BMGT 892 - Business Level Strategy & Competitive Dynamics

BMGT 892 - Business Level Strategy & Competitive Dynamics

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BUSINESS-LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT
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Overview Explain why managers tailor their business models to existing conditions Strategy in fragmented industries Strategy in embryonic and growth industries Strategy in mature industries Strategy in declining industries
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Business-Level Strategy Business-level strategy is a major determinant of industry profitability. The choice of business model and strategies can accelerate or depress market growth.
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Saturate the market Profit Per Unit Sold MBAs - $2.79 UG #1 - $2.26 UG #2 -$.72
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Fragmented Market What are the characteristics of a fragmented market?
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Reasons for Fragmented Industries Results from: Low barriers to entry Low entry barriers permit constant entry by new companies Specialized customer needs Diseconomies of scale “... composed of a large number of small and medium-sized companies.”
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Fragmented Industries What options to firms have for consolidating fragmented industries?
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Strategies for Fragmented Industries Chaining – linked outlets to achieve cost leadership Franchising - rapid growth with proven business concepts, reputation, management skills and economies of scale Horizontal Merger – acquisition to obtain economies/growth I T/I nternet - develop new business models
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Embryonic and Growth Industries Embryonic - just beginning to develop when technological innovation creates new market or product opportunities. Growth- first-time demand is expanding rapidly as many new customers enter market.
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Embryonic and Growth Industries New markets sometimes grow slowly, why?
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Market Characteristics: Embryonic/Growth Industries
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