1. Dealing with all the risks and opportunities of an emerging industry is one of the most challenging business strategy problems.
CORE CONCEPT: Strategic success in an emerging industry calls for bold entrepreneurship, a willingness to pioneer and take risks, an intuitive feel for what buyers will like, quick responses to new developments, and opportunistic strategy making.
2. To be successful in an emerging industry, companies usually have to pursue one or more of the following strategic avenues:
a. Try to win the early race for industry leadership with risk-taking entrepreneurship and a bold creative strategy
b. Push to perfect the technology, improve product quality, and develop additional attractive performance features
c. As technological uncertainty clears and a dominant technology emerges, adopt it quickly
d. Form strategic alliances with key suppliers to gain access to specialized skills, technological capabilities, and critical materials or components
e. Acquire or form alliances with companies that have related or complementary technological expertise
f. Try to capture any first-mover advantages associated with early commitments to promising technologies
g. Pursue new customer groups, new user applications, and entry into new geographical areas
h. Make it easy and cheap for first-time buyers to try the industry’s first-generation product
i. Use price cuts to attract the next layer of price-sensitive buyers into the market
3. The short-term value of winning the early race for growth and market share leadership has to be balanced against the longer-range need to build a durable competitive edge and a defendable market position.
CORE CONCEPT: The early leaders in an emerging industry cannot rest on their laurels; they must drive hard to strengthen their resource capabilities and build a position strong enough to ward off newcomers and compete successfully for the long haul.
4. Young companies in fast-growing markets face three strategic hurdles: (1) managing their own rapid expansion, (2) defending against competitors trying to horn in on their success, and (3) building a competitive position extending beyond their initial product or market.
5. Up-and-coming companies can help their cause by: (1) selecting knowledgeable members for their boards of directors, (2) hiring entrepreneurial managers with experience in guiding young businesses through the start-up and takeoff stages, (3) concentrating on out-innovating the competition, and (4) merging with or acquiring another firm to gain added expertise and a stronger resource base.
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