You cannot invest wisely in your organization unless you understand how the industry is changing. If there is a fundamental change in the industry, you will eventually have to dismantle the old business. If the industry is undergoing incremental change, you may need to reinvest in your core. Understanding the changing needs of the industry may seem obvious, but this knowledge is not always easy. The company has been misinterpreting the clues and drawing the wrong conclusions. Sotheby’s, for example, has invested in online auctions (its own website and a joint venture with amazon), as if the Internet were just another channel. In fact, new technology represents the fundamental influence of industrial structure.
Which direction is it to really understand your industry, you must eliminate the noise of the popular commercial media, and direct threat to competitive pressure, from a long-term point of view of your business background. This is what I and some of my colleagues did. The study is based on a high-level survey of various U.S. businesses. The research, which began in the early 1990s and continues today, initially focused on how industry structures affect corporate profitability and investor returns. This statistical analysis puts forward several hypotheses about the development of the industry, and then tests and improves them in a series of case studies on the industrial structure, industry changes and competitive advantages.
For clarity, I will simplify this by following four different trajectories in the industry: radical, incremental, creative and mediating. In addition, corporate strategy – the plan to achieve ROI – can be successful only if it is consistent with the industry’s trajectory. These four trajectories set limits for the company’s ability to generate profits. Many companies suffer because they try to innovate outside these borders. One of the most famous examples is xerox, which is innovative and fighting for profit. By the mid-1980s, copier manufacturing had matured, with business models emphasizing creative “hot products”. The PC industry, meanwhile, is still in its infancy, although xerox PARC pioneered the introduction of PC inventions such as the graphical user interface mouse.
The industry has followed four different trajectories – radical, aggressive, creative and mediating, setting profit margins for companies.
No innovation strategy applies to every company in every industry. However, if you understand the nature of industry change, you can determine which strategies are likely to succeed and which are likely to backfire.
Before delving into the four tracks of industry development, it is worth recognizing that they are defined by two outmoded threats. The first is a threat to the core activities of the industry – events that historically have brought profits to the industry. Their relationship with suppliers and customers has become less urgent because of new external options. In the auto industry, for example, many dealers have seen their traditional sales activities have not been attached great importance to consumers, they are on the Internet search features they want cars, performance and price. The second is the threat to industry’s core assets, resources, knowledge and brand capital, which makes the organisation unique in history. If they don’t create value the way they used to, they’re threatened. In the pharmaceutical industry, for example, blockbuster drugs have been under threat as patents expire and new drugs are developed.
The trajectory of industry change describes the relationship between two threats and four changes. Fundamental changes occur when an industry’s core assets and activities are threatened by outdated threats. This trajectory most closely approximates the concept of disruptive change that Clayton m discusses. Christopher christensen of Harvard University. In this case, the accumulated knowledge and brand capital in the industry are eroded, and the relationship between customers and suppliers is eroded. In the 1980s and 1990s, an estimated 19 percent of American industry experienced fundamental changes. Travel is a good example. Airline’s core business and core assets for airlines to strengthen direct price competition system (such as SABRE and other reservation systems), and the customers of the agency to network system (such as sex, Orbitz and Travelocity) provide new value (on – line monitoring of the available flights and fares,
The trajectory of industry change
When core assets and activities are not threatened, the industry’s trajectory is gradual. This is the most common trajectory over the past two decades. About 43 percent of the U.S. industry is changing, including long-haul freight and commercial airlines. In these industries, underlying assets, businesses and basic technologies remain stable. Innovators like the Yellow Roadway, Southwest and JetBlue are not because the strengths of existing companies are outdated, but because startups have smart ideas about how to optimize efficiency.
The other two trajectories of change – creativity and mediation – are ignored in the management literature, perhaps because of their subtle differences. Creative change occurs when core assets are threatened and core activities are stable. This means that companies must constantly look for ways to recover assets while protecting their continued customer and supplier relationships. A film studio is thought to be working on a new film or oil company to develop a new well. About 6 percent of the U.S. industry is moving toward innovation.
If core activities under the threat of outdated threat, the relationship between the customer and supplier will become nervous and fragile, and the core assets will retain its ability to create value, and changes in mediation. Sotheby’s, for example, continues to evaluate art, but its matching activities no longer create value because the technology makes it possible. The challenge of intermediate change is to fundamentally change relationships with customers and suppliers while maintaining knowledge, brand capital and other valuable assets. In the 1980s and 1990s, about 32% of American industry experienced some sort of intermediate change.
To change the
Fundamental changes occur when core activities and core assets are threatened with elimination. The correlation between the capabilities and resources built up by some industries has been weakened by some external alternatives; Relations with buyers and suppliers are under attack; The company ended up in crisis. Radical industrial development is relatively unusual. Usually after the introduction of many new technologies. When regulation changes (such as the long-haul airlines of the 1970s), or simply because tastes change (American consumers have stopped smoking in the past 20 years).
