Strategic management in early stages of industry pioneers and late entrants: the case of Indian computer hardware industry

Abstract

This research reviews the current research and perspectives on the concept of strategy, strategies followed by industry pioneers and late entrants, and process of strategy formation in enterprises. The research proposes a conceptualization for the formation of strategy, and generic strategy tor industry pioneers and late entrants; and attempts to support through tour in-depth case studies. Strategy is an enterprises objective and means as evident in its decision and actions on: scone ofoperation (product features and prices; market geographical spread, segment, distribution, and promotion; technology-typeand extent of in-house development; acquisition offinancial and human resources); resource deployments (funds and skills to functions or divisions); and competitive stance. The industry pioneers in a country, break new ground, while the late entrants enter during the growth phase. The mix and magnitude of challenges faced are different for industry pioneers and late entrants. An industry pioneer is the first enterprise which otters a new product, and which (product) leads to the formation of a new Industry segment in country; whereas a late entrant is the one which offers an existing product into an existing industry segment in a country. Some of the conclusions of this research are: 1. Strategy or an enterprise evolves over a period not at one point of time. However the strategy period is clearly identifiable, and it (formation period) is much shorter than the operation period. 2. There are three distinct sequentially occurring phases within the strategy formation period. The phases were found to exist tor two disparate classes of (industry pioneers and late entrants)enterprises. The phases in order of occurrence are: (i) Basic commitment phase: Triggered by environmental events, enterprise makes framework setting decisions.The decisions are closely interrelated and mutually supportive. The key determinants of decisions are technological and socioeconomic environment, and the business approach of top management. (ii) Activation phase; This phase is initiated with the commencement of technology or market related activities. The decisions are made in response to problems / opportunities, and the decisions have low interrelatedness. The decisions are determined by functional capabilities and evolving structure of enterprise, in addition to socioeconomic and technological environment. (iii) Integration phase: Triggered by the accumulation of unexpected / unsatisfactory feedback, the enterprise makes certain choices to correct conflicts / gaps in choices of previous two phases. The decisions are closely interrelated – supportive within the phase, and with those of previous two phases. The key determinants are business approach of top management and evolving structure-system of enterprise, and perceived performance in previous two phases. 3. Generic: Industry pioneer strategy is to achieve high growth rates through manufacture of in house designed / adopted products, and sales to uninitiated customers through elaboration market creation approach. Generic late entrant strategy is to achieve large market share, by offering novel services and complexity priced products through efficient manufacturing and marketing network. The decisions of two industry pioneers [Hindustan Computers Ltd. now HCL.-Hewlett Packard; Wipro information technology ltd.] and two late entrants [Pertech Computers Ltd. ; Modi Olivetti Ltd.] from the computer hardware industry are intensively studied by case history approach. Computer hardware industry was chosen as ; industry is not very old, so sample choices are available ; and lot of published material is available. Data as available from the secondary sources and intensive and lasted for 2-5 hours, and about 25 individuals were interviewed in each enterprise. Cases were later submitted to the enterprises for verification of the data, and clearance was received.

The analytical approach followed is to compare the conceptualizations with the evidence from the cases. Strategy formation in industry pioneers and late entrants is sought to be studied from: content and objectives of strategic decisions, the order/sequence of decisions and actions, the determinants (organizational environmental. and performance) of strategic decisions and interrelations among strategic decisions. Strategic decisions are identified by consistent application of one of the most used (in strategy research) operational definition, i.e. the decision which affects the enterprise as a whole, or is effective over a long period of time or leads to commitment of significance portion of enterprise' resources, or subsumes several decisions. The replication and extension logic of case research methodology is used to mil out generalizations; tor strategy formation from tour empirical settings, and for industry pioneer strategy and late entrant strategy from two settings each.

The research provides a strong platform for further research on strategy formation, and strategies of industry pioneers and late entrants; and it has important implications for research on organizational learning and industrial organization economics , and practitioners.