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CHAPTER 6
Business-Level Strategy and The Industry
Environment

Synopsis of Chapter

This chapter extends the analysis of business-level strategy by considering the different competitive
strategies that firms can and should adopt as they enter different industry environments. The formulation of
business-level strategy does not take place in a vacuum; companies have to consider the reaction of other
firms to their competitive moves. The chapter is therefore a necessary addition to Chapter 5 and provides a
building block to the chapters on corporate-level strategy.

The chapter mainly examines the challenges of managing a generic business-level competitive strategy in
different kinds of industry environments: fragmented industries, embryonic and growth industries, mature
industries, and finally declining industries. In each type of industry, there is a discussion of the competitive
problems associated with that particular environment and the appropriate strategies that firms can use to
tackle those problems.

Learning Objectives

1. Identify the strategies managers can develop to increase profitability in fragmented industries.
2. Discuss the special problems that exist in embryonic and growth industries and how companies can
develop strategies to effectively compete.
3. Understand competitive dynamics in mature industries and discuss the strategies managers can
develop to increase profitability even when competition is intense.
4. Outline the different strategies that companies in declining industries can use to support their business
models and profitability.

Opening Case

How to Make Money in Newspaper Advertising

The U.S. newspaper business is a declining industry, with the drop accelerating in recent years. The fall in
advertising revenue has been very steep. The reasons for the declines in circulation and advertising revenue
are not hard to find; digitalization has disrupted the industry, news consumption has moved to the Web, and
advertising has followed suite. The industry has responded by downsizing newsrooms, shutting down
unprofitable newspaper properties, including numerous local newspapers, and expanding Web-based news
properties as rapidly as possible. Whereas consumers were once happy to subscribe to their daily print
newspaper, they seem to loathe paying for anything on the Web, particularly given the large amount of

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“free” content that they can access. Against this background, one local newspaper company is swimming
against the tide, and making money at it. The company, Community Impact Newspaper, produces 13 hyper-
local editions that are delivered free each month to 855,000 homes in the Austin, Houston, and Dallas areas.
The paper was the brainchild of John Garrett who noticed that local newspapers in Texas did not cover news
that was relevant to smaller neighborhoods. Today the paper has a staff of 30 journalists, about 35% of the
total workforce. The reporting is pretty straight stuff, although Impact will do in-depth stories on
controversial local issues, but it is careful not to take sides as it will cause them to lose business. About half
of each edition is devoted to local advertisements, and this is where Impact makes its money. For their part,
the advertisers seem happy with the paper. It seems that Impact is making very good money for its owners in
an industry where most players are struggling just to survive.

Teaching Note:

This case illustrates the need for business level strategies in a declining industry. Students should continue to
understand the advantages and disadvantages of using a product development strategy and how and why
strategies may need to change according to industry and competitive moves. You might ask students about
the advantages of the niche market.

Lecture Outline

I. Overview

This chapter looks at the different strategies that companies can pursue to strengthen their competitive
position in each of these different stages of the industry life cycle. Each stage in the evolution of its industry
raises some interesting challenges for a business. Managers must adopt the appropriate strategies to deal with
these challenges.

II. Strategy in a Fragmented Industry

A fragmented industry is composed of a large number of small- and medium-sized companies, such as the
dry-cleaning and restaurant industries. An industry may be fragmented for several reasons.

A. Reasons for Fragmentation

Reasons for fragmentation are as follows:

• A lack of scale economies may mean that there are few, if any, cost advantages to large size. In
Some industries there may even be diseconomies of scale, such as when customers prefer the
unique food and style of a popular local restaurant rather than the standardized offerings of
some chain restaurants.
• Brand loyalty in the industry may primarily be local. It may be difficult to build a brand through
differentiation that transcends a particular location or region.
• The lack of scale economies and national brand loyalty implies low entry barriers. When this is
the case, a steady stream of new entrants may keep the industry fragmented.

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Companies may specialize by customer group, customer need, or geographic region. Many small
specialty companies may operate in local or regional markets. All kinds of specialized or custom-made
products—furniture, clothing, hats, boots, houses, and so forth—fall into this category, as do all small
service operations that cater to personalized customer needs, including dry-cleaning services,
landscaping services, hair salons, and massage services.

B. Consolidating a Fragmented Industry Through Value Innovation

Business history is full of examples of entrepreneurial organizations that have pursued strategies to
create meaningful scale economies and national brands where none previously existed. In the process
they have consolidated industries that were once fragmented, reaping enormous gains for themselves
and their shareholders in the process.

For example, until the 1980s the office supplies business was a highly fragmented industry composed
of many small “mom-and-pop” enterprises that served local markets. The typical office supplies
enterprise in those days had a limited selection of products, low inventory turnover, limited operating
hours, and a focus on providing personal service to local businesses. Then along came Staples, started
by executives who had cut their teeth in the grocery business; they opened a big-box store with a wide
product selection, long operating hours, and a self-service business model. They implemented
computer information systems to track product sales and make sure that inventory was replenished just
before it was out of stock, which drove up inventory turnover.

Fragmented industries are wide open market spaces just waiting for entrepreneurs to transform them
through the pursuit of value innovation. A key to understanding this process is to recognize that in
each case, the value innovator defines value differently than established companies, and finds a way to
offer that value that lowers costs through the creation of scale economies.

