Declining niche

A niche in decline reflects saturated product markets. The number of organizations in the niche declines as obsolete technologies wear out. Competition forwhat is left of product markets may drive organizations from the niche to more attractive ones. Average business size in the niche may increase.

Table 8.3 summarizes the POLC model in terms of the major characteristics of the niche environment, given its stage of development, in terms of marketing and production functions.

The four stages describe an industrial life cycle in terms of the changing external environment and hence the context for internal strategies. For example, in the early stages of new niche development, market potential may be huge given limited competition, but the market will be unaware of

Table 8.3 POLC stage environmental characteristics

Enterprise function

New niche

Emerging niche

Mature niche

Declining niche

The firm's

Potential

Product variants

Product

In decline

markets

undefined

define the market

standardized

and market

saturated

Production

Scope for

Organizational

Best practices

Organizational

technology

different

forms stabilizing

defined and

variation

patterns of

and better

economies of

potential

organizing

practices

scale developed

virtually nil

and producing

emerging

The firm's

Innovative

Supply becoming

Supply

Suppliers moving

supply

sourcing

stable and

standardized

to new niches

required

standardized

the firm's new product. Logically, a particular strategy or modus operandi is the appropriate response for effectively exploiting the state of the niche. A new niche would require innovative management approaches to niche exploitation (Howard and Hine 1997). In Thompson's (1999) schema, a charismatic role for the entrepreneur would be recommended because it leads to creative solutions.

Later on in niche development, as the niche matures, resources such as product markets and production inputs become thoroughly defined and standardized, suggesting the need for efficiency in resource utilization. In formal planning terms, the enterprise might implement a best practices plan. Again, if the internal strategy is to 'fit', then Thompson's architectural role would seem appropriate.

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