A radically changed industry has changed, but not overnight. It usually takes decades to become clear. The end result is a complete reconfiguration – usually a reduced industry. Overnight delivery is in the early stages of a radical transformation that began a decade ago. As the use of the Internet becomes more and more common, E-mail, especially secure encrypted E-mail, has become a threat to the industry. However, with the threat still in its infancy, the number of overnight letters is growing and business is booming.
This is part of the radical transformation related news: drastic change track in the industry tend to remain profitable for a long time, especially when cut its commitment to companies in these industries. Companies also have time to make strategic choices that they can implement in the future if they recognize their trajectory early. Fedex’s acquisition of Kinko, for example, will help fedex build deeper partnerships with small and medium-sized enterprises that need file storage, management and communications services.
The only logical way to make a radical change is to focus on the final strategy and its impact on the company’s current strategy. Quitting smoking is not the only option; Some survivors can maintain a lucrative position when others leave the industry. For example, despite threats from PC and workstation makers, the mainframe business is still quite large.
When the industry changes radically, consider the best strategies to understand your productivity Numbers, the speed and timing of industry transformation, and the cost of converting to buyers. Early companies may adopt a staggered strategy of gradually improving established business activities and selective testing of new assets. This is an encyclopedia company how to deal with the militant threat: search engine they try new electronic products and services, and create new distribution channels, actively promote the existing products, update the inventory management system.
Historically, many companies facing sharp changes in their industries have given up their position and entered the emerging business sector, taking huge risks in the process. As demand in emerging industries becomes clearer, for example, several typewriter makers are trying to enter the PC industry just to shorten their efforts. (IBM has succeeded in this strategy, but the success of the PC industry is closely tied to experience in other areas of computing.) Alternative reinvestment in existing industries is also risky because it is unprofitable in ways that might become a reality.
Changes in the middle
Mediating change is more common than activism. This usually happens when buyers and suppliers have new options because they have access to unprecedented information. The core activities of the intermediate trajectory are threatened. However, if used in new ways, the core assets of these industries – knowledge, brand capital, patents, even professional factory equipment – will retain most of their value. In fact, the industry is in the middle when downstream and upstream markets are threatened. For example, car dealers are changing in the middle for a variety of reasons. First, traditional car sales have become less important because of the Internet, and consumers are less likely to buy cars because of their long duration. Second, carmakers are seeking to build closer relationships with drivers to begin sharing customer relationship management with dealers. In some cases, they try to take over the relationship entirely. Finally, individual dealers are losing control of inventory management as IT and complex financing create economies of scope that only large conglomerates can exploit. They tried to take over the relationship completely. Finally, individual dealers are losing control of inventory management as IT and complex financing create economies of scope that only large conglomerates can exploit. They tried to take over the relationship completely. Finally, individual dealers are losing control of inventory management as IT and complex financing create economies of scope that only large conglomerates can exploit.
It is difficult to manage companies in industries that are undergoing change. This is probably the most challenging of all the changes described in this article, because companies must simultaneously retain their valuable assets and reorganize key relationships.
Executives tend to underestimate the threat of their core activities if long-term customers remain satisfied and old supplier relationships remain relevant. In fact, these relationships can be fragile. The value of core assets often escalates, complicating the confusion of managers. Auction houses, for example, were initially interested in their accumulated valuation experience because eBay was already so interested in auctions.
In the medium term, industry pressure tends to increase until it reaches the breaking point, and then the relationship drops sharply, only temporarily recombining until the cycle repeats. Consider a big broker. They have long criticized conflicts of interest among analysts. But the recent market downturn and accounting scandals have broken the camel’s dilemma – both related to fundamental changes in information about investors and companies seeking investment capital. The core assets of investment brokers (including securities valuation and processing trading systems) retain their value, while the old ones no longer offer the same opportunities for creation.
Companies facing regulatory change must find unconventional ways to extract value from their core resources. They may enter new businesses, or even new ones. Or they can sell assets or services to competitors. In the music industry, for example, record companies aspiring musicians to sell their services, rather than the great artist investment, including the artist’s all development costs (radio promotions, dance and image management, in addition to other expenses). Clients and activities have changed, but core resource records companies’ ability to develop new artists retains its value. As another example, some traditional auction companies in under the threat of eBay online assessment of their professional knowledge, need to pay additional fees, they will prove their value of exchange of commodities on the Internet. These companies effectively handle intermediaries by reconfiguring old assets in new ways.
The initial return on this trajectory may be relatively high and then decline sharply, only to be recovered temporarily. For example, the profits of record companies have fluctuated because they have adapted to varying degrees of success. It’s a good idea to reinvest as usual. But, an organization