Strategic Management & Strategic Planning Process

Definition
Strategic management process

is a method by which managers conceive of and implement a strategy that can lead to a
sustainable competitive advantage.
[1]
Strategic planning process

is a systematic or emerged way of performing strategic planning in the organization through

initial assessment, thorough analysis, strategy formulation, its implementation and evaluation.
What is that strategic planning process?
The process of strategic management lists what steps the managers should take to create a
complete strategy and how to implement that strategy successfully in the company. It might
comprise from 7 to nearly 30 steps[4] and tends to be more formal in well-established
organizations.
The ways that strategies are created and realized differ. Thus, there are many different models
of the process. The models vary between companies depending upon:
● Organization’s culture.
● Leadership style.
● The experience the firm has in creating successful strategies.
All the examples of the process in this article represent top-down approach and belong to the
‘design school’.
Components of strategic planning process
There are many components of the process which are spread throughout strategic planning
stages. Most often, the strategic planning process has 4 common phases: strategic analysis,
strategy formulation, implementation and monitoring (David[5], Johnson, Scholes &
Whittington[6], Rothaermel[1], Thompson and Martin[2]). For clearer understanding, this
article represents 5 stages of strategic planning process:
● Initial Assessment
● Situation Analysis
● Strategy Formulation
● Strategy Implementation
 ● Strategy Monitoring
Initial Assessment
Components: Vision statement & Mission statement
Tools used: Creating a Vision and Mission statements.
The starting point of the process is initial assessment of the firm. At this phase managers
must clearly identify the company’s vision and mission statements.
Business' vision answers the question: What does an organization want to become? Without
visualizing the company’s future, managers wouldn’t know where they want to go and what
they have to achieve. Vision is the ultimate goal for the firm and the direction for its
employees.
In addition, mission describes company’s business. It informs organization’s stakeholders
about the products, customers, markets, values, concern for public image and employees of
the organization (David, p. 93)[5]. Thorough mission statement acts as guidance for
managers in making appropriate (Rothaermel, p. 34)[1] daily decisions.
Situation Analysis
Components: Internal environment analysis, External environment analysis and Competitor
analysis
Tools used: PEST ​(political, economic, socio-cultural and technological)​, SWOT, Core
Competencies, Critical Success Factors, Unique Selling Proposition, Porter's 5 Forces,
Competitor Profile Matrix, External Factor Evaluation Matrix, Internal Factor Evaluation
Matrix, Benchmarking, Financial Ratios, Scenarios Forecasting, Market Segmentation, Value
Chain Analysis, VRIO Framework
When the company identifies its vision and mission it must assess its current situation in the
market. This includes evaluating an organization’s external and internal environments and
analyzing its competitors.
During an external environment analysis managers look into the key external forces: macro &
micro environments and competition. PEST or PESTEL (political, economic, socio-cultural,
technological and legal) frameworks represent all the macro environment factors that
influence the organization in the global environment. Micro environment affects the company
in its industry. It is analyzed using Porter’s 5 Forces Framework.
Competition is another uncontrollable external force that influences the company. A good
example of this was when Apple released its IPod and shook the mp3 players industry,
including its leading performer Sony. Firms assess their competitors using competitors profile
matrix and benchmarking to evaluate their strengths, weaknesses and level of performance.
Internal analysis includes the assessment of the company’s resources, core competencies and
activities. An organization holds both tangible resources: capital, land, equipment, and
intangible resources: culture, brand equity, knowledge, patents, copyrights and trademarks
(Rothaermel, p. 90)[1]. A firm’s core competencies may be superior skills in customer
relationship or efficient supply chain management. When analyzing the company’s activities
managers look into the value chain and the whole production process.
As a result, situation analysis identifies strengths, weaknesses, opportunities and threats for
the organization and reveals a clear picture of company’s situation in the market.
Strategy Formulation
Components: Objectives, Business level, Corporate level and Global Strategy Selection
Tools used: Scenario Planning, SPACE Matrix, Boston Consulting Group Matrix,
GE-McKinsey Matrix, Porter’s Generic Strategies, Bowman’s Strategy Clock, Porter’s
Diamond, Game Theory, QSP Matrix.
Successful situation analysis is followed by creation of long-term objectives. Long-term
objectives indicate goals that could improve the company’s competitive position in the long
run. They act as directions for specific strategy selection. In an organization, strategies are
