Dynamic View of Strategy

1. Dynamic View of Strategy Writtent by Constantinos C. Markides Presented by David and Thao

2. Heart and Soul Who should the company target? What products/services should be offered? How can this be done efficiently?

3. Uniqueness is Transitory • Success stems from exploiting an unparalleled strategic position • Uniqueness will not last • Competitors will imitate attractive positions • New strategic positions will emerge

4. Emerging Positions A new strategic position is simply another viable who-what-how combination As industries change, new strategic positions arise to challenge existing positions Existing niches expand while others die, new positions appear, markets fragement, and older niches merge to form larger markets

5. Two types of entry • It is important to recognize two types of entry • Imitative entry • Innovative entry

6. Imitative Entry Could potentially erode profits in two interrelated ways: • By increasing total industry supply (and thus driving prices down); • Through strategy convergence, whereby new entrants imitate the strategies of incumbent firms.

7. The relative strength of strategy convergence (*) • Strategic differentiation in the industry declined by 83% in the period 1992-98. This reduced industry profitability by 50%. • By contrast, the addition of new capacity by new entry caused a 19% decline in industry profitability. • Imitative entry and “strategy convergence” are not as beneficial as we assume. • Uniqueness is transitory since new positions continually emerge (*) Costas Markides. Market Dynamics and Entry. www.competition-commission.org.uk/our_role/cc_lectures/geroski_markides_pres_2.pdf

8. Innovative Entry How can a company prepare for the unknown?

9. Innovative Entry • Become the innovator • Exploit Someone else’ innovation • It’s not just new products or new technologies. It could be new business models.

10. The role of small Vs. Big firms* • Small firms and new entrants are good at “creation” • Large firms (established incumbents) are good at “scaling up”new, radical products. (*) Costas Markides. Market Dynamics and Entry. www.competition-commission.org.uk/our_role/cc_lectures/geroski_markides_pres_2.pdf

11. How ready is a big stabilized company • In most case, it fails when a technological innovation invades their market • Unable to take advantage of the new technology • Late adopters - Trapped in its own core competency • Unable to effectively manage the organization transition

12. Dynamic Strategy

13. Who – What – How positions • Strategic choices answering the basis of the buisiness • Who should the company target? • What products/services should be offered? • How can this be done efficiently? • In search of un-exploited strategic position • Innovative Technology – How can this be done differently

14. A corporate culture that welcomes changes • Processes allowing experimenting with new ideas • Skills allowing exploitation of the new position • Managing the transition Elements of a dynamic strategy

15. Being Ready • Ability to recognize an innovation early - • Ability to absorb innovative ideas or employ new technologies • Appropriate technical and business knowledge

16. Questions • How does emerging positions effect the strategic landscape of a market? • What are some ways that a company can become ready to deal with an emerging strategic position?