Customers usually differ from each other on many factors – purchase rates, price sensitivity, switching costs, rationality, time to respond etc. – and these differences affect the dynamics of competition. The table below gives some illustrative characteristics for two distinct customer groups in the electricity market discussed in Briefing 57.
| Low users | High users | |
| Fraction of customers in each group | 0.7 | 0.3 |
| Quarterly usage | $400 | $600 |
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.. the latest, basic HR miss-step: see basic staff pipeline model. How hard can it be to look at when your staff will retire and plan hiring to replace them?
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This LinkedIn exchange asks why so many new entrants start up in growth industries when it’s obvious that most will fail. Another big case : during 2000-09 Europe added about 12 low-fare airlines – maybe 20 started and 8 failed? No – 60 started and 48 failed!
But I guess the industry dynamics make some kind of sense. In early years, the profit opportunity looks great (early airlines made ...
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I see that icon of ‘not even the sky is the limit’, Ryanair, is finding gravity still exists. In a curious ‘threat’ to curtail growth, lively CEO O’Leary says it’s not as easy to pick up dirt-cheap aircraft as he did in 2002. He’s not quite so open about the company’s experience of opening hundreds of routes between city-pairs. I’ve tried reconciling their statements of routes opened, operated and closed, and it’s not easy – lots of hype about huge ...
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Nice example of what looks like a strategically sound business [Lufthansa] pouncing on valuable resources shaken loose when a feeble competitor [Alitalia] stumbles. The Economist reports they will be offering new services to eight other European cities from under-served Milan.
With the downturn accelerating, there will be many more examples of weak firms forced to surrender potentially valuable resources – especially capacity and people – to those whose sound strategic management avoided getting into trouble. In the extreme, this will involve ...
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