Strategic Management Chapter 5 Quiz

competitive parity

firm's achievement of similarity or being "on par" with competitors with respect to low-cost, differentiation, or other strategic product characteristics Permits cost leaders to translate cost advantages directly into higher profits

4 approaches to combining low cost/differentiation

1. Adopting automated and flexible manufacturing systems 2. Using data analytics 3. Exploitation of the profit pool concept creates a comp. advantage 4. Unscaling to create a combination strategy

Porter's 3 generic strategies

1. overall cost leadership 2. differentiation 3. focus

Adopting Automated and Flexible Manufacturing Systems (approach to combining Low Cost/Differentiation)

Allows for Mass customization: a firm's ability to manufacture unique products in small quantities at lower costs -This is facilitated by advances in manufacturing technologies/systems such as CAD/CAM. -Analysis of data on customer characteristics, purchasing patterns, employee productivity and physical asset utilization allows firms to better serve customers while more efficiently using company resources.

Improving Competitive Position vis-a-vis the Five Forces- Combination:

An integrated/combination overall low-cost and differentiation strategy: Create an enviable position among competitors Creates higher entry barriers due to both cost and differentiation leadership Can provide higher margins that enable the firm to deal with supplier power Reduces buyer power because of fewer competitors Overall value proposition reduces threat from substitutes

Improving Competitive Position vis-a-vis the Five Forces- Differentiation

An overall differentiation strategy: Differentiation provides protection against rivalry since brand loyalty lowers customer sensitivity to price and raises customer switching costs, therefore creating higher entry barriers and reducing the threat from substitutes. Creates higher entry barriers due to customer loyalty and the firm's ability to provide uniqueness in its products/services Provides higher margins that enable the firm to deal with supplier power. (Avoids the need for low-cost position) Supplier power is decreased because there's a certain amount of prestige associated with being the supplier to a producer of highly differentiated products/services Reduces buyer power because buyers lack suitable alternatives and are therefore less price-sensitive Establishes customer loyalty and hence less threat from substitutes.

Improving Competitive Position vis-a-vis the Five Forces- Focus

An overall focus strategy: Focus requires that a firm either have a low-cost position with its strategic target, high differentiation, or both. These positions provide defenses against each competitive force because of higher margins or more specialized products or services. Used to select niches that are least vulnerable to substitutes or where competitors are weakest Creates higher entry barriers due to cost leadership or differentiation or both. Can provide higher margins that enable the firm to deal with supplier power. Reduces buyer power because the firm provides specialized products or services

Improving Competitive Position vis-a-vis the Five Forces- Cost Leadership

An overall low-cost position: Enables the firm to achieve above-average returns despite strong competition. Protects a firm against rivalry from competitors. -For them to be successful at competing w/ us, they need to be able to match our cost-savings -Bc lower costs allow firm to earn returns even if competitors eroded their profits through intense rivalry. Protects the firm against powerful buyers. -Bc we're able to achieve these economies of scale that allow us to have more power w/ buyers -Buyers can exert power to drive down prices only to the level of the next most efficient producer because there are relatively few competitors that can provide a comparable cost/value proposition Provides more flexibility to cope with demands from powerful suppliers who want to increase input costs. Provides substantial entry barriers due to economies of scale and cost advantages. Puts the firm in a favorable position with respect to substitute products. -Bc generally substitutes are looking for products at a higher price range -Bc the cost adv. can be applied across all operations, a low-cost position puts the firm in a favorable position w/ respect to substitutes introduced by new and existing competitors

atlas door example (sustaining competitive advantage)

Atlas Door, an industrial door producer (manufactured after order placed so inventory not needed) is a US based company with remarkable success growing at an average annual rate of 15% in an industry with an overall annual growth rate of less than 5%. By its 10th year, the company had a #1 competitive position in its industry Created its competitive advantage in the industry by -Building just-in-time factories (require extra tooling/machinery to reduce changeover times, major product organization, schedule to start, and complete with all of the parts available at same time) -Reduced time to receive/process an order (streamlined then automated its entire order-entry, engineering, pricing, and scheduling process very quickly) -Controlled logistics so it shipped only fully complete orders to construction sites (developed a system to track all production and purchased parts for each order) Result: -Distributors first had little interest in Atlas' product and was only used as a last resort if the established supplier could not deliver or missed a key date, but longer order fulfillment times led distributors to them -Atlas demanded higher prices and its effective integration of value-creating activities saved time and lowered costs --> replaced the leading door suppliers in 80% of the distributors in 10 years

atlas pro position (strategy is highly sustainable)