chosen at 3 different levels:
 ● Business level strategy. This type of strategy is used when strategic business units
(SBU), divisions or small and medium enterprises select strategies for only one
product that is sold in only one market. The example of business level strategy is well
illustrated by Royal Enfield firms. They sell their Bullet motorcycle (one product) in
United Kingdom and India (different markets) but focus on different market segments
and sell at very different prices (different strategies). Firms may select between
Porter’s 3 generic strategies: cost leadership, differentiation and focus strategies.
Alternatively strategies from Bowman’s strategy clock may be chosen (Johnson,
Scholes, & Whittington, p. 224[6]).
● Corporate level strategy. At this level, executives at top parent companies choose
which products to sell, which market to enter and whether to acquire a competitor or
merge with it. They select between integration, intensive, diversification and
defensive strategies.
● Global/International strategy. The main questions to answer: Which new markets to
develop and how to enter them? How far to diversify? (Thompson and Martin, p.
557[2], Johnson, Scholes, & Whittington, p. 294[6])
Managers may choose between many strategic alternatives. That depends on a company’s
objectives, results of situation analysis and the level for which the strategy is selected.
Strategy Implementation
Components: Annual Objectives, Policies, Resource Allocation, Change Management,
Organizational chart, Linking Performance and Reward
Tools used: Policies, Motivation, Resistance management, Leadership, Stakeholder Impact
Analysis, Changing organizational structure, Performance management
Even the best strategic plans must be implemented and only well executed strategies create
competitive advantage for a company.
At this stage managerial skills are more important than using analysis. Communication in
strategy implementation is essential as new strategies must get support all over organization
for effective implementation. The example of the strategy implementation that is used here is
taken from David’s book, chapter 7 on implementation[5]. It consists of the following 6
steps:
● Setting annual objectives;
● Revising policies to meet the objectives;
● Allocating resources to strategically important areas;
● Changing organizational structure to meet new strategy;
● Managing resistance to change;
● Introducing new reward system for performance results if needed.
The first point in strategy implementation is setting annual objectives for the company’s
functional areas. These smaller objectives are specifically designed to achieve financial,
marketing, operations, human resources and other functional goals. To meet these goals
managers revise existing policies and introduce new ones which act as the directions for
successful objectives implementation.
The other very important part of strategy implementation is changing an organizational chart.
For example, a product diversification strategy may require new SBU to be incorporated into
the existing organizational chart. Or market development strategy may require an additional
division to be added to the company. Every new strategy changes the organizational structure
and requires reallocation of resources. It also redistributes responsibilities and powers
between managers. Managers may be moved from one functional area to another or asked to
manage a new team. This creates resistance to change, which has to be managed in an
appropriate way or it could ruin excellent strategy implementation.
Strategy Monitoring
Components: Internal and External Factors Review, Measuring Company’s Performance
Tools used: Strategy Evaluation Framework, Balanced Scorecard, Benchmarking
Implementation must be monitored to be successful. Due to constantly changing external and
internal conditions managers must continuously review both environments as new strengths,
weaknesses, opportunities and threats may arise. If new circumstances affect the company,
managers must take corrective actions as soon as possible.
Usually, tactics rather than strategies are changed to meet the new conditions, unless firms
are faced with such severe external changes as the 2007 credit crunch.
Measuring performance is another important activity in strategy monitoring. Performance has
to be measurable and comparable. Managers have to compare their actual results with
estimated results and see if they are successful in achieving their objectives. If objectives are
not met managers should:
● Change the reward system.
● Introduce new or revise existing policies.
The key element in strategy monitoring is to get the relevant and timely information on
changing environment and the company’s performance and if necessary take corrective
actions.
Different models of the process
There is no universal model of the strategic management process. The one, which was
described in this article, is just one more version of so many models that are established by
other authors. In this section we will illustrate and comment on 3 more well-known
frameworks presented by recognized scholars in the strategic management field. More about
these models can be found in the authors’ books.
Figure 1. David’s Model of the Strategic Management’s Process

