Strategy in Strategy in Aging/Declining Aging/Declining IndustryIndustry
Amin WibowoAmin Wibowo
FEB UGMFEB UGM
Tantangan Strategik dalam New Competitive Landscape
Para manajer dan pemimpin semakin dituntut untuk mempunyai kapasitas menavigasi perusahaan dalam menghadapi new competitive landscape, dengan mengembangkan fleksibilitas strategik dan keunggulan kompetitif berkelanjutan
Old Competitive Landscape
Old Competitive Landscape
New Competitive Landscape
New Competitive Landscape
Keunggulan kompetitif berbasis proteksi pasar, monopoli, produk dan sebagainya
Keunggulan kompetitif berbasis proteksi pasar, monopoli, produk dan sebagainya
Keunggulan kompetitif berbasis kompetensi dan knowledge
Keunggulan kompetitif berbasis kompetensi dan knowledge
Visi Strategik:Misi, Visi, Nilai-nilai
Agenda Strategik dan Transformasi
organisasional
Declining Phase
Declining Industries
Reasons for and severity of the declineReasons: technological change, social trends,
demographic shifts Intensity of competition is greater when:
The decline is rapid versus slow and gradual. The industry has high fixed costs. The exit barriers are high. The product is perceived as a commodity.
• Not all industry segments typically decline at the same rate
A declining industry is one in which market demand has leveled off or is falling and the size of total market starts to shrink.
Competition tends to intensify and industry profits tend to fall.
What does aging/declining industry mean?
The size of total market starts to shrink:
- Technological advances (railroads, steel vs.
plastic, vacuum tube vs. transistor)
- Lower cost or high quality (synthetics for leather)
- Customer groups shrinks (baby foods)
- Change in life-style, buyers’ need, or tastes (cigars and hatmaking)
The Life-Cycle Portfolio Matrix
Industry Maturity (External)Embryonic Growth Mature Aging
Com
peti
tive
Pos
itio
n (I
nter
nal)
Dominant
Strong
Favorable
Tenable
Weak
Nonviable
•Wide range of strategic options•Caution: selective development•Danger: withdraw to market niche, divest or liquidate
The Life-Cycle Portfolio Matrix
Descriptors
Development Stage
Embryonic Growth Mature Aging
Market Growth Rate
Accelerating Faster than GNP Equal to or slower than GNP
Declines over long term
Industry Potential
Difficult to determine
Exceeds the industry volume
Well-known; approach saturation
No potential remains
Breadth of product lines
Basic product line established
Rapid proliferation
Product turnover
Shrinking
Number of competitors
Increasingly rapid
Increasing to peak
Stable Declines
The Life-Cycle Portfolio Matrix
Descriptors
Development Stage
Embryonic Growth Mature Aging
Market share stability
Volatile A few firms have major shares
Firms with major shares are entrenched
Concentration increases as marginal firms drop out
Purchasing Patterns
Little or none Some: buyers are aggressive
Buying patterns are established
Number of alternatives decreases
Ease of entry Opportunity may not be apparent
The presence of competitors is offset by vigorous growth
Competitors are entrenched, and growth is slowing
Little incentive
Technology Concept dev and product engineering
Product line refinement and extension
New product line development to renew growth
Role is minimal
Criteria of Competitive PositionDominantDominant: Dominant competitors are very rare. Dominance often
results from a quasimonopoly or from a strongly protected technological leadership.
StrongStrong: Not all industries have dominant or strong competitors. Strong competitors can usually follow strategies of their choice, irrespective of their competitors’ moves.
FavorableFavorable: When industries are fragmented, with no competitor clearly standing out, the leaders tend to be in a favorable position.
TenableTenable: A tenable position can usually be maintained profitably through specialization in a narrow or protected market niche. This can be a geographic specialization or a product specialization.
WeakWeak: Weak competitors can be intrinsically too small to survive independently and profitably in the long term.
NonviableNonviable: Represents the final recognition that the firm relly has no strength whatsoever, now or in the future, in that particular business. Therefore, exiting is the only strategic responses.
The Life-Cycle Portfolio Matrix
All-out push for share; Hold position
Hold position; Hold share
Hold position; Grow with industry
Hold position
Attempt to improve position; All-out push for share
Attempt to improve position; Push for share
Hold position; Grow with industry
Hold position or Harvest
Selective or all-out push for share; Selectively attempt to improve position
Attempt to improve position; Selectively push for share
Custodial or maintenance; Find niche and attempt to protect
Harvest or Phased withdrawal
Selectively push for position
Find niche and protect it
Find niche an hang on or Phased withdrawal
Phased withdrawal or Abandon
Up or Out Turnaround or Abandon
Turnaround or Phased withdrawal
Abandon
Exiting Exiting Exiting Exiting
Embryonic Growth Mature Aging
Dominant
Strong
Favorable
Tenable
Weak
Nonviable
•Market share thrust
The Life-Cycle Portfolio Matrix
Invest slightly faster than market dictates
Invest to sustain growth
Reinvest as necessary
Reinvest as necessary
Invest as fast as market dictates
Invest to increase growth rate (and improve position)
Reinvest as necessary
Minimum reinvestment or maintenance
Invest selectively Selective investment to improve position
Minimum and/or selective reinvestment
Minimum maintenance investment or disinvest
Invest (very) selectively
Selective investment
Minimum reinvestment or disinvest
Disinvest
Invest or divest Invest or divest Invest selectively or disinvest
divest
Embryonic Growth Mature Aging
Dominant
Strong
Favorable
Tenable
Weak
Nonviable
•Investment Requirements
The Life-Cycle Portfolio Matrix
Probably profitable but not necessary; Net cash borrower
Profitable; Probably net cash producer (but not necessary)
Profitable; Net cash producer
Profitable; Net cash producer
May be unprofitable; Net cash borrower
Probably profitable; Probably net cash borrower
Profitable; Net cash producer
Profitable; Net cash producer
Probably profitable; Nat cash borrower
Marginally profitable; Net cash profitable
Profitable; Net cash producer
Moderately profitable; Cash flow balance
Unprofitable; Net cash borrower
Unprofitable; Net cash borrower or cash flow balance
Minimally profitable; cash flow balance
Minimally profitable; Cash flow balance
Unprofitable; Net cash borrower
Unprofitable; Net cash borrower or cash flow balance
Unprofitable; Possibly net cash borrower or net cash producer
Unprofitable (write-off)
Embryonic Growth Mature Aging
Dominant
Strong
Favorable
Tenable
Weak
Nonviable
•Profitability and Cash Flow