Briefly discuss the four strategic options firms have during the decline stage of the industry life cycle.
What will be an ideal response?
At the decline stage, managers generally have four strategic options:
• Exit: Some firms are forced to exit the industry by bankruptcy or liquidation.
• Harvest: In pursuing a harvest strategy, the firm reduces investments in product support and allocates only a minimum of human and other resources.
• Maintain: When following a maintain strategy, firms continue to support marketing efforts at a given level despite the fact that demand has been declining.
• Consolidate: Although market size shrinks in a declining industry, some firms may choose to consolidate the industry by buying rivals (those who choose to exit). This allows the consolidating firm to stake out a strong position-possibly approaching monopolistic market power, albeit in a declining industry.
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Assume that Denmark, a member of the European Community, is contemplating the enactment of a protective tariff for its fledgling electronics industry due to domestic political and economic pressures. Assume further that the EC has a tariff that it has also enacted for all electronics manufacturers within the EC that is considerably lower than the one that is being proposed in Denmark. The policy
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