Which Emerging Industries to Enter

The choice of which emerging industry to enter is dependent on the outcome of a predictive exercise such as the one described above. An emerging industry is attractive if its ultimate structure (not its ini-tial structure) is one that is consistent with above-average returns and if the firm can create a défendable position in the industry in the long run. The latter will depend on its resources relative to the mobil-ity barriers that will evolve.

Too often firms enter emerging industries because they are growing rapidly, because incumbents are currently very profitable, or because ultimate industry size promises to be large. These may be contributing reasons, but the decision to enter must ultimately de-pend on a structural analysis. Chapter 16 in Part III of this book dis-cusses the decision to enter an industry in considerably more detail.

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

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