ACCA SBL Syllabus C. Strategy - Industry, Sector and Convergence - Notes 2 / 8
Types of Industry
| Type | Explanation | Example |
| Fragmented | Small firms to small portions of market | Dry Cleaners; Hairdressers |
| Emerging | Just starting to develop | Space travel |
| Mature | Latter stages of lifecycle | Car manufacturers |
| Declining | Less firms, less sales | Coal mining |
| Global | Worldwide marketplace | Professional footballers |
Convergence
This is where 2 or more industries come together and serve the same marketplace
When this happens, there is a huge impact on the industry
Apple went from producing computers, then to iPods then to iPhones.
In the latter they effectively converged the phone, mobile computing and music sales industry together in some aspects
Apple are now seemingly headed in the direction of Televisions, this could have an enormous effect not only on the TV manufacturers but also the broadcasters, as different industries converge
In doing so - new markets emerge also eg The app store and the ability to “rent” TV and music.
The renting of music is still an emerging industry and one which looks set to dominate the marketplace
Demand - led Convergence
Customers bring the industries together. eg Designers and developers.
Here the geek and the stylish are merging into one - as this is what the customer wants.
He doesn’t want to deal with 2 separate people when creating his website
Supply - led Convergence
Suppliers bring the industries together.
This happens a lot in the technology industries (see Apple example earlier) as they are aware of the possibilities before the consumer
Convergence of Markets
This is increasing worldwide, consumer needs are becoming more similar.
Not only that they are changing in line with each other (across nations).
Consumers then become global consumers and may look for global suppliers
This means that brands, marketing etc can all be developed globally, with cost advantages in doing so
Cost Advantages of Globalisation
The obvious economies of scale where large volume, standardised products are required
Efficiencies from getting the lowest global cost suppliers (however think of recent move back from outsourcing customer service to highly skilled, cheap labour in India)
Government Policy towards globalisation
Technical standardisation between products due to freer markets and trade between countries, such as in the airline industry
Some countries actively encourage global operators into their markets eg The gaming industry in Malta