BMGT 892 - Business Level Strategy & Competitive Dynamics

BMGT 892 - Business Level Strategy & Competitive Dynamics

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Unformatted text preview: BUSI NESS-LEVEL STRATEGY AND THE I NDUSTRY ENVI RONMENT 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 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. Saturate the market • Profit Per Unit Sold • MBAs - $2.79 • UG #1 - $2.26 • UG #2 -$.72 Fragmented Market • What are the characteristics of a fragmented market? Reasons for Fragmented I ndustries • Results fr om: • 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.” Fragmented I ndustries • What options to firms have for consolidating fragmented industries? Strategies for Fragmented I ndustries • Chaining – linked outlets to achieve cost leadership • Fr anchising- rapid growth with proven business concepts, reputation, management skills and economies of scale • H or izontal M er ger – acquisition to obtain economies/growth • I T/I nter net- develop new business models Embryonic and Growth I ndustries • 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. Embryonic and Growth I ndustries • New markets sometimes grow slowly, why? Market Characteristics:...
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This note was uploaded on 06/07/2011 for the course BMGT 892 taught by Professor Donsmith during the Spring '11 term at UNL.

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BMGT 892 - Business Level Strategy & Competitive Dynamics

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