Summary of Chapter
1. In fragmented industries composed of a large number of small- and medium-sized companies, the principal forms of competitive strategy are using the Internet, chaining, franchising, and horizontal merger.
2. In embryonic and growth industries, strategy is partly determined by market demand. Innovators and early adopters have different needs than the early and the late majority, and a company must have the right strategies in place to cross the chasms and survive. Similarly, managers must understand the factors that affect a market’s growth rate so that they can tailor their business model to a changing industry environment.
3. Companies need to navigate the difficult road from growth to maturity by choosing an investment strategy that supports their business models. In choosing this strategy, managers must consider the company’s competitive position in the industry and the stage of the industry’s life cycle. Some main types of investment strategy are share building, growth, market concentration, share increasing, harvest, and hold-and-maintain.
4. Mature industries are composed of a few large companies whose actions are so highly interdependent that the success of one company’s strategy depends upon the responses of its rivals.
5. The principal strategies used by companies in mature industries to deter entry are product proliferation, price cutting, and maintaining excess capacity.
6. The principal strategies used by companies in mature industries to manage rivalry are price signaling, price leadership, nonprice competition, and capacity control.
7. In declining industries, in which market demand has leveled off or is decreasing, companies must tailor their price and nonprice strategies to the new competitive environment. Companies also need to manage industry capacity to prevent the emergence of capacity expansion problems.
8. There are four main strategies a company can pursue when demand is falling: leadership, niche, harvest, and divestment. The strategic choice is determined by the severity of industry decline and the company’s strengths relative to the remaining pockets of demand.
