Expansion (or Contraction) in Scale Framework
Industry growth
Expansion or contraction in scale can affect industry structure and mobility barriers. Growing industries can lead to increased economies of scale and capital requirements, making it more difficult for new entrants to compete.
- Industry growth can affect mobility barriers
- Growing industries can lead to increased economies of scale
- Continual innovation is necessary to maintain a competitive advantage
- Assess Industry GrowthAssess the growth of the industry and its impact on mobility barriersPro tipConsider the complexity of the technology and the availability of skilled personnelWarningUnderestimating industry growth can lead to loss of competitive advantage
- Develop Strategy to Maintain Competitive AdvantageDevelop a strategy to maintain a competitive advantage through innovation and experience accumulationPro tipInvest in research and developmentWarningFailure to innovate can lead to loss of competitive advantage
- Monitor Industry StructureMonitor changes in industry structure and adjust strategy accordinglyPro tipConsider the impact of industry growth on mobility barriers and competitive advantageWarningFailure to monitor industry structure can lead to loss of competitive advantage
Recreational Vehicle Example
The recreational vehicle industry experienced changes in industry structure due to growth
OutcomeCompanies that innovated and accumulated experience maintained their competitive advantage
Underestimating Industry Growth
Failing to consider industry growth can lead to loss of competitive advantage
Failing to Innovate
Failure to continually innovate can lead to loss of competitive advantage
The framework is based on the idea that industry growth can affect mobility barriers and competitive advantage.
Source · BOOK
Competitive Strategy