{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

COMPETITIVE ADVANTAGE in MATURE INDUSTRIES

COMPETITIVE ADVANTAGE in MATURE INDUSTRIES - Competitive...

Info icon This preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Competitive Advantage in Mature Industries Chapter 12
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Objectives Recognize the principal strategic characteristics of mature industries Identify key success factors within mature industries and formulate strategies directed toward their exploitation Locate and analyze opportunities for strategic innovation in mature industries to establish competitive advantage
Image of page 2
Key Success Factors in Mature Environments Maturity has two principal implications for competitive advantage: It tends to reduce the number of opportunities for establishing competitive advantage It shifts these opportunities from differentiation-based factors to cost-based factors
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Diminishing opportunities for competitive advantage in mature industries stem from: *Less scope for differentiation advantage resulting from increased buyer knowledge, product standardization, and less product innovation Diffusion of process technology means that cost advantages based on superior processes or more advanced capital equipment methods are difficult to obtain and sustain
Image of page 4
Diminishing opportunities for competitive advantage in mature industries stem from: A highly developed industry infrastructure together with the presence of powerful distributors makes it easier to attack established firms that occupy particular strategic niches The vulnerability of cost advantage to exchange rate movements and the emergence of low-cost overseas competitors
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Key Success Factors in Mature Environments: Cost Advantage What are the primary sources of low cost? Three cost drivers tend to be especially important: Economies of scale . Low-cost inputs Low overheads
Image of page 6
Economies of Scale In capital-intensive industries, or where advertising, distribution, or new product development is an important element of total cost, economies of scale are important sources of inter-firm cost differences. The increased standardization that accompanies maturity greatly assist the exploitation of such scale economies
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Low cost inputs Where small competitors are successful in undercutting the prices of market leaders in mature industries, it is frequently through their access to low-cost inputs. Established firms can become locked into high-cost positions through unionization of their workforces or through inertia.The decline in the market share of the US steel majors over the past three decades is partly the result of union agreements over wages, benefits, and working practices that guaranteed high-cost production.
Image of page 8
Low overheads During the early 1990s, some of the most profitable companies in mature industries tended to be those that had achieved the the most substantial reductions in overhead cost. Among the oil majors, Exxon is known for its rigorous control of overhead costs.Exxon’s headquarters cost was estimated at less than one- quarter that of Mobil’s .When Exxon merged with Mobil, it was able to extract huge cost savings from Mobil.
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Key Success Factors in Mature Environments :
Image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern