Generic Industry Environments

Part II builds on the foundation of analytical techniques for for-mulating competitive strategy (in Part I) to consider the more specific analysis of strategy in important types of industry envi-ronments. Industry environments differ most strongly in their fundamental strategic implications along a number of key di-mensions:

  • industry concentration;
  • state of industry maturity;
  • exposure to international competition.

In Part II, I select a number of generic industry environments based on these dimensions for in-depth consideration. In each of these environments, the crucial aspects of industry structure, key strategic issues, characteristic strategic alternatives, and strategic pitfalls are identified.

Five important generic environments are singled out for consideration in Part II. Chapter 9 examines competitive strategy in fragmented industries, or industries where the level of indus-try concentration is low. Chapters 10,11, and 12 consider strat-egy formulation in industries at fundamentally differing states of maturity: Chapter 10 examines the emerging or new industry; Chapter 11, the industry undergoing the difficult transition from rapid growth to maturity; and Chapter 12, the unique problems of the industry that is declining. Finally, Chapter 13 examines strat-egy formulation in global industries, an increasingly common in-dustry setting in the 1980s.

The environments examined in Part II are all based on one key structural dimension of the industry, and each chapter devel-ops the implications for competitive strategy of this one dimen-sion. Although some of the chapters examine environments that are mutually exclusive (an industry might be emerging or declin-ing but not both, for example), some of the industry environ-ments may not be. For example, a global industry might also be fragmented or be undergoing transition to maturity.

The reader should begin by characterizing the environment of the particular industry being studied into the framework of Part II. In industries that fall into more than one of the environ-ments examined, the problem of setting competitive strategy is one of reconciling the strategic implications flowing from each of the important aspects of the industry’s structure.

Source: Porter Michael E. (1998), Competitive Strategy_ Techniques for Analyzing Industries and Competitors, Free Press; Illustrated edition.

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