Evaluating a firm's external environment - industry structure and environmental opportunities

11 important questions on Evaluating a firm's external environment - industry structure and environmental opportunities

What are the opportunities in the fragmented industry?

Consolidation

What are the opportunities in the emerging industry?

First-mover advantage

What are the opportunities in the mature industry?

  1. Product refinement
  2. investment in service quality
  3. process innovation
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What are the opportunities in the declining industry?

  1. Leadership
  2. niche
  3. harvest
  4. divestment

What are the four conditions for an empty core industry?

  1. Capacity is added in large increments, relative to demand
  2. there are large unavoidable sunk costs
  3. demand fluctuates in difficult to predict ways
  4. limited product differentiation

What are fragmented industries?

In which a large number of small- or medium-sized firms operate and so small set of firms has dominant market share or create dominant technologies

What is the consolidation strategy?

Consolidating the industry into smaller number of firms

What are the characteristics of mature industries?

  1. Slowing growth in total industry demand
  2. the development of experienced repeat customers
  3. a slowdown in increases in production capacity
  4. a slowdown in the introduction of new products and services
  5. increase in the amount of international competition
  6. overall reduction of profitability of firms in the industry

What is a declining industry?

An industry that has experienced an absolute decline in unit sales over a sustaind period of time

What is the harvest opportunity in the declining industry?

They try to get as much value as possible from the industry while slowly while withdrawling from the industry

What is the divestment opportunity in the declining industry?

Similar to harvest, but it occurs quickly, soon after a pattern of decline has been established

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