Presentation on theme: "Strategy in Aging/Declining Industry Amin Wibowo FEB UGM."— Presentation transcript:
Strategy in Aging/Declining Industry Amin Wibowo FEB 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 New Competitive Landscape Keunggulan kompetitif berbasis proteksi pasar, monopoli, produk dan sebagainya Keunggulan kompetitif berbasis kompetensi dan knowledge Visi Strategik: Misi, Visi, Nilai-nilai Agenda Strategik dan Transformasi organisasional
Declining Industries Reasons for and severity of the decline Reasons: 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 Competitive Position (Internal) 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 EmbryonicGrowthMatureAging Market Growth Rate AcceleratingFaster than GNPEqual 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 StableDeclines
The Life-Cycle Portfolio Matrix Descriptors Development Stage EmbryonicGrowthMatureAging Market share stability VolatileA few firms have major shares Firms with major shares are entrenched Concentration increases as marginal firms drop out Purchasing Patterns Little or noneSome: buyers are aggressive Buying patterns are established Number of alternatives decreases Ease of entryOpportunity may not be apparent The presence of competitors is offset by vigorous growth Competitors are entrenched, and growth is slowing Little incentive TechnologyConcept dev and product engineering Product line refinement and extension New product line development to renew growth Role is minimal
Criteria of Competitive Position Dominant Dominant: Dominant competitors are very rare. Dominance often results from a quasimonopoly or from a strongly protected technological leadership. Strong Strong: Not all industries have dominant or strong competitors. Strong competitors can usually follow strategies of their choice, irrespective of their competitors’ moves. Favorable Favorable: When industries are fragmented, with no competitor clearly standing out, the leaders tend to be in a favorable position. Tenable Tenable: 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. Weak Weak: Weak competitors can be intrinsically too small to survive independently and profitably in the long term. Nonviable Nonviable: 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 OutTurnaround or Abandon Turnaround or Phased withdrawal Abandon Exiting EmbryonicGrowth 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 Invest as fast as market dictates Invest to increase growth rate (and improve position) Reinvest as necessary Minimum reinvestment or maintenance Invest selectivelySelective 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 selectively or disinvest divest EmbryonicGrowth 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 May be unprofitable; Net cash borrower Probably profitable; Probably net cash borrower 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) EmbryonicGrowth Mature Aging Dominant Strong Favorable Tenable Weak Nonviable Profitability and Cash Flow