JRE410 | MARKETS AND COMPETITIVE STRATEGY (LECTURE 4)

This set covers competitive strategies, industry life cycle changes, technological disruption, market entry timing, and organizational growth mechanisms including M&A, alliances, and vertical integration.

Broad Low Cost Provider Strategy

A strategy where value creation involves low costs across a broad range of market segments.

Broad Differentiation Strategy

A strategy where value creation involves differentiating features across a broad range of market segments.

Best Cost Provider Strategy

A strategy that aims to compete on both cost and quality as differentiating factors for the customer.

Evolution along the industry life cycle

A type of change also known as continuous or incremental change, moving from niche products to consolidated, cost-based competition.

Disruptive technology

Radical innovations that may initially appeal to niche markets with high technological uncertainty and lower profitability than mainstream products.

The Innovator’s Dilemma

A concept by Christensen (1977) describing why incumbents often fail to adopt disruptive technologies because they are focused on their most profitable customers.

First Mover Advantage

Competitive benefits gained by being the first to enter a market, such as building a loyal customer base or pre-empting access to scarce resources.

Fast Follower

A firm that enters a market after a pioneer, often gaining an advantage by leapfrogging flawed early products or using stronger distribution capabilities.

Offensive Moves

Aggressive strategic actions intended to gain competitive advantage from rivals, such as reconfiguring the value chain or rescaling the industry.

Defensive Moves

Protective strategic actions designed to lower the risk of attack, such as locking out competition through patents or proprietary standards.

Strategic Alliances

Cooperative arrangements where companies join forces to achieve common goals through shared resources, knowledge, and risk.

Merger

The combination of two companies into a newly created entity, such as the formation of TD Canada Trust.

Acquisition

A strategic move where one company absorbs the operations of another, such as Yahoo buying Tumblr.

Backward Integration

Extending a firm's activities along the value chain closer to the supply and raw materials.

Forward Integration

Extending a firm's activities along the value chain closer to the customers and end-users.

Outsourcing

Contracting out an activity to be performed outside the company, which should be avoided if the activity is a source of competitive advantage.

Strategic Alliance Failure Rate

According to a 2007 Harvard Business Review article, between $60-70\%$ of these cooperative ventures fail.

M&A Failure Rate

A 2000 KPMG study reported that $83\%$ of mergers and acquisitions fail to produce benefits, with over half losing value.

Rubber tire industry consolidation

A case study of disruption where the number of companies fell from $300$ in 1923 to $50$ in 1930 and further to $23$ in 1970.

Qualcomm Financials (Fall 2009)

At this time, the company had a market cap of $84$ billion, free cash flow of $7$ billion on $10$ billion in sales, and $18$ billion in cash.