Atlas attained a very favorable position in the industry, allowing it to exert power over its customers/distributors due to its ability to deliver a quality product in a short period of time Dominance creates high entry barriers for new entrants Was able to successfully integrate many value-chain activities within the firm, making it difficult for rivals to imitate the strategy due to causal ambiguity/path dependency Benefits from the social capital it's developed with a wide range of key stakeholders (customers, employees, managers) Would be difficult for rivals to replace Atlas as the supplier of last resort Ability to appropriate most of the profits generated by its competitive advantages Created competitive advantage in both overall low cost and differentiation --> strong links to value-chain activities lowered costs and caused quicker respond times Strong, positive reputational effects that it's earned with its customers increases their loyalty and would take significant time for rivals to match

growth stage (industry life cycle)

Characterized by strong increases in sales Attractive by potential competitors Strategies: -Develop strong brand reputation -Create branded differentiated products -Stimulate selective demand: demand for specific products and its unique features we're offering instead of a rival's -Provide financial resources to support value-chain activities Revenues increase at an accelerating rate because -New consumers are trying the product -A growing proportion of satisfied consumers are making repeat purchases (As move through the life cycle, the proportion of repeat buyers to new purchasers increases and new products fail if there are few repeat purchases) Differentiation strategy used, large market growth rate, some # of segments, increasing competition intensity, high emphasis on product design, low emphasis on process design, sales/marketing is a major functional area of concern, overall objective is to create consumer demand

Sustainability of Competitive Advantage Strategies

Competitive advantages are often short-lived and temporary (especially among Fortune 500 list) due to rapid changes in tech, globalization, and actions by rivals within/outside the industry -A strategy that provides temporary competitive advantage but is easy to imitate or substitute for will not sustain that advantage. Technology has increasingly made competitive advantages less sustainable The sustainability of competitive advantage ties completely back to the characteristics of resources that provide competitive advantage.

the central role of competitive advantage

Consider ... -In order to create/sustain a competitive advantage, companies need to stay focused on their customers' evolving wants and needs and not sacrifice their strategic position as they mature and the market around them evolves. -They also have to have a strategy... How firms compete with each other and how they attain and sustain competitive advantages go to the heart of strategic management. -In short, the key issue becomes: Why do some firms outperform others and enjoy such advantages over time? This subject, business level strategy, is the focus of this chapter.

using data analytics (approach to combining Low Cost/Differentiation)

Corporations are increasingly collecting/analyzing data on their customers, including data on customer characteristics, purchasing patterns, employee productivity, and physical asset utilization -These efforts have the potential to allow firms to better customize product and services while using resources more fully and efficiently

two variants of focus strategy

Cost focus: -Creates a cost advantage in its target segment -Exploits the diff in cost behavior Differentiation focus: -Differentiates itself in its target market -Exploits/generates profit on the special needs of buyers (that tend to be neglected by other firms) Both variants of the focus strategy rely on providing better service than broad-based competitors that are trying to serve the focuser's target segment

The issues platform businesses need to master to succeed

Draw in users: firms must develop effective pricing and incentives to attract/retain them (subsidizing early, price-sensitive users, and "marquee" users- YouTube monetization) Create easy and informative customer interfaces: make it easy for users to plug into the platform -EX: Quicken Loans, Uber, Apple (supplier side) Facilitate the best connections btween supplier/customers: -Successful platform businesses leverage supplier and customer search /usage pattern data to figure out how to best fill their matchmaking role in bringing together suppliers and users -EX: Google and Airbnb Sequencing the growth of the business: -Platforms must consciously plan out the sequence of their business by thinking of both geographic/product market expansion -EX: Uber analyzed the supply/demand of the taxi markets in cities and first entered cities with the greatest shortage of taxis; Facebook has expanded the range of services it offers and as a result, put a squeeze on narrow platform providers (Twitter)

pitfalls of focus strategy

Erosion of cost advantages within the narrow segment. -Advantages of a cost focus strategy may be fleeting if the cost advantages are eroded over time. -EX: University of Phoenix faced challenges as traditional universities have entered their own online programs that match the cost benefits associated with online delivery programs Highly focused products and services still subject to competition from new entrants and from imitation. -Some firms adopting a focus strategy may enjoy temporary advantages because they select a small niche with few rivals. However, this strategy can be imitated and their advantages may be short-lived Focusers too focused to satisfy buyer needs. -Finally, some firms attempting to attain advantages through a focus strategy may have too narrow a product or service.

