Dynamic View of StrategyWrittent by Constantinos C. Markides

Presented by David and Thao

Heart and Soul

• Who should the company target?

• What products/services should be offered?

• How can this be done efficiently?

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

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

Two types of entry

• It is important to recognize two types of entry

– Imitative entry– Innovative entry

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.

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

Innovative EntryHow can a company prepare for the unknown?

Innovative Entry

• Become the innovator

• Exploit Someone else’ innovation

• It’s not just new products or new technologies. It could be new business models.

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

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

Dynamic Strategy

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

Elements of a dynamic strategy

•A corporate culture that welcomes changes

•Processes allowing experimenting with new ideas

•Skills allowing exploitation of the new position

•Managing the transition

Being Ready

• Ability to recognize an innovation early -

• Ability to absorb innovative ideas or employ new technologies – Appropriate technical and business

knowledge

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?