While still growing some competitors are losing share
Symptom: While still growing, some competitors are losing share.
Implications for the market:
Even though successful today, any company losing share puts itself in grave danger. Although periods of rapid demand growth can mask the problem, the company is still vulnerable:
In time, competitors with growing share will overcome the last critical advantages held by the earlier market leaders — economies of scale and ownership of the customer — and will experience relatively higher profits even while growing share.
When a market becomes hostile, a company that has foregone share for profitability by keeping its price structure relatively high may find that its prices must fall and it will be earning lower returns on less volume than it could have had.
Loss of share can take several years to show itself in the financial results of the share losers. Returns can stay acceptable for long periods of time. However, once the returns start to fall, the drop can become precipitous and extremely difficult to reverse. The early 90s' experiences of IBM, Sears, and General Motors all illustrate this problem.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.