TOPIC 5350
Description
Identify a growth industry, a mature industry, and a declining industry. For each industry, identify the
following: (1) the number and size distribution of companies, (2) the nature of barriers to entry, (3) the
height of barriers to entry, and (4) the extent of product differentiation. What do these factors tell you
about the nature of competition in each industry? What are the implications for the company in terms
of opportunities and threats?
ANSWER.
Growth, Mature and Declining Industry
Growth industry: The technology sector largely remains part of the growing industry. In the recent
past, the technology sector has become an ideal platform for business. Most players have pursued this
market, and some partnered with application developers to increase revenue sources (Bauer et al.,
2017). The size gets distributed across numerous sectors such as telecommunications, digital games,
online stores, and others. Bringing onboard a large number of developers becomes the nature of barriers
to entry: stringent government regulations and the high cost of acquiring licenses to operate bar most
the companies from operating. Competitive differentiation remains the most difficult in product
differentiation. To this end, companies pay heavily for advertisements to differentiate their products.
Mature Industry: Coca-cola. The company has, over the years, indulged in the production of soft
drinks all over the world. Sodas, especially coca-cola, have become the trademark of this company. The
company has distributors spread across the globe, with every city and town having a distributor. The
barrier to entry in the soft drink industry remains relatively high, leading to its domination of the market
over rivals (Bauer et al., 2017). The company's economies of scale remain unmatched by the
competitors, making it a monopoly. The company employs a different strategy in the differentiation and
development of its product. It tends to offer soft drinks unique attributes and distinct features.
Declining Industry: Bookstores. The decline of bookstores can largely be attributed to online
applications, which enable one to acquire the material online. To this end, the demand for bookstores
declines as customers access the contents online and procure it from the same platform. The size of the
bookstore industry has significantly reduced due to the continued shrinking of the market. Cost
inefficiencies mostly form the basis of barriers to entry (Bauer et al., 2017). Increased online reading and
the overall cost of running and managing a bookstore remain quite high as demand decreases. To no
small extent, books lack a long-term attachment to the products sold.
In all three industries, the competition is relatively high, but in the mature industry, it is moderate.
Competition is stiffest in the decline industry, and firms from other sectors pose it. Great opportunities
and threats are resulting from technological growth for the industry's growth and decline. For the
mature industry, the opportunities and threats are low. The factors significantly point out a changing
market with the companies employing smart strategies to survive the ever-competitive market.
Companies that seize the opportunities in the market survive. Those with poor business strategies
decline when they encounter threats. In a nutshell, as the industry moves shifts from growth to decline
via maturity, an increase in the intensity of competitive threats reflects an increase while the availability
of opportunities reflects a decrease.
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References
Bauer, F., Dao, M. A., Matzler, K., & Tarba, S. Y. (2017). How the industry lifecycle sets boundary
conditions for M&A integration. Long Range Planning, 50(4), 501-517.
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