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Session 5.docx

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York University
Administrative Studies
ADMS 1000
Indira Somwaru

SESSION 5: Competitive Context & Technological Context Industry Life Cycle Intro > Growth > Maturity > Decline  Over time all industries go through life cycle  How fast depends on level of technology o Ex. Newspaper, oil Introduction Stage  New industries  emerge based on innovation  Risk, lack of a dominant model  Small firms enter first  low risk/big payoff  Search for dominant design/standard  Money/cool/want to own first  Prices are high  Businesses recover R+D costs  Entrepreneurs  Joins together to seek legitimacy o Legislation/social  Little intra-industry rivalry  High research and development costs  Company structures are organic Growth  Convergence around a dominant standard  Large companies enter o Mergers & acquisitions  Standardization of products, processes o Economics of scale are now achieved  Focus on sales/marketing (not R+D) Maturity  Demand begins to slow  Market is saturated with sellers/product  Fierce competition among competitors  Products become commodities  Inform consumers/price conscious (demanding) Decline  Ex. Newpapers, CDs  Why do industries decline? o Lack of innovation o New technology o Changing consumer tastes  Declining sales, layoffs, firms will exit the industry Strategies: o Maintain industry leadership  R+D/ continue to _____ o Target niche market o Harvest profits  Reducing operating costs/restricting new investment o Exit early o Consolidate the remaining industry players McDonald’s video questions: 1. What
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