Technological Forces
How do industries evolve over time?
Reading:
Karakowsky & Guriel
Copyright 2015 Pearson Canada Inc.
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Learning Objectives
1. Describe the different stages of the industry life-
cycle model, including how competitive forces
change and the various success factors for firms in
each stage of the life cycle.
2. Identify different types of innovations.
3. Understand the relationship between technological
evolution and industry evolution and describe the
key features of technology life-cycle models.
4. Describe how technology is changing the
workplace.
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The Industry Lifecycle Model
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Introduction phase
The introduction phase is characterized by:
 high fragmentation
 entrepreneurial
 high degree of innovation
 many small competitors
 lots of R&D
 customers willing to pay a premium
 uncertainty about the market
 lack of legitimacy
What might be some examples?
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Introduction phase
The introduction phase is characterized by:
Examples:
1. A new technology - that may change the current
industry
2. A new invention - creates a new industry or changes
the old one
3. A new drug - creates a new industry or changes the old
one
4. A change in a government regulation - that
affects a new industry being created
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Example
A new technology - Self-driving cars
Video: (5 min)
https://www.youtube.com/watch?v=_Zd1ByhigPU
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Example:
A new technology - Just walk-out
technology?
Video:
https://www.youtube.com/watch?v=NrmMk1Myrxc
Image result for just walk out technology amazon
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Example: A new technology
Using solar technology in an aircraft to bring disaster
relief by landing ‘anywhere’ for take-off and landing
The Canadian Company: Solar Ship (3 min)
https://www.youtube.com/watch?v=HGsnSh5pfUU
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Growth phase
The growth phase is characterized by:
 a dominant design (i.e. standard)
 shakeout (firms exiting)
 products appeal to wider market
 economies of scale
 lower prices
 growing sales
 new entrants
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Growth Stage:
 In some cases, technical standards are specified and must be adhered to by
all firms wishing to enter the market. When a standard is legally mandated
and enforced by a government or standards organization, it is called a de jure
standard. For example, the gauge of a railroad track, a light bulb socket, and
an electrical outlet.
 A de facto standard, on the other hand, arises by virtue of common usage
and is not officially sanctioned by any authority. It is a standard “in fact” or “in
practice,” rather than in law. Microsoft Windows is the de facto standard for
personal computer operating systems because over 90% of the market uses
Windows.
 A shakeout often occurs as a standard has been achieved. It is a natural
process for an industry as it simply purges and weeds out the weaker
competitors. The firms remaining after the shakeout emerge as strong
competitors able to scale up production and serve the needs of a growing
market.
What might be some examples?
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Growth Stage:
Examples?
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Growth Stage:
Example: The Cannabis industry in Canada
Cannabis companies race to clinch an edge in pot industry’s next phase of growth: (With
the global cannabis business expected to be worth $194 billion in seven years)
Video (9 min)
https://business.financialpost.com/cannabis/cannabis-companies-race-to-clinchan-edge-in-pot-industrys-next-phase-of-growth-intellectual-property
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Maturity phase
The maturity phase is characterized by:
 Slow growth
 Markets saturated
 Competition intensifies
 Profitability
 Price-conscious consumers
 Incremental improvements (“new and improved”)
 Lots of advertising
 Price wars
What might be some examples?
Copyright 2015 Pearson Canada Inc.
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Maturity phase
Examples:
 Furniture
 Clothing and shoes
 Electronics
 Hardware
 Groceries
 Sports
 Burger restaurants
 Cell phones
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Maturity phase
So, how do you enter and compete in a
mature industry that is already saturated
and succeed?
Eg. Differentiation strategy???
Offer the customer something truly:
different, something unexpected and
something to take notice.
Copyright 2015 Pearson Canada Inc.
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Maturity phase
Example:
Indestructible pantyhose, by Sheertex, a
Canadian company.
Video:
https://www.news.com.au/technology/indestructible-sheertaxpantyhose-that-dont-run-or-tear-unveiled/newsstory/a2a55d74922cb83e6acddf2f94a786f4
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Maturity phase
Example:
HotBlack Coffee, a coffee shop, in
downtown Toronto
 Pays its employees above minimum wage
and offers NO wifi.
Video:
https://globalnews.ca/news/4813667/toronto-cafeminimum-wage-freeze/
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Decline phase
The decline phase is characterized by:
 Declining “industry sales” due to one or more of
the following:
 Changes in demographics
 Shifting consumer tastes
 Technological substitution
(Remember: A decline in a “company” sales does not
mean the entire industry is declining)
What might be some examples?
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Decline phase
The decline phase is characterized by:
Examples:
 Tobacco industry
 Cola (sugary pop) industry
 Retail malls
Remember:
The decline stage doesn’t mean the industry is going
to die. It’s not over yet!
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Example:
Retail malls?
Video:
https://globalnews.ca/video/3113870/mall-shopping-ondecline-experts-say
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Characteristics of the
Industry Life-Cycle Model Stages
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Alternatives to manage
the decline phase
1. Maintain a leadership stance
2. Pursue a niche strategy
3. Harvest profits
4. Exit early
5. Consolidate
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Alternatives to manage the
decline phase
1. Maintain a leadership stance
Be the leader, be the best!
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Alternatives to manage the
decline phase
2. Pursue a niche strategy
Example: Tobacco – From cigarettes to cigars or e-cigarettes
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Alternatives to manage the
decline phase
3. Harvest profits
 Cut costs (reduce staff, cut advertise and just make what
you can)
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Alternatives to manage the
decline phase
4. Exit early
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Alternatives to manage the
decline phase
5. Consolidate (M&A)
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Innovation and Technology:
The evolution of technology
 Radial innovations
 Incremental innovations
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Innovation and Technology:
A Cyclical Model of Technological Change
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Examples:
Old Technology
New Technology
 Typewriter
 VHS Tape
Computer
DVD/Blue-Ray
Smart Phone
Digital imaging
Internet
 Landline phone
 Film
 Encyclopedia
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Is this the next wave of
technological change in cameras?
Example: Pixel 3 - Google Top Shot
camera feature
(New cell phone camera technology)
Video:
https://www.youtube.com/watch?v=XjcQqBQVUYo
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Technology and
the Changing Workplace
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Question:
How do you think technology has changed
work environments over the last 25 years?
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Work Technology Trends:
Video: (5 min)
https://www.youtube.com/watch?v=BAYMc5Rkf9Q
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Textbook Case:
Has soda lost its fizz?
Page 103
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Questions and Answers?
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