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(ASM)G3 Dynamic strategy (Competitive Life Cycle Analysis (Three Phase…
(ASM)G3 Dynamic strategy
The Dynamic Capabilities Perspective
Fundamental Principle of Business Strategy
No firm realizes economic rents in perfect competitive market
Corollary
Imitation is the sincerest form of flattery
Change is the only constant
Economic rents come from:
Monopoly Rent
Barriers to entry
Industry structure matters
Ricardian Rents
Barriers to imitation
Firm structure matters
Entrepreneurial Rents
Markets are dynamic
Innovation matters
Dynamic capabilities perspective
Premise that markets are ultimately dynamic
Economic rents are due to temporal advantages
Timing and adaptation is critical for success
Introduction to the Competitive Life Cycle
Goal
The pattern of firms, revenues, and margins in an industry over time
phrase
Growth(shakeout)
what
entry of new players & number grow to a point
Example
automobile industry
margins
successful
start to grow as the market starts to grow
Emerge(Annealing)
What
It's not clear what the dominant standard might be in the marketplace
Example
automobile industry
different attempts for the internal drive train
margins
low
Mature(Disruption)
what
stable
how
Porter's five forces analysis
Why Incumbent Firms Fail or Survive
Fail
No better positioned than new entrants
The innovation renders existing capabilities
Example:
Swiss watchmaker v.s. Digital watches
Tons of entrepreneurs
All it needs is one successful idea
Worse positioned than entrants
The past success becomes future blinders
Example:
Kodak
Select not to change
Example:
Blockbuster
Survive
Why do firms succeed?
Innovation needs
extensive capital and expertise
Not easy for small, new firms
Customers desire the assurance of established firms
Brand, reputation
Example:
online education
Leverage complementary resources or capabilities
Supplier network, distribution network, sales forces
Dynamic capabilities
To adjust to changing business conditions
Example:
Intel
Competitive Life: CycleCommon Patterns
In the begining~
Emergent Phase
Innovation focus on product feature
Largely exploratory
Led by small enterprise
Profit made through Differentiation and Niche placement
Growth Phase
Only few large, efficient firms remian
Pioneering firms often whiter away
Innovation shifts to process, delivery and service
Disruption occurs and competitive reordering occurs
Emerge of new dominant design
New technology may be worse at First!
New technology supplant odd as they improve
Some new technology may fail to improve fast enough and even disapper
New business model or technology emerge
Exogenous technological change
Technology Push
Change in market due to consumer shifts
Demand Push
Competitive Life Cycle Analysis
Three Phase
Emergent Phase
How long is the emergent phase?
Growth Phase
How long is the growth phase?
Mature Phase
How long is the mature phase?
Slowly evolving or hyper-dynamic?
Disruption
Annealing
Shakeout
Overall
How important is innovation/adaptation to market?
Do we have innovation capability?
Can we appropriate value from innovation?
Example : Netflix
Severity
Radical or incremental?
Dominant design or multiple designs?
Winner-take-all, duopoly, contested?
First move advantage?