Source: David (p. 46)

Stages
● Strategy Formulation
● Strategy Implementation
● Strategy Evaluation
Steps
 1. Develop vision and mission
2. External environment analysis
3. Internal environment analysis
4. Establish long-term objectives
5. Generate, evaluate and choose strategies
6. Implement strategies
7. Measure and evaluate performance
Benefits
● Indicates all the major steps that have to be met during the process.
● Illustrates that the process is a continuous activity.
● Arrows show the two way process. This means that companies may sometimes go a
step or two back in the process rather than having to complete the process and start it
all over from the beginning. ​For example​, if in the implementation stage the company
finds out that the strategy it chose is not viable, it can simply go back to the strategy
selection point instead of continuing to the monitoring stage and starting the process
from the beginning.
Drawbacks
● Represents only strategy formulation stage and does separate situation analysis from
strategy selection stages.
● Confuses strategy evaluation with strategy monitoring stage.
Figure 2. Rothaermel’s The Analysis-Formulation-Implementation (AFI) Strategy
Framework

Source: Rothaermel (p. 20)

Stages
● Analysis
● Formulation
 ● Implementation
Steps
1. Initial analysis
2. External and internal analysis
3. Business or corporate strategy formulation
4. Implementation
Benefits
● Shows that the process is a continuous activity.
● Separates initial analysis (in this articles it’s called initial assessment) from
internal/external analysis.
● Emphasizes the main focus of strategic management: “Gain and sustain competitive
advantage”.
Drawbacks
● Does not include strategy monitoring stage.
● Arrows indicate only one way process. ​For example​, after the strategy formulation the
process continues to the implementation stage while this is not always the truth.
Companies may go back and reassess their environments if some conditions had
changed.
Figure 3. Thompson’s and Martin’s Strategic Management Framework

Source: Thompson and Martin (p.36)

Stages
● Where are we?
● Where are we going?
● How are we getting there?
● How are we doing?
Steps
1. Situation appraisal: review of corporate objectives
2. Situation assessment
 3. Clarification of objectives
4. Corporate and competitive strategies
5. Strategic decisions
6. Implementation
7. Monitor progress
Benefits
● Indicates all the major steps that have to be met during the process.
● Shows that the process is a continuous activity.
● The model is supplemented by 4 fundamental strategic management questions.
Drawbacks
● Arrows indicate only one way process.
Limitations
It is rare that the company will be able to follow the process from the first to the last step.
Producing a quality strategic plan ​requires time​, during which many external and even
internal conditions may change. This results in the flawed strategic plan which has to be
revised, hence requiring even more time to finish.
On the other hand, when implementing the strategic plan, the actual results do not meet the
requirements of the strategic plan so the plan has to be altered or better methods for the
implementation have to be discovered. This means that some parts of strategic management
process have to be done simultaneously, which makes the whole process more ​complex​.
Sources
Balanced Scorecard Basics

The balanced scorecard (BSC) is a strategic planning and management system that
organizations use to:
● Communicate what they are trying to accomplish
● Align the day-to-day work that everyone is doing with strategy
● Prioritize projects, products, and services
● Measure and monitor progress towards strategic targets

The system connects the dots between big picture strategy elements such as mission (our
purpose), vision (what we aspire for), core values (what we believe in), strategic focus areas
(themes, results and/or goals) and the more operational elements such as objectives
(continuous improvement activities), measures (or key performance indicators, or KPIs,
which track strategic performance), targets (our desired level of performance), and initiatives
(projects that help you reach your targets).
Who Uses the Balanced Scorecard (BSC)?

BSCs are used extensively in business and industry, government, and nonprofit organizations
worldwide. Gartner Group suggests that over 50% of large US firms have adopted the BSC.
More than half of major companies in the US, Europe, and Asia are using the BSC, with use
growing in those areas as well as in the Middle East and Africa. A recent global study by
Bain & Co listed balanced scorecard fifth on its top ten most widely used management tools
around the world, a list that includes closely-related strategic planning at number one. BSC
has also been selected by the editors of Harvard Business Review as one of the most
influential business ideas of the past 75 years.
​BSC Terminology: Perspectives
The BSC suggests that we view the organization from four perspectives, and to develop
objectives, measures (KPIs), targets, and initiatives (actions) relative to each of these points
of view:

● Financial: often renamed Stewardship or other more appropriate name in the

public sector, this perspective views organizational financial performance and the
use of financial resources
● Customer/Stakeholder: this perspective views organizational performance from
the point of view the customer or other key stakeholders that the organization is
designed to serve
● Internal Process: views organizational performance through the lenses of the
quality and efficiency related to our product or services or other key business
processes
● Organizational Capacity (originally called Learning and Growth): views
organizational performance through the lenses of human capital, infrastructure,
technology, culture and other capacities that are key to breakthrough performance

BSC Terminology: Strategic Objectives

Strategic Objectives are the continuous improvement activities that we must do to implement
strategy. The break down the more abstract concepts like mission and vision into actionable
steps. Actions that your organization take should be helping you achieve your strategic
objectives. Examples might include: Increase Revenue, Improve the Customer or Stakeholder
Experience, or Improve the Cost-Effectiveness of Our Programs.

BSC Terminology: Strategy Mapping

One of the most powerful elements in the BSC methodology is the use of strategy mapping to
visualize and communicate how value is created by the organization. A strategy map is a
simple graphic that shows a logical, cause-and-effect connection between strategic objectives
(shown as ovals on the map). Generally speaking, improving performance in the objectives
found in the Organizational Capacity perspective (the bottom row) enables the organization
to improve its Internal Process perspective (the next row up), which, in turn, enables the
organization to create desirable results in the Customer and Financial perspectives (the top
two rows).

BSC Terminology: Measures (Key Performance Indicators)

For each objective on the strategy map, at least one measure or Key Performance Indicator
(KPI) will be identified and tracked over time. KPI’s indicate progress toward a desirable
outcome. Strategic KPIs monitor the implementation and effectiveness of an organization's
strategies, determine the gap between actual and targeted performance and determine
organization effectiveness and operational efficiency.

Good KPIs:

● Provide an objective way to see if strategy is working

● Offer a comparison that gauges the degree of performance change over time
● Focus employees' attention on what matters most to success
● Allow measurement of accomplishments, not just of the work that is performed
● Provide a common language for communication
● Help reduce intangible uncertainty
​BSC Terminology: Cascading

Cascading a balanced scorecard means to translate the corporate-wide scorecard (referred to

as ​Tier 1​) down to first business units, support units or departments (​Tier 2​) and then teams
or individuals (​Tier 3​). The end result should be focus across all levels of the organization
that is consistent. The organization alignment should be clearly visible through strategy,
using the strategy map, performance measures and targets, and initiatives. Scorecards should
be used to improve accountability through objective and performance measure ownership,
and desired employee behaviors should be incentivized with recognition and rewards.

Cascading strategy focuses the entire organization on strategy and creating line-of-sight
between the work people do and high level desired results. As the management system is
cascaded down through the organization, objectives become more operational and tactical, as
do the performance measures. Accountability follows the objectives and measures, as
ownership is defined at each level. An emphasis on results and the strategies needed to
produce results is communicated throughout the organization. This alignment step is critical
to becoming a strategy-focused organization.
BSC History
The Balanced Scorecard (BSC) was originally developed by Dr. Robert Kaplan of Harvard
University and Dr. David Norton as a framework for measuring organizational performance
using a more BALANCED set of performance measures. Traditionally companies used only
short-term financial performance as measure of success. The “balanced scorecard” added
additional non-financial strategic measures to the mix in order to better focus on long-term
success. The system has evolved over the years and is now considered a fully integrated
strategic management system.

Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a
Strategic Management System,” Harvard Business Review (January-February 1996): 76.

While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type
of approach are deep, and include the pioneering work of General Electric on performance
measurement reporting in the 1950’s and the work of French process engineers (who created
theTableau de Bord – literally, a "dashboard" of performance measures) in the early part of
the 20th century.

This new approach to strategic management was first detailed in a series of articles and books
by Drs. Kaplan and Norton and built on work by Art Schneiderman at Analog Devices.
Recognizing some of the weaknesses and vagueness of previous management approaches, the
balanced scorecard approach provides a clear prescription as to what companies should
measure in order to 'balance' the financial perspective.

Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the
story of past events, an adequate story for industrial age companies for which investments in
long-term capabilities and customer relationships were not critical for success. These
financial measures are inadequate, however, for guiding and evaluating the journey that
information age companies must make to create future value through investment in
customers, suppliers, employees, processes, technology, and innovation."

BSC Automation and Performance Analysis

Once a scorecard has been developed and implemented,

performance management software can be used to get the right performance information to
the right people at the right time. Automation adds structure and discipline to implementing
the Balanced Scorecard system, helps transform disparate corporate data into information and
knowledge, and helps communicate performance information. The Balanced Scorecard
Institute formally recommends the ​QuickScore Performance Information System​TM
developed by ​Spider Strategies ​and co-marketed by the Institute.

BSC Development

The Institute’s award-winning framework, ​Nine Steps to SuccessTM​, is a disciplined,

practical approach to developing a strategic planning and management system based on the
balanced scorecard. Training is an integral part of the framework, as is coaching, change
management, and problem solving. Emphasis is placed on “teaching clients to fish, not
handing them a fish”, so the scorecard system can be sustained.
A key benefit of using a disciplined framework is that it gives organizations a way to
‘connect the dots’ between the various components of strategic planning and management,
meaning that there will be a visible connection between the projects and programs that people
are working on, the measurements being used to track success, the strategic objectives the
organization is trying to accomplish and the mission, vision and strategy of the organization.

1. Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases.

McGraw-Hill/Irwin, p. 20, 32-45, 90
2. Thompson, J. and Martin, F. (2010). Strategic Management: Awareness & Change.
6th ed. Cengage Learning EMEA, p. 34, 557, 790
3. Clark, D. N. (1997). Strategic management tool usage: a comparative study. Strategic
Change Vol. 6, pp. 417-427
4. David, F.R. (2009). Strategic Management: Concepts and Cases. 12th ed. FT Prentice
Hall, p. 36-37, 45-47, 93
5. Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed.
FT Prentice Hall, p. 11-13, 224, 294
6. Virtual Strategist (2012). Overview of the Strategic Planning Process (VIDEO).
Available at: ​http://www.youtube.com/watch?v=sU3FLxnDv_A

Lecture 6 :- Understanding : Driving forces

Strategic Management:

Understanding : Driving Forces,Strategic Group Mapping &Key Success Factors

Factors driving Industry Change …

All industries are characterised by trends and new development that gradually
or speedily produce changes important enough to require a strategic response
from participating firms.

Also Industries go thru a life cycle changes- its difference stages and hence the
Industry change….but it is far from complete
There are more causes…..that need to be identified and their impact to be
understood.

The Concept of Driving Force:

Industry conditions change because important forces are driving industry

participants (competitor, customer, or suppliers) to alter their actions; the
driving forces in an industry are the major underlying causes of changing
industry and competitive conditions- they have the biggest influence on how the
industry landscape will be altered. Some originate in the outer ring of
macro-environment and some originate from the inner ring.

Driving forces Analysis:

1. Identifying what the driving forces are

2. Assessing whether the drivers of change are, on the whole, acting to make
the industry more or less attractive
3. Determining what strategy changes are needed to prepare for the impact
of the driving forces

Identifying an Industry’s Driving Forces:

1) Emerging new internet Capabilities and Applications

Got into every days biz operation and social fabric of life all across the world.

Increasing internet usage & Speed->Growing internet shopping

Companies using online technology

Collaborate closely with suppliers and streamline their supply chain

Revamp internal operations and squeeze our cost saving

Manufacturer-> website-> Direct customers.

All Biz->Extend Geographical Reach

Low cost increases the no. of online rival and hence the compitition of online
v/s brick and mortar sellers.

Internet gives customer-> Power to research the product offering and shop the
market for the best Value.

untig Ability of Consumer to download Music from internet has reshaped

traditional music retailers

● Emails has eroded fax services and first class mail delivery revenues of
govt postal services world wide
● Videoconferencing has eroded the demand of biz travels
● Online cources offering have the potential of revolutionise higher
education

Internet will feature faster speed, dazzling applications and over a billion
connected gadgets performing an array of functions thus driving firther
industry and competitive changes

Internet related impacts vary from industry to industry

2) Increasing Globalisation:

Competition begin to shift from regional & national focus to an inernational or

global focus
Industry members begin seeking out customers in foreign market
Production activities begin to migrate to countries where costs are lowest
Global competition really starts when one or more ambitious Companies
precipitate a race for world wide market leadership.
Globalization happens:-

● Blossoming of customer and demand in more and more countries

● Action of govt to reduce the trade barrier .Europe,Latin America and Asia
● Significant difference in labour cost ->locate plant e.g China, india ,
Singapore, Maxico and Brazil ¼ of those in US, Germany and Japan

Eg.Industires :- Credit Card, CellPhone, Digital Camera, Golf and Ski

Equipment, Motor Vehicles, Steel, Petrolium, Personal Computers, Vedio
Games, Public Accounting and Text Publishing….

3) Changes in an Industry Long Term Growth Rate.