decline (maturity stage strategy)

Firms must face up to either exiting or staying and attempting to consolidate their industry position When industry sales and profits begin to fall Changes in the business environment, consumer tastes, or technology innovations can push a product into decline Products in this stage consume a large share of managerial time/financial resources relative to their potential worth Price competition increases -Competitors may start drastically cutting their prices to raise cash and remain solvent -Situation is further aggravated by the liquidation of assets (inventory) of the competitors who failed A firm's strategic options become dependent on the actions of rivals -If they leave, sales/profits increase, limited if they remain, decrease if new competitors enter market Industry consolidations occurs Overall cost leadership and focus used, negative market growth rate, few # of segments, changing competition intensity, low emphasis on product design, low emphasis on process design, general management/finance is a major functional area of concern, overall objective is to Consolidate/maintain/ harvest/ exit EX: cable TV (being replaced by streaming services), hard disk drivers (being replaced by cloud storage), and taxis (being replaced by ride sharing services are currently in this stage

pitfalls of combination strategy

Firms that fail to attain both overall low-cost and differentiation strategies may end up with neither and become "stuck in the middle" Firms can also underestimate the challenges/expenses associated w/ coordinating value-creating activities in the extended value chain -Integrating activities across a firm's value chain with the value chain of suppliers/customers involves a significant investment in financial and human resources -Firms must consider the expenses linked to tech investment, managerial time/commitment, and the involvement/investment required by the firm's customers/suppliers -Firm must be confident that it can generate a sufficient scale of operations/revenues to justify all associated expenses Firms can also miscalculate sources of revenue and profit pools in the firm's industry -Firms may fail to accurately assess sources of revenue and profits in value chain -This can occur if A manager is biased due to their functional area background, work experiences, and educational background -EX: With a background in engineering, they may perceive that proportionately greater revenue/margins were being created in manufacturing, product, process design than a person in marketing/sales -Or politics could make managers "fudge" the numbers to favor their area of operations --> making them responsible for a greater proportion of the firm's profits and improving their bargaining position A related problem is directing an overwhelming amount of managerial time, attention, and resources to value-creating activities that produce the greatest margins/less profitable activities

Unscaling to Create a Combination Strategy (approach to combining Low Cost/Differentiation)

For decades, firms built large-scaled operations to run as efficiently as possible in order to dominate markets -which allowed the firm to build cost adv. over rivals but led them to be slow in responding to market changes and limited their ability to customize their products to specific customer needs Unscaled firms look to build small scale operations that meet the needs of particular customers as efficiently as possible --> at times even more efficiently than scaled competitors -Involves both the leveraging of tech, such as AI, and the reliance on suppliers/customers to provide critical inputs to the process. EX: P&G faces a slew of unscaled competitors, such as the Dollar Shave Club's subscription model and the Honest Co's environmentally friendly diapers --> have responded with its Connect + Develop Initiative -Now invites outside inventors to submit development proposals to the company and if approved, these inventors can effectively "rent" P&G's distribution and marketing to get their products to market -Allows them to be more nimble in meeting the needs of diff customers in an efficient way since the firm doesn't bear the entire cost of product development -Slowly translating itself into becoming a consumer product platform rented by everchanging set of small, focused product developers

what low-cost leadership involves and requires

Involves: -Aggressive construction efficient scale facilities -Vigorous pursuit of cost reductions from experience -Tight cost and overhead control -Avoidance of marginal customer accounts -Cost minimization in all activities in the firm's value chain, such as R&D, service, sales force, and advertising Requires learning to lower costs through experience- the experience curve This strategy also requires competitive parity Price is just 1 component of value and even cost-sensitive customers won't buy a bad product

decline strategies

Maintaining the product position -Keeping a product going without significantly reducing marketing support, technological development, other investments in the hope that competitors will leave market -Seen as more secure than other means Harvesting profits -Obtaining as much profit as possible and requires that costs be reduced quickly -Managers should consider the firm's value-creating activities and cut associated budgets Exiting the market -Dropping the product from a firm's portfolio; must be carefully considered -If the firm's exit involves product markets that affect important relationships with other product markets in the corporation's overall portfolio, an exit could cause repercussions Consolidating -One firm acquiring surviving firms at a reasonable price -Enables firms to enhance market power and acquire valuable assets

atlas cons position (strategy can be easily imitated/substituted)

