Strategies for Firms in Stagnant or Declining Industries


0
51 comments

1.   Many firms operate in industries where demand is growing more slowly than the economy-wide average or is even declining.

Advertisement

2.   Stagnant demand by itself is not enough to make an industry unattractive. Selling out may or may not be practical and closing operations is always a last resort.

3.   Businesses competing in stagnant or declining industries must resign themselves to performance targets consistent with available market opportunities.

4.   In general, companies that succeed in stagnant industries employ one or more of three strategic themes:

a.   Pursue a focused strategy aimed at the fastest growing market segments within the industry

b.   Stress differentiation based on quality improvement and product innovation

c.   Strive to drive costs down and become the industry’s low-cost provider

CORE CONCEPT: Achieving competitive advantage in stagnant or declining industries usually requires pursuing one of three competitive approaches: focusing on growing market segments within the industry, differentiating on the basis of better quality and frequent product innovation, or becoming a lower-cost producer.

5.   These three strategic themes are not mutually exclusive.

6.   The most common strategic mistakes companies make in stagnating or declining markets are:

a.   Getting trapped in a profitless war of attrition

b.   Diverting too much cash out of the business too quickly

c.   Being overly optimistic about the industry’s future and spending too much on improvements in anticipation that things will get better

Advertisement
The following two tabs change content below.
We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to contact@bms.co.in.

Like it? Share with your friends!

0
51 comments
BMS Team

We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to contact@bms.co.in.

51 Comments

Ask Us On WhatsApp
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format