Market Segments And Competitive Advantages example essay topic

Aministrative Policy and Strategy Strategies for Differing Company Situations A company's strategy must be matched to its external and internal conditions. The most important drivers in crafting a company strategy are the nature of the industry and competitive conditions; and the firm's own resources and competitive capabilities, market position and best opportunities. Some of the conditions that a company could face include: + Emerging industries + High Velocity markets+ Mature industries + Declining industries + Fragmented industries An emerging industry is one in its early and formative stage. Companies in an emerging market are in a starting mode adding personnel, obtaining facilities, gearing up production and broadening distribution gaining customers. The critical issues facing firms are how to finance initial operations till sales take off and what market segments and competitive advantages to pursue to gain market leadership. Managers should: 1.

Try to win the early race for industry leadership with bold entrepreneurship and a creative strategy through broad or focused differentiation strategies keyed to product superiority. 2. Push R&D to perfect technologies, improve product quality, and develop attractive performance features. 3. Try to capture first mover advantages by committing early to promising technologies, allying with the most capable suppliers, expanding product selection, and getting well positioned in new distribution channels.

4. Pursue new customer groups, new user applications, and entry into new geographic areas. As the new market develops companies must successfully manage their rapid expansion, defend against competitors, and build a competitive advantage beyond their initial product or market. High Velocity markets are characterized by rapid-fire technological change, short product life cycles, entry of new important rivals, frequent launches of new competitive moves by rivals, and rapidly evolving customer requirements and expectations. Examples of high velocity industries include microelectronics, telecommunications, and the Internet. Success in high velocity environments includes the needs to: 1.

Invest aggressively in R&D to stay on the leading edge of technological know-how: 2. Develop the organizational capability to respond quickly to new events 3. Rely on strategic partnerships with outside suppliers and with companies making tie-in products to perform those activities in the total industry value chain where they have specialized expertise and capabilities. In fast paced markets, in-depth expertise, speed, agility, innovativeness, opportunism, and resource flexibility are critical organizational capabilities. A maturing industry is characterized by: + Slowing growth in buyer demand that generates more head-to-head competition for market share+ Competition produces a greater emphasis on cost and service+ Product innovation and new end-use applications are harder to come by. + International competition increases.

+ Stiffing competition leads to mergers and acquisitions among former competitors, drives the weakest firms out of the industry, and produces industry consolidation. Strategic moves in a mature industry should be designed to increasing efficiency and preserving profits. These moves include: 1. More emphasis on product innovations.

Efforts to improve the production process can lower costs, improve product quality, and cause shorter design to market cycles. 2. A strong focus on cost reduction. 3. Purchasing rival firms at bargain prices. The rivals production can be used or shut down bringing more customers to your company.

4. Expanding internationally. Companies can enter foreign markets where attractive growth potential exists and where competitive pressures are not strong. In a declining industry cash flow and return on investment criteria are more appropriate than growth orientated performance measures, but sales and market share growth are not ruled out. Strong competitors can take sales from weaker rivals. Firms in declining industries can: 1.

Pursue a focused strategy by identifying, creating, and exploiting the growth segments within the industry. 2. Stress differentiation based on quality improvement and product innovation. 3. Work diligently to drive costs downIntroducing new, innovative versions of a product can create a fast growing market segment.

And the pursuit of greater operating efficiencies permits price cuts that can bring price conscious buyers back into the market. Fragmented industries are characterized by many small and medium sized companies with the absence of market leaders with large market shares or widespread buyer recognition. Examples are landscaping, auto repair, and trucking. The industry features low barriers to entry and a firm can grow by cultivating a loyal customer base.

Companies can: 1. Become a low cost operator. 2. Focus on a limited geographic area. 3. Specialize by product type.

4. Specialize by customer type. Companies can compete broadly or focus and pursue either a low-cost or a differentiation based competitive advantage. Managers should: 1. These moves include: 1. Companies can: 1.