Chapter 11 (The Transition to Industry Maturity) Maturity is the condition, that the market has no future and become dead market in several year or time. The signal for this conditions are slowing industry growth reflecting more competition for market share, firms in the industry increasingly are selling to experienced repeat buyers, the competition is more cost or service oriented.
Problem in adding industry capacity and personel, The change of Manufacturing, marketing, distributing, selling and research method, New products and applications are harder to come by, International competition increase, Industry profit often fall, Dealers’ margin fall, but their power increases.
Some Strategic Implications Transition The changes that often accompany transition to maturity represent possible changes in the basic structure of the industry. Each major element of industry structure often is changing: overall mobility barriers, the relative significance of various barriers, the intensity of rivalry (it usually increases).
Structural change nearly always means that firms must respond strategically. There are several issues that companies should consider, such as the dilemma in choosing strategic choice, cost analysis to rationalize the product mix and correct the price, manufacturing design and process innovation, stealing customers from existing companies, cheap assets procurement, buyer selection with low bargaining power, different cost curve, and international competition.
Strategic Pitfalls in Transition
If the company failed to apply the strategy, the company will felt down and there is some sign and characteristics the failed company: * A company’s self-perceptions and its perception of the industry. * Caught in the middle * The cash trap investments to build share in a mature market * Giving up market share too easily in favor of short-run profits * Resentment and irrational reaction to price competition (“we will not compete on price”) * Overemphasis on “creative,” “new” products rather than improving and aggressively selling existing ones * Clinging to “higher quality” as an excuse for not meeting ggressive pricing and marketing moves of competitors. * Overhanging excess capacity. Organizational Implications of Maturity In the maturity stage, the growth, the glamour, the excitement, the will to be pioneer and unique are no more. This creates problems for management in order to scale down its expectation for financial performance and advancement, to recentralize, to give more attention on human dimension, and to discipline the organization.
This condition raises a number of extremely difficult problems for general management and the strategy to faces this situation are : * Scaled down expectations for financial performance * More discipline from the organization. * Scaled-down expectations for advancement. * More attention on the human dimension. * Recentralization. Industry Transition and the General Manager The atmosphere of the company may well change in ways the general manager may find undesirable. He or she cannot provide as much opportunity and advancement for personnel and organization. So he or she needs a much time to overcome this problem.