Life Cycles, Size, and Decline

BA 152

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

Entry Strategies  Entering the market early – – –

Entry Strategies  Entering the market later – – – –

Survival Strategies 

Specialists

– – – – – 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.

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

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

Organizational Characteristics During the Life Cycle  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?

 Pressures for Growth – – – –

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

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

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

Organizational Characteristics During the Life Cycle  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 Continued maturity Creativity Addition of Internal Systems Provision of Clear Direction Crisis: Need for delegation with control Crisis: Too much red tape Decline Crisis: Need for revitalization Small Crisis: Need for Leadership Entrepreneurial Collectivity Formalization Elaboration ?????????

Organizational Decline and Downsizing: The Causes  Organizational Atrophy – Loss of ability to respond to changing environment – Inefficient, bureaucratic, fat, and happy  Organizational Vulnerability – – – 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 Blinded Inaction Faulty Action Crisis Dissolution

Managing the Downsizing  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 surprise.” “The best surprise is no Allow employees to leave with dignity Assist those leaving – – Use ceremonies to reduce anger/confusion Remember those who stay!

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Case: Sunflower, Inc.