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Chapter 11 Strategic management in a changing environment
Reflection: change may be the greatest challenge that general managers face to. The challenge is all the daunting because change is usually accompanied by some uncertainty. We had provided frameworks for thinking strategically about external change. We had distinguished between a natural evolution that most industries undergo over their life cycle and occasional episodes where underlying forces of supply and demand shift. The management challenges and required strategic-thinking skills are different for each kind of change and for each stage of industry evolution. In the emergent stage of the industry life cycle, entrepreneurship, both in the sense of discovering new opportunities and in Schumpeter’s sense of doing what needs to be done to succeed, is at a premium. Within established companies, the equivalent skill is likely to be more prevalent within explorer type organizations. As the industry paradigm begins to solidify after a share-out in which dominant designs or forms emerge, the stage is set for the winner to grow. Here the focus shifts toward successful exploitation. The trend continues as the industry matures and the basis of competition shifts to a few key attributes such as cost and differentiation. Unfortunately as successful companies go through the latter stages of the industry life cycle. Their success at exploitation often cause them to become inwardly focused and rigid and to fail into competence traps. Firms that are successful in the long run will be these that manage to maintain the balance between exploiting current success and finding and taking advantage of possible sources of future success.
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