Much of Atlas' strategy relies on technologies that are well-known and nonproprietary --> a well-financed rival could imitate its strategy and leapfrog the tech/processes Human capital is highly mobile, so a rival could hire away their talent and they could aid the rival in transferring its best practices A new rival could enter the industry with a large resource base, enabling it to price its doors well under Atlas to build market share

differentiation strategy can take many diff forms

Prestige or brand image (Hotel Monaco, BMW automobiles) Quality (Apple, Ruth's Chris steak houses, Michelin tires) Technology (Martin guitars, North Face camping equipment) Innovation (Medtronic medical equipment, Tesla Motors) Features (Cannondales mountain bikes, Ducati motorcycles) Customer service (Nordstrom department stores, USAA financial services) Dealer network (Lexus automobiles, Caterpillar earthmoving equipment)

Exploitation of the profit pool concept creates a competitive advantage (approach to combining Low Cost/Differentiation)

Profit pool: the total profits in an industry at all points along the industry's value chain. -The structure of the profit pool can be complex. -The potential pool of profits will be deeper in some segments of the value chain than others, and the depths will vary within an indiv segment. -Create comp. advantage within specific niche in market but compete broadly in industry and in diff levels Segment profitability may vary widely by customer group, product category, geographic market, or distribution channel. -Additionally, the pattern of profit concentration in an industry is often very diff from the pattern of revenue generation . Many firms have also achieved success by integrating activities throughout the extended value chain by using information tech. to link their own value chain with the value chains of their customers/suppliers.

differentiation strategy requires

That price premiums exceed the extra costs incurred in being unique A level of cost parity relative to competitors -If product is so expensive and can't compare to your competitors, you're not doing this strategy anymore but a differentiation focus (segmented market) Integration of multiple points along the value chain -Superior material handling operations to minimize damage -Low defect rates to improve quality -Accurate/ responsible order processing -Personal relationships with key customers -Rapid response to customer service requests Differentiation along several diff dimensions at once

importance of industry life cycles

The emphasis on various generic strategies, functional areas, value-creating activities, and overall objectives varied over the course of an industry life cycle, so managers must become even more aware of their firm's strengths/weaknesses in many areas to attain competitive advantage EX: Firms depend on R&D activities in intro stage; firms develop products/services that stimulate consumer demand; in the maturity stage, the product functions have been defined, more competitors have entered the market, and more intense competition; managers then place greater emphasis on production efficiencies to lower manufacturing costs and extend product life cycle

pitfalls of cost leadership

Too much focus on one or few value chain activities. -Managers should explore all value-chain activities, including relationships among them, as candidates for cost reductions Increase in the cost of the inputs on which the advantage is based. -Firms can be vulnerable to price increases in the factors of production Strategy may consist of value-creating activities that can be too easily imitated. A lack of parity on differentiation. -Firms striving to attain cost leadership advantages must obtain a level of parity on differentiation. Reduced flexibility. -Building a low-cost advantage often requires significant investments in plant and equipment, distribution systems, and large, economically scaled operations. -As a result, firms often find that these investments limit their flexibility, leading to greater difficulty responding to environmental changes Obsolescence of the basis of a cost advantage. -Ultimately, the foundation of the firm's cost advantage may become obsolete. -In these circumstances, other firms develop new ways of cutting costs, leaving the old cost leaders at a significant disadvantage. See Cases: General Motors, & Ford.

pitfalls of differentiation strategy

Uniqueness that is not valuable. -It's not enough just to be different. A differentiation strategy must provide unique bundles of products and/or services that customers value highly. Too much differentiation. -Firms may also strive for quality of service that is higher than customers desire, thus, they become vulnerable to competitors who provide an appropriate level of quality at a lower price. Too high a price premium -Customers may desire the product but be repelled by the price premium. Differentiation that is easily imitated. Dilution of brand identification through product line extensions. -Firms may erode their quality brand image by adding products/services with lower prices and less quality, thus confusing the customer--> too many product extensions -Can increase short-term rev but be detrimental in the long run Perceptions of differentiation may vary btween buyers/ sellers. -Companies must also realize that although they may perceive their products and services as differentiated, their customers may view them as commodities. --> beauty is in the eye of the beholder"

maturity stage (industry life cycle)

