COMPETITIVE ADVANTAGE in MATURE INDUSTRIES

COMPETITIVE - Competitive Advantage in Mature Industries Chapter 12 Objectives Recognize the principal strategic characteristics of mature

Info iconThis 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
Background image of page 1

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

View Full DocumentRight 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
Background 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
Background image of page 3

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

View Full DocumentRight 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
Background 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
Background image of page 5

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

View Full DocumentRight 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
Background 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
Background image of page 7

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

View Full DocumentRight 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
Background 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.
Background image of page 9

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

View Full DocumentRight Arrow Icon
Key Success Factors in Mature Environments : Cost advantage While cost efficiency will not necessarily provide sustainable advantage, cost inefficiency can be fatal!
Background image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/05/2011 for the course MANAGMENT 25 taught by Professor Fu during the Spring '11 term at Asbury.

Page1 / 42

COMPETITIVE - Competitive Advantage in Mature Industries Chapter 12 Objectives Recognize the principal strategic characteristics of mature

This preview shows document pages 1 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online