Competitive Strategy in Mature Industries

Question 1

What is a Mature Industry?

Answer 1

An Industry that has underwent the majority of its development.

Question 2

What are Common Characteristics of Mature Industries?

Answer 2

• Market saturation.
• Historically high rivalrouness.
• Limited growth opportunities.
• Limited technological innovation.
• Sluggish aggregate capacity growth.
• Increased international competition.
• Historically frequent outbreaks of warfare.
• Strategic emphasis on market share, cost, and service.
• Strategic emphasis on selling to experienced, repeat Buyers.

Porter, Competitive Strategy — P. 293-296.

Question 3

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What are the Major Strategic Issues for a Firm in a Maturing Industry?

Answer 3

• Competing internationally.
• Design and process innovation.
• Optimised Buyer-Supplier selection.
• Commitment to a strategic direction.
• Increasing the scope of Buyer purchases.
• Optimised product curation and pricing as informed by a sophisticated cost analysis.
• Expansion through the acquisition of severely undervalued (often distressed) assets and companies.

Porter, Competitive Strategy — P. 296-301.

It is not a given that strategic shifts are needed to compete successfully in Mature Industries; the choice depends on the nature of the Industry’s structural changes and their implications for profit, the Firm’s resources and those of its Rivals, and the duration and severity of transitional turmoil.

Question 4

What are common Strategic Pitfalls for a Firm in a Maturing Industry?

Answer 4

• Capacity overhang.
• Failing to commit to one strategic direction.
• Excessively investing cash to build market share.
• Surrundering market share for short-term profit.
• Emphasising evenue instead of profitability.
• Clinging to quality despite the erosion of its Differentiating effects.
• Maintaining outdated assumptions about itself, its Rivals, and the Industry.
• Irrational unwillingness to compete on price or adapt to changing practices.
• Overemphasising innovation and neglecting to improve and aggressively sell flagship products.

Porter, Competitive Strategy — P. 302-305.