When aggregate industry demand slows/softens As market becomes saturated, there are few new adoptors (everyone who wanted product has it) Direct competition becomes predominant Marginal competitors begin to exit because they can't deal with this direct competition and rivalry among existing rivals intensifies Advantages based on efficient manufacturing operations and process engineering become more important for keeping costs low as consumers become more price-sensitive and it's more difficult for firms to differentiate its offerings Strategies: -Creates efficient manufacturing operations -Lower costs as customers become price-sensitive -Adopt reverse or breakaway positioning Differentiation strategy and overall cost leadership used, low market growth rate, many # of segments, high competition intensity, low emphasis on product design, high emphasis on process design, production is a major functional area of concern, overall objective is to defend market share/ extend product life cycles

introduction stage (industry life cycle)

When products are unfamiliar to consumers Market segments are not well-defined Product features are not clearly specified Competition tends to be limited Typically involves low sales growth, rapid tech change, operating losses, and the need for strong sources of cash to finance operations; competition is limited Success requires an emphasis on R&D and marketing activities to enhance awareness Strategies: -Develop a product and get users to try it -Generate exposure so the product becomes "standard" Advantages to both "first movers" (Coca-Cola) and "late movers" (Target) Differentiation strategy used, low market growth rate, few # of segments, low competition intensity, high emphasis on product design, low emphasis on process design, R&D is a major functional area of concern, overall objective is to increase market awareness EX: electric vehicles and space tourism currently in this stage

reverse positioning (maturity stage strategy)

a break in the industry tendency to continuously augment products by offering products with fewer product attributes/lower prices; strips away "sacred" (considered by industry) product attributes while adding new ones -Assumes that although customers may desire more than the baseline product, they don't necessarily want an endless list of features -Once a product is returned to its baseline state, the stripped-down product adds one or more carefully selected attributes that would usually be found only in a highly augmented product -This allows the product to assume a new competitive position in the category and move backward into growth

breakaway positioning (maturity stage strategy)

a break in the industry tendency to to incrementally improve products along certain dimensions by offering products that are still in the industry but are perceived to be different by customers; associates the product with a radically different category -A product establishes a unique position in its category but retains clear category membership -A product escapes its category by deliberately associating with a different one --> changing how products are consumed and whom they compete with -This allows product to redefine its competition and move background into growth

focus strategy (porter's generic strategies)

a firm's generic strategy based on appeal to a narrow market segment/competitive scope within an industry; requires -A firm selects a segment/group of segments (or niche) and tailors its strategy to serve them -A firm achieve comp. advantage by dedicating itself to these segments exclusively Requires: -Narrow product lines, buyer segments, or targeted geographic markets. (Advantages obtained either through differentiation or cost leadership.) Do what specific consumers need very well and stand out in market Can be either cost-focus or differentiation focus -Cost focus= narrow target markets and low-cost position -Differentiation focus= narrow target markets and superior perceived value by customer (Less profitable for both because market is smaller)

overall cost leadership (porter's generic strategies)

a firm's generic strategy based on appeal to the industrywide market using a competitive advantage based on low cost Based on: -Creating a low-cost position relative to a firm's peers. -Managing relationships throughout the entire value chain to lower costs. --> so, efficiency is cohesive Large segment of population prioritizes price/cost Broad target market and low-cost position Can achieve really good return on investment

differentiation strategy (porter's generic strategies)

a firm's generic strategy based on creating diff in the firm's product/service offering by creating something that is perceived industrywide as unique/valued by customers -May differentiate themselves in primary and support activities and along several dimensions at once Implies: -Products and/or services that are unique and valued. -Emphasis on "nonprice" attributes for which customers will gladly pay a premium. (People are willing to pay a little bit more for the value) -Broad Differentiation= broad target market and superior perceived value by customer -Can achieve really good return on investment

business-level strategies

a strategy designed for a firm or a division of the firm that competes within a single business; require a choice

a turnaround strategy

a strategy that reverses a firm's decline in performance and returns it to growth and profitability The need for turnaround may occur at any stage in the life cycle but is more likely to occur during maturity or decline. Most turnarounds require a firm to carefully analyze the external and internal environments -The external analysis leads to the identification of market segments and customer groups that may still find the product attractive. Internal analysis results in actions aimed at reduced costs and higher efficiency. EX: See Case Ford, and Case Jamba Juice for how CEOs tried to revamp product lines and put the company on the path to profitability. See the Issue for Debate about decline in the department store industry. See Ascena Case for attempts to survive in women's specialty retail.

