Assessment of Performance Measurement in - St Clements University

falling R & D and advertising, and a dividing number of competitors.
The accepted strategic prescription for decline is a “harvest strategy”,
that is, eliminating investment and generating maximum cash flow from
the business, followed by eventual divestment.
In-depth study of a wide spectrum of declining industries, suggests that
the nature of competition during decline as well as the strategic
alternatives available to firms for coping with decline are a great deal
more complex. Industries differ markedly in the decline, some
industries age gracefully, whereas others are characterized by better
warfare, prolonged excess capacity, and heavy operating costs.
Successful strategies vary just as widely some firms have reaped high
returns from strategies actually involving heavy reinvestment in a
declining industry that make subsequently borne by their competitors by
existing before the decline was generally recognized, and not harvesting
at all.
Determinants of Industry Decline
Porter (1980) explains various causes of industry decline. They include:
a. Technological substitution: One source of decline is substitute
products created through technological innovation or made prominent
by shifts in relative costs. This source can be threatening to industry
profits because profits, and also leads to fall in sales volume. This
negative effect on profits can be mitigated if there are pockets of
demand in the industry that are resistant to the substitute and have
favourable characteristics.
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