Advantage
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
High-Velocity Industry
Time (years)
10 5 15
Launch
Exploitation
Counterattack
Returns
from a
Sustained
Competitive
Advantage
Firm continues to
move on to the next
Advantage
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Figure 8.1: Meeting the Challenge
of High-Velocity Change
Strategic
Posture
Actions Strategy
Reacting to
Change
Introduce better products in
response to new offerings of rivals
Respond to unexpected changes
in buyer needs and preferences
Adjust to new government policies
React and respond as
needed
Defend and protect
companys position
D
e
f
e
n
s
i
v
e

O
f
f
e
n
s
i
v
e

Anticipating
Change
Analyze prospects for market
globalization
Research buyer needs,
preferences, and expectations
Monitor new technological
developments to predict future
Plan ahead for future
changes
Add/adapt competitive
capabilities
Improve product line
Strengthen distribution
Leading
Change
Pioneer new and better
technologies
Introduce innovative products that
open new markets and spur
creation of whole new industries
Seek to set industry standards
Seize the offensive
Be the agent of industry
change
Influence rules of the
game
Force rivals to follow
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Strategy Options for Competing
in High Velocity Markets
Invest aggressively in R&D
Develop quick response capabilities
Shift resources, Adapt competencies, Create
new competitive capabilities, Speed new
products to market

Use strategic partnerships to develop specialized
expertise and capabilities

Initiate fresh actions every few months

Keep products/services fresh and exciting
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Characteristics of Industry Maturity
What are some of the industry traits of a mature
industry? (recall chapter 3 concepts, e.g., scope
of the rivalry, market growth, etc.)

What activities of the value chain become more
critical?

In mature industries, firms must True False
look for products to abandon.

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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Competitive Features of
Fragmented Industries
Fragmented industries have clear True False
market leaders with high market share.

Buyer demand is homogeneous. True False
Buyer demand is geographically True False
scattered.

Scale economies is a major factor. True False
Buyers buy in large quantities. True False
What are some possible ways to compete in a
fragmented industry?

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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
Weak Businesses: Strategic Options
What is a turnaround strategy?

What is a liquidation strategy?

What is an end-game strategy?

When should a firm consider a turnaround
strategy? A liquidation strategy? An end-game
strategy?

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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
10 Commandments for Crafting
Successful Business Strategies
1. Always put top priority on crafting and executing
strategic moves that enhance a firms
competitive position for the long-term and that
serve to establish it as an industry leader.
2. Be prompt in adapting and responding to
changing market conditions, unmet customer
needs and buyer wishes for something better,
emerging technological alternatives, and new
initiatives of rivals. Responding late or with too
little often puts a firm in the precarious position
of playing catch-up.
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
3. Invest in creating a sustainable competitive
advantage, for it is a most dependable
contributor to above-average profitability.
4. Avoid strategies capable of succeeding only
in the best of circumstances.
5. Dont underestimate the reactions and the
commitment of rival firms.
10 Commandments for Crafting
Successful Business Strategies
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
6. Consider that attacking competitive
weakness is usually more profitable than
attacking competitive strength.
7. Be judicious in cutting prices without an
established cost advantage.
8. Employ bold strategic moves in pursuing
differentiation strategies so as to open up
very meaningful gaps in quality or service or
advertising or other product attributes.
10 Commandments for Crafting
Successful Business Strategies
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2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright
9. Endeavor not to get stuck back in the pack
with no coherent long-term strategy or
distinctive competitive position, and little
prospect of climbing into the ranks of the
industry leaders.
10 Commandments for Crafting
Successful Business Strategies
10. Be aware that aggressive strategic moves to
wrest crucial market share away from rivals
often provoke aggressive retaliation in the form
of a marketing arms race and/or price wars.