.::" . li ~,. ~,. 1840 1880 1900 1920 1940 1960 1980 2000 other industries, lbanking, medical services) fragment. To understand the dyn:11nics of 111dus1ry change. we may need 10 look at clusters of related industries.' Implications of the Life Cycle for Competition and Strategy Change, in demand growth and technology over the cycle have implications for indu,try struc!Ure, the population of firms, and competition. Table 8.1 summarizes the principal features of each stage of the industry life cycle. Product Dif(erentiation The introduction stage typically features a wide variety ol product types that reflect the diversity of technologies and designs-and the l.1t'k of consensus over customer requirements. Convergence around a dominant dc·,ign is often followed by commoditization during the mature phase unless pro-ducers develop new dimensions for differentiation. Personal computers, credit cards, online financial services, wireless communication services, and internet access have :di h<:come commodity items which buyers select primarily on price. However, the trend toward commoditization also creates incentives for firms to create novel .1 ppruache, lo differentiation. Or#c111izational Demographics and Industry S tructure The number of firms in an industry changes substantially over the life cyd e. The field of o rganizational ecology , founded by_Michael Hannan.John Freeman, and Glen Carroll, analyzes the popu la11on ol industnes and the processes of founding and selection that determine <:nt_ry and exit." Some of the main findings of the organizational ecologists in relation 1<> industry evolution are: • The number of !inns in a · d • . f . . . . . . . · n in ustry mcreases rapidly during the early stages 0 an induSlry s life. ln111alli•, an industry may be pioneered by a few firms However as the i t . • · 1 .. • .. of new Ii. n_c uscry g,uns eg111macy, failure rates decline and the rate r rm foundings increases. The US automobile industry comJ)fisc·d 272 rnanu,accurers ·n 1909 • I ·t · . ' . i . w u e in l V receivers there were 92 companies in Ir ~ CHAPTER 8 INDUSTRY EVOLUTION AND STRATEGIC CHANGE 2 l3 E 8 1 The c·,ol1111on ol 111du,1n , 1ruL1ure and c<Hnpc·1111on ml'r 1ht· l,k-," k fJ\BL .:....-·-----------------------: Introduction Growth Maturity Decline oemand Limited to early Rapidly increasing Mass market, replacement/ Obsolescence adopters: market penetration repeat buy,ng. Customers high-income. knowledgeable and price avant-garde sensiuve Technology Competing technolo-Standardization Well-diffused technical Linle product or pro g1es, rapid product around dominant know-how: quest for cess innovation 1nnovat1on technology, rapid technological process innovation improvements.