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CHAPTER 6

Business-Level Strategy and the Industry Environment
0Summary of Chapter
10. In fragmented industries composed of a large number of small and medium-sized companies, the principal forms of competitive strategy are chaining, franchising, and horizontal merger, as well as using the Internet. 20. In embryonic and growth industries, strategy is determined partly by market demand. he innovators and early adopters have different needs from the early and the late ma!ority, and a company must be prepared to cross the chasm between the two. "imilarly, managers must understand the factors that affect a market#s growth rate so they can tailor their business model to a changing industry environment. $0. %ompanies need to navigate the difficult road from growth to maturity by choosing an investment strategy that supports their business model. In choosing this strategy, managers must consider the company#s competitive position in the industry and the stage of the industry#s life cycle. "ome main types of investment strategy are share building, growth, market concentration, share increasing, harvest, and hold-and-maintain. &0. 'ature industries are composed of a few large companies whose actions are so highly interdependent that the success of one company#s strategy depends on the responses of its rivals. (0. he principal strategies used by companies in mature industries to deter entry are product proliferation, price cutting, and maintaining e)cess capacity.

/0. know thy rival. niche. he principal strategies used by companies in mature industries to manage rivalry are price signaling. +0.*0. and use strategy to change the payoff structure in a way that increases the profitability of your dominant strategy. he choice is determined by the severity of industry decline and the company#s strengths relative to the remaining pockets of demand. nonprice competition. in which market demand has leveled off or is falling. In declining industries. and divestment. price leadership.0.ame theory suggests several management principles.leadership. remember that strategy can alter the payoff structure of the game. . companies must tailor their price and nonprice strategies to the new competitive environment. hey also need to manage industry capacity to prevent the emergence of capacity e)pansion problems. and capacity control. . harvest. pursue your dominant strategy. here are four main strategies a company can pursue when demand is falling.look forward and reason back. .