Discuss the strategy for competing in maturing industry

Ans :     The transition to market maturity usually produces fundamental changes in the industry ‘s competitive environment :

a)    Slowing growth in buyer demand generates more head to head competition for market share firms that want to continue on a rapid growth track start looking for ways to take customer away from competitors. Outbreaks of price cutting increase advertising, and other aggressive tactics to gain market share are common.

b)   Buyers become more sophisticated, often driving a harder bargain on repeat purchase. Buyers are better able to evaluate different brands and can use their knowledge to negotiate a better deal with sellers.

c)    Competition often produces a greater emphasis on cost and service. Buyer’s choices increasingly depend on which seller offers the best combination of price and service.

d)   Firms have a “topping out” problem in adding out production capacity. Slower rates of industry growth mean slowdowns in capacity expansion. Because each firm has to monitor ‘rivals’ expansion plans and time its own capacity additions to minimize industry oversupply.

e)    Product innovation and new end use applications are harder to come by. Producer find it increasingly difficult to create appealing new performance features, find further uses for the product and sustain buyers excitement.

f)     International competition increases. Growth minded domestic firms start to seek out sales opportunities in foreign markets some companies looking for ways to cut costs. Relocates plants to countries with lower wages rates.

g)    Industry profitability falls temporarily or permanently. Slower growth increase competition.

h)   Stiffening competition leads to mergers and acquisitions among former competitors, drives the weakest firms out of the indus

    What are strategies that you will use for competing in stagnant or declining industry?

Ans :     achieving competitive advantage in stagnant or declining industries usually requires pursuing one of three competitive approaches:

1.    Focusing on going market segment with in the industry:  Pursue a focused strategy by identifying, creating and exploiting the growth segments with in the industry. Stagnant or declining markets, like other markets, are composed of numerous segment or niches. Frequently, one or more of these segments is growing rapidly, despite stagnation in the industry as a whole. An astute competitor who is first to concentrate on the attractive growth segments can escape stagnating sales and profits and possibly achieve competitive advantage in the target segments.

2.    Differentiating on the basis of better quality and frequent product innovation:   Stress differentiation based on quality improvement and product innovation. Either enhances quality or innovation can rejuvenate demand by creating important new growth segments or inducing buyers to trade up. Successful product innovation opens up an avenue for competing besides meeting or beating rivals prices. Such differentiation can have the additional advantage of being difficult and expensive for rival firms to imitate.

3.    Becoming a lower cost producer: Work diligently and persistently to drive cost down. When increase in sales cannot be counted on to increase earnings, companies can improve profit margins and return on investment by stressing continuous productivity improvement and cost reduction year after year.

Potential cost saving actions includes:

A.  Outsourcings functions and activities that can be that can be performed more cheaply by outsiders.

B.   Completely redesigning internal business processes.

C.   Consolidating underutilized production facilities.

D.  Adding more distribution channels to ensure the unite volume needed for low cost production.

E.   Closing low volume, high cost distribution outlets.

F.    Cutting marginally beneficial activities out of the value chain.

Q - 28.      Describe the pitfalls in a maturing industry?

Ans :     One of the biggest strategic mistakes a firm can make in a maturing industry is pursuing a compromise between low cost, low cost differentiation and focusing such that it ends up with a fuzzy strategy, an weak defined market identity no competitive advantages, and little prospect of becoming an industry leader. Strategic pitfalls in maturing industries are:

a)    Employing a ho-hum strategy with no distinctive features thus leaving firm “stuck in the middle”

b)   Being slow to mount a defense against stiffening competitive pressures.

c)    Concentrating on short-term profits rather than strengthening long-term competitiveness.

d)   Being slow to respond to price – cutting.

e)    Having too much excess capacity.

f)     Overspending on marketing.

g)    Failing to aggressively pursue cost reductions.

    Which strategic are used for the competing in turbulent and high velocity market?

Ans :     strategy for competing in turbulent and high velocity markets: the characteristics of the turbulent ,, high velocity markets is the occurrence of all the following things at once:

1.    Rapid technological change.

2.    Short product life cycles.

3.    Entry of new rivals into the marketplace.

4.    Frequent launches of new competitive moves by rivals.

5.    Fast evolving customer requirements.

6.    E.g mobile service, cell phones,.

       Discuss the features of high velocity market?

Ans :     The Features  of  High-Velocity  Markets:

u            Rapid-fire technological change.                         

u  Short product life-cycles.

u     Entry of important new rivals.

u      Frequent launches of new competitive moves.

u    Rapidly evolving customer expectations.