Competitive Posture

LacsinaLaoLim

Introduction

Strategy is defined as the art of devising or employing plans or stratagem toward a goal.

In shaping a firm’s strategic options, there are

two main categories which are the most important drivers to consider:

1. Nature of industry & competitive conditions

2. Firm’s own competitive capabilities, market position, & best opportunities

Introduction

Arthur 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?

Objectives

To know and understand the concept of- industry lifecycle- competitive posture

And to be able to apply them using - the ADL matrix - previous lessons

Industry Lifecycle

Industry Lifecycle

Embryonic – 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.

Industry Lifecycle

• Mature – The market is stable, there’s a well-established 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 market’s demise.

Competitive Posture

Categories

Dominant

Strong

Favorable

Tenable

Weak

Competitive Posture

Dominant – 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 Posture

Favorable – 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 Posture

Weak – Continual loss of market share, and your business line, as it exists, is too small to maintain profitability.

ADL Matrix

Developed 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 Matrix

Step #1: Identify your industry maturity category.

Business market share, Investment Profitability and cash flow.

Using the ADL Matrix

Step #2: Determine your competitive position. 

Step #3: Plot your matrix position.

ADL Matrix

Limitations 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

Exercise

Use 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.

Synthesis

Industry 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.

Synthesis

Competitive 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

Conclusion

The effect of a strategy is critical and to a company’s 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.

Thank You!