Life Cycles Size and Decline BA 152 Industry

Life Cycles, Size, and Decline BA 152

Industry Life Cycles n Industry Evolution – Entry strategies n n – Survival Strategies n Specialist n Generalist

Entry Strategies n Entering the market early – – –

Entry Strategies n Entering the market later – –

Survival Strategies n Specialists – – – n Concentrate skills in a single niche Develop core competencies Can provide better customer service and superior products, but Trouble if the niche disappears or others enter. Generalists – – Spread skills across many niches Providing greater brand recognition Can succeed when environment is uncertain, If risk is spread across a number of niches

Organizational Life Cycle n Stages of Life Cycle Development – Pre-Birth Stage n first idea n commitment and early planning n implementation

Organizational Characteristics During the Life Cycle n ENTREPRENEURIAL STAGE: – Personal control systems – Innovation by owner/manager – Goal: – Management style: – Crisis:

Organizational Characteristics During the Life Cycle n COLLECTIVITY STAGE: – Personal rewards aimed at individuals who contribute to organizational success – Innovation from employees and managers – Goal: – Management style: – Crisis:

Organization Size: Is Bigger Better? n Pressures for Growth – –

Size and Structural Characteristics As Organizations get bigger: • Complexity • Centralization • Formalization • Flexibilty

Large Vs. Small: How can you be both? n n n

Organizational Characteristics During the Life Cycle n FORMALIZATION STAGE: – Impersonal rewards through formalized systems – Innovation from separate innovative groups – Goal: – Management style: – Crisis:

Organizational Characteristics During the Life Cycle n ELABORATION STAGE: – Extensive rewards tailored to product and department success – Innovation by institutionalized R & D – Goal: – Management style: – Crisis:

Organization Life Cycle Large Streamlining Development of Teamwork Size Continued maturity Addition of Internal Systems Provision of Clear Direction Crisis: Too much red tape Creativity Crisis: Need for delegation with control Small Decline Crisis: Need for revitalization Crisis: Need for Leadership Entrepreneurial Collectivity Formalization Elaboration ? ? ? ? ?

Organizational Decline and Downsizing: The Causes n Organizational Atrophy – – n Organizational Vulnerability – – – n Loss of ability to respond to changing environment Inefficient, bureaucratic, fat, and happy Loss of resources Loss of market share Loss of legitimacy Environmental decline – – – Stagnating economy Flat/shrinking market Increased competition

Stages of Decline Successful Organizational Performance Decl ining Blinded Orga nizat Inaction ional Perfo rman c Faulty Action e Crisis Dissolution

Managing the Downsizing n n Implementation approaches must be a function of the severity and speed of decline. Implementation issues to consider – – – Consider voluntary programs with incentives (but be careful - who might leave? ) Over communicate - “The best surprise is no surprise. ” Allow employees to leave with dignity Assist those leaving Use ceremonies to reduce anger/confusion Remember those who stay!

Next Time Case: Sunflower, Inc.