Wednesday, June 30, 2010

Extinction of Dinosaurs. A Strategic Perspective!

For years, Dinosaurs were our muse, we used them for recreational purposes. (Seen Avatar?)The industry had grown very big over time, (Seen Jurassic Park?) So why did we let them go? Here are some reasons why?

A quick Porter Analysis of the industry reveals staggering facts.

Threats of Entry: The entertainment industry was getting more and more open for other rivals, and barriers were really low, as sense of humor was by and large declining amongst the humans. Even monkeys and dogs were able to compete in the industry, giving no competitive advantage to dinosaurs, who with their wide jawline and long tail amused mankind all through the pre-pre-historic ages.

Industry Outlook: The industry had matured! Had low growth opportunities, like some of the big firms( they had turned into cash cows. Raw material had become costly, for reasons we will touch upon later. In all, the situation looked grim.

Substitutes: For the consumer there were many substitutes available in the market for adventure activities, like anaconda and Godzilla(seen these?). So the Dinosaur were losing popularity, and of course we humans(read shareholders) don’t like to cling on to assets that we no longer use. So pre historic(I have always wondered what that era refers to) man decided to short sell them.

Supply Conflict: In the earlier days, Dinosaur were the sole vendor for suppliers(smaller animals they fed on). But then man thought apple was not his cup of tea, he decided to eat smaller animals, and thus appeared the conflict of interests between Man and Dinosaur. Then man thought, if this big giant can’t make me laugh, I’ll eat him, and thus began the tale of slow extinction.

Buyer Power: Dinosaurs could not sell their services to anyone else. As no other animal relied on others for their humor, so humans had great buying power. Eventually it got to the level, where a guy asked a dinosaurs to swing from one tree to another(Seen Tarzan?) and spit fire, and when it declined, to avoid further global warming, that guy asked for a 100% refund. The dinosaurs got fed up and ate him.

This lead to a war and change in strategies and positioning of the dinosaurs. Let’s see how that took place.

So clearly we see that there is a misalignment of strategy and capabilities. Where the market Segment of low fun low animosity was still open , and was being occupied by the lesser known species, (like the Koalas and Hippos), yet the management decided to take the harder step.

And what happens when someone starts attacking the Humans. Well, the dinosaurs had no learning curve to evaluate, but now we can look back and say that the strategy was totally wrong. See how the Koalas, dogs and cockroaches have still maintained the competitive advantage.