| What does industry dynamics examine? | The industry dynamics looks at the future industry structure and future shape of 5-forces, whereas the regular Porters Five-Forces model only look at the present tells very little of the future.
5-Forces are a “snapshot” of the present, and what it does tell of the future may be unreliable.
Industries change. Consider how the 5-Forces will look in the future. Also stage in the the product and industry life cycle.
The industry dynamics are best viewed when looking at the product / industry lifecycle |
| What is the industry life cycle, why is it useful and what does it consist of? | The industry lifecycle looks at the stages in the lifecycle of an industry. It is useful as strategy is shaped by the stage in the industry life cycle. Hence, it influences strategy and strategic decision making. The industry life cycle consist of 5 phases:
1. Development (Low rivalry, high differentiation, innovation is key)
2. Growth (Low rivalry, high growth and weak buyers, low entry barriers, growth ability is key)
3. Shake-out (Increasing rivalry, slower growth, some firms exit, managerial and financial strength is key)
4. Maturity (Stronger buyers, low growth, standard products, higher barriers of entry, market share and cost is key)
5. Decline (Extreme rivalry, typically many exits, price competition, cost and commitment key) |
| What is a key success factor at each stage of the industry lifecycle ? | See elaboration in pic |
