Professional Documents
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ANALYSIS
(7th edition, John Wiley & Sons Ltd., 2010)
Robert M. Grant
Chapter
Chapter 11
11
Industry
Industry Evolution
Evolution and
and
Strategic
Strategic Change
Change
2010 Robert M. Grant
www.contemporarystrategyanalysis.com
Industry
Industry Evolution
Evolution
OUTLINE
The industry life cycle
Structure, competition, and success
factors over the life cycle.
Organizational adaptation and change
Industry Sales
The
The Industry
Industry Life
Life Cycle
Cycle
Introduction
Growth
Maturity
Decline
Time
Drivers of industry evolution :
demand growth
creation and diffusion of knowledge
Product
Product and
and Process
Process Innovation
Innovation Over
Over Time
Time
Rate of innovation
Product Innovation
Process Innovation
Time
2010 Robert M. Grant
www.contemporarystrategyanalysis.com
How
How typical
typical is
is the
the Life
Life Cycle
Cycle Pattern?
Pattern?
Sales
Sales
1900 50
MOTORCYCLES
90
07
TVs
Color
B&W
1930
50
Flat
screen
Portable
70
90
00
HDTV
10
Innovation
Innovation &
& Renewal
Renewal over
over the
the
Industry
Industry Life
Life Cycle:
Cycle: Retailing
Retailing
Warehouse
Clubs
e.g. Price Club
Sams Club
Discount
Stores
Mail order,
catalogue
retailing
e.g. Sears
Roebuck
e.g. K-Mart
Wal-Mart
Chain
Stores
Category
Killers
Internet
Retailers
e.g. Amazon;
Peapod
e.g. Toys-R-Us,
Home Depot
e.g. A&P
1880s
2010 Robert M. Grant
www.contemporarystrategyanalysis.com
1920s
1960s
1980s
2000
6
Evolution
Evolution of
of Industry
Industry Structure
Structure over
over the
the Life
Life Cycle
Cycle
INTRODUCTION
GROWTH
MATURITY
DECLINE
DEMAND
Early adopters
Rapidly increasing
market penetration
Replacement/ repeat
buying; price
sensitive customers
Obsolescence
TECHNOLOGY
Competing
technologies; rapid
product innovation
Standardization;
rapid process
innovation
Little innovation
PRODUCTS
Wide variety of
features & designs
Commoditization;
brand differentiation
Differentiation
difficult
MANUFACTURING
Short-runs, skill
intensive
Capacity shortage,
mass- production
Over-capacity
emerges; deskilling
Overcapacity
TRADE
COMPETITION
Few companies
Shakeout &
consolidation
KSFs
Product innovation
Design for
manufacture
Process innovation
Low overheads;
rationalization
The
The Driving
Driving Forces
Forces of
of Industry
Industry Evolution
Evolution
BASIC CONDITIONS
Customers become
more knowledgeable
& experienced
INDUSTRY STRUCTURE
Customers become
more price conscious
Products become
more standardized
Diffusion of
technology
Demand growth
slows as market
saturation approaches
2010 Robert M. Grant
www.contemporarystrategyanalysis.com
COMPETITION
Production
becomes less
R&D
& skill-intensive
Production shifts
to low-wage
countries
Excess capacity
increases
Distribution channels
consolidate
Price competition
intensifies
Bargaining power
of distributors
increases
8
Changes
Changes in
in the
the Population
Population of
of Firms
Firms over
over the
the Industry
Industry
Life
Life Cycle:
Cycle: US
US Auto
Auto Industry
Industry 1895-1960
1895-1960
The
The Worlds
Worlds Biggest
Biggest Companies,
Companies, 1912
1912 and
and 2009
2009
(by
(bymarket
marketcapitalization)
capitalization)
1912
2009
$ bn.
$ bn.
US Steel
0.74
Exxon Mobil
395
Exxon
0.39
PetroChina
241
J&P Coates
0.29
Wal-Mart Stores
202
Pullman
0.20
ChinaMobile
197
0.19
Procter&Gamble
179
Anaconda
0.18
Microsoft
174
General Electric
0.17
BP
170
Singer
0.17
General Electric
168
American Brands
0.17
AT&T
157
Navistar
0.16
Chevron
148
BAT
0.16
BP
148
De Beers
0.16
Nestl
139
10
Strategy
Strategy and
and Performance
Performance across
across the
the Industry
Industry Life
Life Cycle
Cycle
11
Organizational
Organizational Adaptation
Adaptation and
and Change:
Change:
The
The Sources
Sources of
of Inertia
Inertia
1. Organizational Routines: existing patterns of coordinated
activity make it difficult to develop new capabilities
12
Preparing
Preparing for
for the
the Future:
Future: the
the Role
Role of
of Scenario
Scenario Analysis
Analysis
in
inAdapting
Adapting to
to Industry
Industry Change
Change
13
Gary
Gary Hamel:
Hamel: Shaking
Shaking the
the Foundations
Foundations
OLD BRICK
NEW BRICK
Everyone is responsible
for setting strategy
Rule-busting innovation
is the way to win
14