Independent Study--Competitive Strategy Chap 9,10&11 competitive strategy in fragmented,emerging and maturity

Porter (1980) introduced three generic strategies that businesses could carry out to enhance performance and outdistance competitors. Fragmented - an industry in which "no one firm has significant market share and can strongly influence industry outcomes" (Porter 1980, 191). Fragmented industries have many small competitors and have structural factors that inhibit concentration. The reasons for the fragmentation may include:1. Low barriers to entry. 2. Highly specialized market for goods and services requires extreme specialization by firms. 3. High transportation costs. 4. Lack of standardization, or lack of need for it. 5. High need for trust and local firms often inspire more trust in their customers. These firms face greater uncertainty in the market environment. The advantage small firms have over large firms in fragmented industries can be enhanced where local contact, local image, and personal service are an important part of the market environment. To overcome fragmentation, Porter suggested three strategies: Cost Leadership, Differentiation, and Focus. Become a low-cost producer; Provide more service with the sale and add value to the customer; Increase customer value via vertical integration; Specialize by product type; Specialize by customer type; Operate "bare bones/no frills" business; Focus on a limited geographic area. Examples of fragmented industries include: book publishing, restaurant industry, retailer, computer component and so on. Emerging industries are newly formed or re-formed industries that have been created by technological innovations. Some new products are so innovative. An example of emergence. First there was Radio Shack and a host of others and now HP has acquired Compac to lay claim to a 26% share of the PC manufacturing business. Automobiles are a mature industry with 3 or 4 major players each needing to maintain a 25% market share to survive and thrive.