Industry structure change, often in fundamental ways. Moreover, some industries go through evolutionary phases or stages development, growth, shakeout, maturity, saturation, and decline, the so-called industry/product life cycle. Industry conditions change because some forces are in motion that create incentives or pressures for change.
There are numerous types of driving forces which can exist to produce evolutionary change in an industry:
- Changes in the long-term industry growth rate
- Changes in buyer composition
- Product innovation
- Technological change
- Marketing innovation
- Entry or exit of major firms
- Diffusion or technical know-how
- Increasing globalization of the industry
- Changes in cost and efficiency
- Emerging buyer preference for a differentiated instead of commodity product (or for a more standardized product instead of strongly differentiated products)
- Regulatory influences and government policy changes
- Changing societal concerns, attitudes, and lifestyles
- Reduction in uncertainty and business risk
The driving forces work to push the current industry structure into a new structure and they usually create new kinds of competitive pressures - both of which have implications for business strategy.