Chapter 6 DQs and Responses

Chapter 6 DQs and Responses - Chapter 6 DQs and Responses...

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Chapter 6 DQs and Responses 1. What industry forces might cause a company's propitious niche to disappear? Newman's argument for a propitious niche includes the implication that a corporation with such a niche will be successful so long as it fills that niche. This niche is the specific competitive role held by a corporation, division, or product/service. A "propitious" niche is that which is so well-suited to the firm's internal and external environment that competitors are not likely to challenge or dislodge it. In terms of automobiles, both Rolls Royce and Morgan fill two very different niches in the industry. The key to answering this question is understanding that a propitious niche exists not only because of environmental opportunities, but also because a company has the resources to take advantage of these opportunities. Therefore a niche can disappear because of changes within a company as well as because of environmental changes. Some of the possible changes are: a. The environment/industry changes . The company/SBU continues to make its products or services, but the size of the market changes. 1) Contracts - The market gets smaller because of factors beyond the control of the company/SBU. For example, the increasing price of gasoline in the 1970s contracted the market for gas-guzzling performance-oriented automobiles. The niche could then only support the strongest companies/SBUs. 2) Expands - The company/SBU, through its own efforts, not only fills a demand in the market but actually causes the market to expand. Unless the company/SBU can manufacture sufficient products to meet growing demand or is able to defend a patented process (as Proctor & Gamble did with Crest-Fluoride toothpaste for years), profit opportunities will cause competitors with sufficient internal resources to join the niche. Such competitors may be stronger and drive the original company/SBU out of the market, thus causing it to lose its niche. b. The company/SBU Changes . The same market demand continues for specific products or services, but the company/SBU itself changes so that there is no longer a synchronization between itself and the market. 1)
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This note was uploaded on 10/10/2011 for the course BAD 480 taught by Professor Null during the Fall '11 term at GWU.

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Chapter 6 DQs and Responses - Chapter 6 DQs and Responses...

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