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Transcript of Competitive Posture
Lacsina Lao Lim
IntroductionStrategy is defined as the art of devising oremploying plans or stratagem toward a goal. In shaping a firms strategic options, there are two main categories which are the most important drivers to consider: 1. Nature of industry & competitive conditions 2. Firms own competitive capabilities, market position, & best opportunities
IntroductionArthur D Little (ADL) Matrix helps you think about strategy based on: Industry lifecycle At what stage of its lifecycle is the industry? Competitive Posture How strong is your strategic position?
ObjectivesTo know and understand the concept of - industry lifecycle - competitive posture And to be able to apply them using - the ADL matrix - previous lessons
Industry LifecycleEmbryonic The introduction stage, characterized by rapid market growth, very little competition, new technology, high investment and high prices. Growth The market continues to strengthen, sales increase, few competitors exist, and company reaps rewards for bringing a new product to market.
Mature The market is stable, theres a wellestablished customer base, market share is stable, there are lots of competitors, and energy is put toward differentiating from competitors. Aging Demand decreases, companies start abandoning the market, the fight for market share among remaining competitors gets too expensive, and companies begin leaving or consolidating until the markets demise.
Competitive PostureDominant Rare, typically short-lived, little to no competition, usually a result of bringing a brand-new product to market or having built an extremely strong reputation in the market. Strong Market share is strong and stable, regardless of what your competitors are doing.
Competitive PostureFavorable Enjoys competitive advantages in certain segments of the market, many rivals of equal strength Tenable position in the overall market is small, and market share is based on a niche. Strong competitors are overtaking your market share by building their products and defining clear competitive advantages.
Competitive PostureWeak Continual loss of market share, and your business line, as it exists, is too small to maintain profitability.
ADL MatrixDeveloped by Arthur D Little in the late 1970s by ADL consulting company Uses the dimensions of environmental assessment and business strength assessment Prescribes various strategies for each of the 20 combinations
Using the ADL MatrixStep #1: Identify your industry maturity category.Business market share, Investment Profitability and cash flow.
Using the ADL MatrixStep #2: Determine your competitive position.
Step #3: Plot your matrix position.
ADL MatrixLimitations of ADL Matrix There is no standard length of life cycles, Determining the current industry life cycle phase is awkward, Competitors may influence the length of the life cycle
ExerciseUse the Airline industry as the basis in answering the following: 1. Determine the stage in the industry lifecycle of the given industry 2. From the listed below, identify the Competitive Posture of each company. Laoag Air, Zest Air, Philippine Airlines, Cebu Pacific, Transglobal Airways 3. Choose the company under the Strong Competitive posture and plot it in the ADL matrix and formulate a specific strategy based on the general strategy proposed in the matrix.
SynthesisIndustry Lifecycle - classify ones own stage of growth for the purpose of knowing which company would match its stage of growth and from there know what measures to take to be at par with the current competing companies.
SynthesisCompetitive Posture - To able to know its strategic position in the market compared with its competitors ADL Matrix - produces 20 combinations of strategy which may be used by different business unity belonging to different industry maturity and competitive position
ConclusionThe effect of a strategy is critical and to a companys success hence it is important to look at ones own organization in relation to the industry where it belongs and its competitors to be to plan and formulate strategies that will be beneficial for the company.