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20 Cards in this Set
- Front
- Back
fragmented industries
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one composed of a large number of small and medium sized companies
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reasons for fragmented industries
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low barriers to entry due to lack of economies of scale
low entry barriers permit constant entry by new companies specialized customer needs require small job lots of products - no mass production dis economies of scale |
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fragmented industries strategies
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chaining - linked outlets
franchising - reputation in management skills and economies of scale horizontal merger - obtain economies and growth It and internet - develop new business models |
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Embryonic industry
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just beginning to develop when technological innovation creates new market or product opportunities
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growth industry
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first time demand is expanding rapidly as many new customers enter the market
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reasons for slow growth in market demand
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limited performance and poor quality of the first products
customer unfamiliarity poorly developed distribution channels lack of complementary products high production costs |
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mass markets typically start to develop when:
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technological progress makes a product easier to use and increase its value
key complementary products are developed companies find ways to reduce production cost, therefor reducing price |
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stages in the industry life cycle
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embryonic
growth shakeout mature decline |
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market development and customer groups
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innovators
early adopters early majority late majority laggards |
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market share or different customer segementds
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most market demand and industry profits arise during the early and late majority customer segments
roughly 75% |
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embryonic stages
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share building strategies
requires capital to develop R and D development of distinctive competencies and comp adv |
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growth stages
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maintain relative competitive position
strengthen business model |
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shakeout stage
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increase share during fierce competition
weak companies should exit the industry |
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maturity stage
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hold and maintain to defend business model
dominant companies want to reap the reward of prior investments |
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mature industry
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dominated by a small number of large companies whose actions are so highly interdependent that success of one company's strategy depends on the response of its rivals
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evolution of mature industries
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industry becomes consolidated as a result of the fierce competition during the shakeout stage
business level strategy is based on how establishes companies try to reduce strength of competition interdependent companies try to protect industry profitability |
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declining industry
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market demand has leveled off or is falling and the size of total market starts to shrink
competition tends to intensify and industry profits tend to fall |
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reasons for and severity of the declining industries
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technological change, social trends, demographic shifts
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intensity of competition is greater when
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the decline is rapid versus slow
the industry has high fixed costs the exit barriers are high the product is perceived as a commodity |
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niche
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focuses on pockets of demand that are declining more slowly
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