MGBU 4441 Lecture Notes - Lecture 13: Switching Barriers, Value Chain, Network Effect
17 Apr 2017
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Document Summary
Business-level strategy lifecycles: products & industries have lifecycles w/ each stage of lifecycle requiring different strategies. Slow market growth & customers tend to be early adopters & customers difficult to find & reach. Value chain needs: support, marketing, & early distribution. Differentiation still important, but price pressures emerge w/ new imitators. Market growth increases which attracts competitors & complements. Market leadership may still be challenged & advertising investments can pay off. Strategy of trying to build switching costs & network effects. Margins strong if prices hold & cost of production falls. Value chain needs: distribution, marketing, growing emphasis on production & logistics. Differentiation very difficult & price pressures important. Lots of process automation & technology use. Increasing product segmentation begins to offer focus opportunities. Value chain needs: production & logistics, support & service to try to cut down switching. Price dominates & margins tend to be poor (even gross margins) Decreasing competition, depending on exit barriers (strategic important, capital intensity)
