Products become more standardized Distribution channels consolidate Production shifts to low-wage countries Price competition intensifies Bargaining power of distributors increase[r]
(1)Industry Evolution
Industry Evolution
• The industry life cycle
• Industry structure, competition, and
success factors over the life cycle.
• Anticipating and shaping the future.
(2)The Industry Life Cycle The Industry Life Cycle
Drivers of industry evolution :
• demand growth
• creation and diffusion of knowledge
Introduction Growth Maturity Decline
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(3)Product and Process Innovation Over Time
Product and Process Innovation Over Time
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(4)Standardization of Product Features in Cars
Standardization of Product Features in Cars
FEATURE INTRODUCTION GENERAL ADOPTION
Speedometer 1901 by Oldsmobile Circa 1915
Automatic transmission 1st installed 1904 Introduced by Packard as an option, 1938 Standard on Cadillacs early 1950s
Electric headlamps GM introduces, 1908 Standard equipment by 1916 All-steel body GM adoptes 1912 Standard by early 1920s
All-steel enclosed body Dodge, 1923 Becomes standard late 1920s Radio Optional extra 1923 Standard equipment, 1946
Four-wheel drive Appeared 1924 Only limited availability by 1994 Hydraulic brakes Introduced 1924 Became standard 1939
Shatterproof glass 1st used 1927 Standard features in Fords 1938 Power steering Introduced 1952 Standard equipment by 1969 Antilock brakes Introduced 1972 Standard on GM cars in 1991 Air bags GM introduces, 1974 By 1994 most new cars equipped
(5)How Typical is the Life Cycle Pattern?
How Typical is the Life Cycle Pattern?
• Technology-intensive industries (e.g pharmaceuticals,
semiconductors, computers) may retain features of emerging industries.
• Other industries (especially those providing basic
necessities, e.g food processing, construction, apparel) reach maturity, but not decline.
• Industries may experience life cycle regeneration.
Sales Sales
1900 ‘50 ‘60 ‘90 1930 50 60 90
MOTORCYCLES TV’s
• Life cycle model can help us to anticipate industry
evolution—but dangerous to assume any common, pre-determined pattern of industry development.
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(6)Evolution of Industry Structure over the Life Cycle
Evolution of Industry Structure over the Life Cycle
INTRODUCTION GROWTH MATURITY DECLINE DEMAND Affluent buyers Increasing Mass market Knowledgeable,
penetration replacement customers, resi- demand dual segments
TECHNOLOGY Rapid product Product and Incremental Well-diffused innovation process innovation innovation technology
PRODUCTS Wide variety, Standardization Commoditiz- Continued
rapid design change ation commoditization
MANUFACT- Short-runs, skill Capacity shortage, Deskilling Overcapacity URING intensive mass-production
TRADE -Production shifts from advanced to developing
countries -COMPETITION Technology- Entry & exit Shakeout & Price wars, consolidation exit
KSFs Product innovation Process techno- Cost efficiency Overhead logy Design for uction, ration-
(7)The Driving Forces of Industry Evolution The Driving Forces of Industry Evolution
Customers become more knowledgeable & experienced Diffusion of technology Demand growth slows as market saturation approaches
Customers become more price conscious
Products become more standardized Distribution channels consolidate Production shifts to low-wage countries Price competition intensifies Bargaining power of distributors increases
BASIC CONDITIONS INDUSTRY STRUCTURE COMPETITION
Excess capacity increases Production becomes less R&D & skill-intensive