Question

In: Operations Management

How can you have a high market share in a low growth industry? And Does this...

How can you have a high market share in a low growth industry? And
Does this mean that business is a stand alone, amongst similar businesses within the industry?

Solutions

Expert Solution

High market share in a low growth industry is a possibility with the businesses which have spent a long time in the industry and have seen the haydays of high growth. Their expertise is such that they have become experts in producing high quality items at most cost effective manner, which is not possible for other businesses who have different constraints. No new businesses are moving in due to unattractive growth prospects, so the competition is not increasing. This is typical scenario where investing in other businesses is avoided by these players as long as this business is sustainable and yielding profits, though thin.

The high market share can be achieved by increasing cost effectivenss, employing economies of scale and improving quality of output in such industry scenario. This type of businesses need not be standalone, as there might be a few big businesses standing together producing complemetary products, or even similar products, while sharing market among them. It is also possible that there are two or three big businesses, each making a specific  variant of the product and leading market in it, or a group of businesses making different components of a single product, each being a market leader.


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