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fragmentation (i.e., production or service delivery process) • Make acquisitions for a critical mass External Analysis • Recognize industry trends early Coping with fragmentation: • Tightly manage decentralization: keeping individual operations small and as autonomous as possible, reinforced with central control and a strong promotion-from-within policy Industry Analysis• Building of efficient low-cost facilities at multiple locations • Increased added value: providing more service with sale, enhance product differentiation, or forward integration • Specializing by product type or product segment • Specializing by customer type; perhaps the customer with the least bargaining power • Specializing by type of order: fast delivery • A focused geographic area • Bare bones/no frills • Backward integration: selective backward integration may lower costs and put pressure on competitors who cannot afford such integrationHBS Case Interview Guide, Page18
Marketing/Strategy Concepts Review – The 4 CsSource: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors HBS Case Interview Guide, Page194. Emerging Industries The essential characteristics of an emerging industry from the viewpoint of formulating strategy are that there are no rules of the game. The overriding aspect of emerging industries is great uncertainty, coupled with certainty that change will occur. 4 Cs COMPANY Common Structural Characteristics: • Technological uncertainty • Strategic uncertainty - no right strategy has been clearly defined • High initial costs but steep cost reduction • Embryonic companies and spin-offs - many new companies are formed and many spin-offs from personnel leaving from existing companies to start new ones • First-time buyers - the marketing task is one of inducing substitution, getting the buyer to purchase the product instead of another Common mobility barriers faced in emerging industries/problems:• Proprietary technology/absence of product or technological standardization • Access to distribution channels • Access to raw materials and other inputs – rapid escalation of raw material • Cost advantage due to experience • High risk-capital requirement/high cost • Erratic product quality • Regulatory approval • Response of threatened entities: substitutes or labor unions Strategic Choice: • Shaping industry structure: through its choices, the firm can try to set the rules of the game • Developing relationships with channels • Shifting mobility barriers: making new commitments in capital and technology External Analysis • Timing entry: early entry or pioneering involves high risks but may involve otherwise low entry barriers and offer a large return Techniques for Forecasting: • The device of scenarios is a particularly useful tool in emerging industries Industry Analysis• The starting point for forecasting is estimating the future evolution of product and technology, in such terms as cost, product variety, and performance • The next step is to develop the implications for