Shift in industry growth or are driving force for industry change, affecting the
balance between industry supply and buyer demand, entry and exit of the firms

Increase in buyers demand triggers a race among established firms and new
comers to capture the new sales opportunities, in turn will launch offensive
strategies to broaden customer base and grow significantly

Decrease or slow down in rate at which demand is growing firms fight for their
market share

If industry sales suddenly turns flat competition itencify, consolidation takes

shapes by mergers and acquisations,
Stagnating sales forces both weak and strong firms to sell their biz to those who
elect to stick-> forces to close inefficient plants and retrench to small prod
base…

4) Changes in who buys the Product and how they use it:

Shift in buyer demographics-New ways of using product- firms broaden or

narrow their product line-diff sales & promotion…

Downloading Music From Internet-Storing Music Files on HD & PC, Burning

CD-forced to reexamin the traditional music stores-also have stimulated the
sales of Disc burners and blank discs.

PC & Internet- Banks to expand their electronics bill payment services and
retailers to move more of their customer services online

5) Product Innovation:

Rivals racing to be first to introduce the new product or product enhancement

after another.

Competition changes->attracting more 1st time buyers ->Rejuvenating ind

growth, creating wider or narrow prod differentiation.

Strong market position of Successful innovators at the cost of slow innovators

Eg. Degital Cameras, Golf Glub, Video games, Toys and Prescription Drugs.

6) Technology Change & Manufacturing Process Innovation

Advances in the technology can dramatically alter an industry’s landscape.

Gives birth to new and better products at lower costs opening up new industry
frontier.

Identifying an Industry’s Driving Forces: Technology change contd..

Eg.

● Internet based phones are stealing large number of customers from using
traditional telepone co world wide( high cost technology, hard weird
connections via overheads and underground telephone lines
● Flat screen technology are killing CRT monitors
● LCD and Plasma screen tech are driving CRT tech further
● Digital tech driving huge change in camera and film industry
● MP3 technology is transforming how people listen to music.

7) Marketing Innovation :
Successful in introducing new ways to MARKET their products:
 ● Spark a burst in buyer interest
● Widen industry demand
● Increase product differentiation
● Lower unit cost

Any or all of which can alter the competitive position of rival firm

Eg.

On line marketing of Electronics goods

Music artist mkting their own website V/s contract with recording Studios….

8) Entry or Exit of Major Firms

Entry of one or more foreign co. into a geographic market once dominated by
domestic firms shakes up the competitive scenario.

Pushes the competition to new direction

Bring in new rules of competiting

Exit:- Reduces the no of mkt leaders, dominance of existing players and rush to
capture existing firm’s customers.
 9) Diffusion of Technical Know how across more companies and more
countries.

As the knowledge spreads, the competitive advantage of existing firm originally

possessing it erodes.

It happens thru Scientific Journals, Trade Publications, On site Plant tours,

Word of mouth, Employees Migration, and internet sources

Tehnology knowledge license / Royaltee fees

Cross border technology transfer has made the once domestic industries of
automobile, tires, consumer electronics, telecommunication and computers
truly global

10) Change in cost and efficiency

Widening or shrinking differences in the costs among key compititors tend to

dramatically alter the state of compitition

Low cost fax and e mail put mounting pressure on the ineffecient and high cost
operation of Postal Dept.

Shrinking cost of differences in producing multifeatured mobiles is turning the

mobile phone market into comodity business and making more buyers to base
Price as their Purchase decision

11) Growing buyer preferences for differentiated products instead of a

commodity product
When buyers taste and preferences start to diverge, sellers can win a loyal
following by providing different vairants and taste then the compotitors.

Eg.

● Beer
● Automobile

12) Reduction in uncertainty and Business Risk.

An emerging industry is typically characterised by much uncertainty and risk

in terms of time and efforts required to coverup with the investments.
Emerging industries tend to atract only risk-taking entrepreneurial companies.
over time how ever, if the business model of industry pioneers proves profitable
and market demand for the product appears durable, more conservative firms
are usually enticed to enter the market. Often the later enterants are large &
financially strong looking to invest into attractive growth industry.

Low biz risk and less industry uncertainty also affect competition in
international market. In the early stage the co. enters foreign mkt with a
conservatie approach with less risky strategies like exporting, licensing, joint
marketing agreement and JV with local companies.
As time goes and the co accumulates experience, it starts moving boldly and
independently making acquisitions, constructing their own plantss, puting their
own sales and mkting capabilities to build strong competitive position...

13) Regulatory Influence and government Poliy Changes.

Govt regulatory actions can often forces significant changes in industry
practices and strategic approaches.
Deregulation has proved to be a potent pro competitive force in the airline,
banking, natural gas, telecommunications, and electric utility industries.
Govt efforts to reform MEDICARE and HEALT Insurance have become potent
driving forces in the health care industry.

14) Changing Societal Concerns, attitudes and life styles...