Strategies for Dynamic and Stable Industry Environments: Summary

Hedge Funds and Financial Market Dynamics (Occasional Papers S.)The various strategies that firms can use in different industry environments. Developing an appropriate strategy to suit the needs of different industry environments is crucial for a firm’s survival. Companies must always be prepared for changes in the conditions in their environment if they are to respond to these changes in a timely manner.
In dynamic markets, developing a strategy to exploit technical innovations is a crucial aspect of competitive strategy. The three strategic choices for a firm in a dynamic industry are i) to develop and market the technology by itself, ii) to do so jointly with another company, or iii) to license the technology to existing companies.

Stable environment is characterized by a few large companies whose actions are so highly interdependent that the success of one company’s strategy depends upon the responses of its competitors. The principal actions initiated by companies to deter entry of competitors are i) product proliferation, ii) price cutting, and iii) maintaining excess capacity. The principal actions initiated by companies to manage rivalry in a stable and mature industry include market penetration, product development, market development and product proliferation.