generic strategies (sustaining a competitive advantage)

basic types of business-level strategies based on breadth of target market (industrywide versus narrow market segment) and type of competitive advantage (low cost versus uniqueness) Main Question we try to answer: How to overcome the five forces and achieve competitive advantage? --> We use a generic strategy

platform markets

firms act as intermediaries between 2 sets of platform users (buyers and sellers) -Firms that thrive in these markets often don't produce a product themselves, but instead create a business that attracts a large range of suppliers/customers for help with facilitating transactions by combining both cost/differentiation strategies These markets have been in existence for a long time, but it's been increasingly common in the 21st century -EX: Visa has become the largest credit card company by signing up both the merchants and consumers in their card network, and is the most accepted among consumers and merchants Facebook in social networks, Uber in driver services, Amazon in retailing, etc. In order to succeed in both markets, it involves a combo of actions to build up a strong position and facilitate optimal interactions between suppliers/users --> this causes firms to simultaneously limits costs to users and provide differentiated service.

combination strategies

firms' integration of various strategies to provide multiple unique products in small quantities at low cost; combining overall low-cost and differentiation strategies can take several forms. Integration of low-cost and differentiation strategies makes it difficult for competitors to duplicate or imitate strategy. -The goal of a combination strategy is to provide unique value in an efficient manner. Firms' integrations of various strategies can provide multiple types of value to customers. -A combo low-cost and differentiation strategy enables a firm to provide 2 types of value to customers: differentiated abilities (e.g., high quality, brand identification, reputation) and lower prices (because of the firm's lower costs in value creating activities). EX: superior quality can lead to lower costs bc of less need for rework in manufacturing, fewer warranty claims, a reduced need for customer service personnel to resolve customer complaints, and so forth.

experience curve

how businesses learn to lower costs as it gains experience with production processes -With experience (longer we produce a product over time), unit costs of production processes decline as output increases -The most common factors of this is that workers are getting better at what they do, product designs are being simplified as the product matures, and production processes are being automated and streamlined

a turnaround strategy involves

reversing performance decline and reinvigorating growth toward profitability through Asset and cost surgery -Mature firms often tend to have assets that do not produce any returns (real estate, buildings, etc.) -Outright sales/sale and leaseback free up cash and improve returns -Firms in turnaround situations try to aggressively cut administrative expenses/inventories and speed up collection of receivables -Costs can also be reduced by outsourcing production of various inputs for which market prices may be cheaper than in-house production costs Selected market and product pruning -Most mature/declining firms have product lines that are losing money and only marginally profitable -One strategy is to discontinue such profit lines and focus all resources on a few core profitable areas Piecemeal productivity improvements -Ways a firm can eliminate costs and improve productivity include: -Improving business processes by engineering them, benchmarking specific activities against industry leaders, encouraging employee input to identify excess costs, increasing capacity utilization, and improving employee productivity

industry life cycle

the stages of introduction, growth, maturity, and decline that occurs over the life of an industry Can be explored from several levels Managers must strive to emphasis the key functional areas during each of the 4 stages to attain a level of parity in all functional areas and value-creating activities Generic strategies, functional areas, value-creating activities, and overall objectives all vary over the course of an industry life cycle Retreating to more defensible ground, using the new to improve the old, and improving the price-performance trade-off are 3 strategies that firms specializing in tech threatened with rapid obsolescence have followed Managers must strive to emphasis the key functional areas during each of the 4 stages to attain a level of parity in all functional areas and value-creating activities

firms "stuck in the middle"

try to go for both cost and differentiation focus and can't achieve either so profitability drops; firm can't identify any type of advantage Firms may find themselves there as their cost structure is higher than discount retailers offering groceries and their products/services are not seen by consumers as being valuable as those of high-end grocery chains (Whole Foods)

caveats of industry life cycle

while the life-cycle is analogous to a living organism (birth, growth, maturity, death), the comparison has limitations -Products/services go through many cycles of innovation/renewal -Only fad products have a single life cycle -Maturity stages of an industry can be "transformed" or followed by a stage of rapid forth if consumer tastes change or there's new technological developments or new developments