Industry Evolution & Environments Flashcards Preview

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Flashcards in Industry Evolution & Environments Deck (15)
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1
Q

High entry and mobility barriers and low exit barriers promote

A

Profitability

2
Q

The product life cycle includes four stages:

A

1) Introduction stage
2) Growth stage
3) Maturity stage
4) Decline stage

3
Q

Are the incentives or pressures that cause structural change. These processes operate to move an industry from its initial structure to its potential structure.

A

Evolutionary processes

4
Q

Individual firms have insignificant market shares and little influence on industry outcome.

A

Fragmented industry

5
Q

Economic causes of fragmentation may include:

A

1) Diseconomies of scale and

2) Diverse market needs

6
Q

Can contributes diseconomies of scales in a fragmented industry:

A

1) High transportation costs,
2) High inventory carrying costs, and
3) Sharp and unpredictable changes in sales.

7
Q

Fragmentation can be overcome if the factor(s) preventing consolidation can be eliminated. Examples include the following:

A

1) Using technology to create economies of scale in production, marketing, distribution service, etc.
2) Standardizing diverse market needs by introducing a new product
3) Isolating factors responsible for fragmentation
4) Acquisitions

8
Q

Is new or newly formed and is small initially. No rules exist, creating risks and opportunities.

A

Emerging industry

9
Q

Examples of strategic choices in emerging industries include:

A

1) Shaping the structure of an emerging industry and

2) Considering externalities in industry development

10
Q

Has sustained a permanent decrease in unit sales over the long run. However, this phase of the industry life cycle does not correspond exactly to the decline stage in the product life cycle.

A

Declining industry

11
Q

Examples of strategic choices in declining industries include the following:

A

1) Leadership strategy
2) Niche strategy
3) Harvest strategy
4) Quick divestment strategy

12
Q

In a declining industry: Is adopted by a firm that believes it can achieve market share gains to become the dominant firm.

A

Leadership strategy

13
Q

In a declining industry: Seeks a market segment (pocket of demand) with stable or slowly decreasing demand with the potential for above-average returns.

A

Niche strategy

14
Q

In a declining industry: Is, in effect, a controlled, gradual liquidation that maximizes cash flow by reducing costs and using the firm’s remaining strengths to increase prices or maintain sales.

A

Harvest strategy

15
Q

In a declining industry: Assumes that the highest net recovery is obtained by sale early in the decline phase. It is then that uncertainty about the industry’s future is greatest and other markets for the assets are most favorable.

A

Quick divestment strategy