C. Chaining and Franchising

There are two strategies that enterprises use to replicate their offering once they get it right. One is
chaining and the other is franchising. Chaining involves opening additional locations that adhere to
the same basic formulae, and that the company owns. By expanding through chaining, a value
innovator can quickly build a national brand. At the same time, by rapidly opening locations, and by
knitting those locations together through good information systems, the value innovator can start to
realize many of the cost advantages that come from large size.

Franchising is similar in many respects to chaining, except that in the case of franchising the
founding company—the franchisor—licenses the right to open and operate a new location to another
enterprise—franchisee—in return for a fee. There are some advantages to using a franchising strategy:
• Normally the franchisee puts up some or all of the capital to establish his or her operation. This
helps to finance the growth of the system, and can result in more rapid expansion.
• As franchisees are the owners of their operations, and because they often put up capital, they
have a strong incentive to make sure that their operations are run as efficiently and effectively.

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• Franchisees have an incentive to improve the efficiency and effectiveness of their operations by
developing new offerings and/or processes.

The drawbacks of a franchising strategy are threefold:

• There may not be the same tight control that can be achieved through a chaining strategy.
• In a franchising system the franchisee captures some of the economic profit from a successful
operation.
• As franchisees are small relative to the founding enterprise, they may face a higher cost of
capital, which raises system costs and lowers profitability.

Given these various pros and cons, the choice between chaining and franchising depends on managers
evaluating which is the best strategy given the circumstances facing the founding enterprise.

D. Horizontal Mergers

Another way of consolidating a fragmented industry is to merge with or acquire competitors,

combining them together into a single larger enterprise that is able to realize scale economies and
build a more compelling national brand.

Focus On: Wal-Mart

Value Innovation at Wal-Mart: Consolidating a Fragmented Market

When Sam Walton opened the first Wal-Mart store in 1967 there were no large-scale general merchandise
retailers. The industry was very fragmented. Walton’s vision was simple: Provide a wide selection of
merchandise, stay open seven days a week, and have long operating hours. Buy in bulk to drive down the
costs of goods sold, and then pass those cost savings on to customers in the form of lower prices. Reduce
costs further by switching from a full-service format to a self-service format. Use good information systems
to track what is sold in a store, and make sure that desired products are never out of stock. Gain further
efficiencies by chaining, opening additional stores in a cluster around a common distribution center. It was a
brilliant vision. Execution required the development of processes that did not exist at the time, including
state-of-the-art information systems to track store sales and inventory turnover, and a logistics system to
optimize the flow of inventory from distribution centers to stores. Over the years, as Wal-Mart did grew and
built these systems, it was able to offer its customer set more value on the attributes that mattered to them.
Due to its increasingly low cost structure, it was able to offer all this at prices significantly below those of its
smaller rivals, effectively driving them out of business. Through such value innovation, Wal-Mart was able
to consolidate what was once a fragmented market, building a powerful national brand wrapped around the
concept of everyday low prices and wide product selection.

Teaching Note:

Wal-Mart did a fantastic job consolidating a once fragmented market, through the process of value
innovation. Although faced with initial difficulties, Wal-Mart was able to achieve all its goals. Ask students
to think of other examples of companies that successfully expanded by chaining the way. To initiate a class
discussion, students may be asked to share about the difficulties these companies may have faced.

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III. Strategies in Embryonic and Growth Industries

An embryonic industry is one that is just beginning to develop, and a growth industry is one in which first-
time demand is rapidly expanding as many new customers enter the market. Choosing the strategies needed
to succeed in such industries poses special challenges for because new groups of customers with different
kinds of needs start to enter the market. Managers must be aware of the way competitive forces in embryonic
and growth industries change over time because they frequently need to build and develop new kinds of
competencies, refine their business strategy, in order to effectively compete in the future. Most embryonic
industries emerge when a technological innovation creates a new product opportunity. Customer demand for
the products in embryonic industries is initially limited for a variety of reasons. Reasons for slow growth in
market demand include:
• The limited performance and poor quality of the first products
• Customer unfamiliarity with what the new product can do for them
• Poorly developed distribution channels to get the product to customers
• A lack of complementary products that might increase the value of the product for customers
• High production costs because of small volumes of production

An industry moves from the embryonic stage to the growth stage when a mass market starts to develop for its
product. A mass market is one in which large numbers of customers enter the market. Mass markets start to
emerge when three things happen:
Ongoing technological progress makes a product easier to use, and increases its value for the average
customer
Complementary products are developed that also increases its value
Companies in the industry work to find ways to reduce the costs of producing the new products so they can
lower their prices and stimulate high demand.

A. The Changing Nature of Market Demand

Managers who understand how the demand for a product is affected by the changing needs of
customers can focus on developing new strategies that will protect and strengthen their competitive
position, such as building competencies to lower production costs or speed product development.
Figure 6.1: Market Development and Customer Groups

Different groups of customers with different needs enter the market over time. Growth follows an S-
curve because as the stage of market development moves from embryonic to mature, customer demand
first accelerates then decelerates as the market approaches the saturation point—where most customers
have already purchased the product for the first time, and demand is increasingly limited to
replacement demand. This curve has major implications for a company’s differentiation, cost, and
pricing decisions.

Following are the different groups of customers with different needs:

• Innovators are “technocrats” or “gadget geeks”; people who are delighted to be the first to
purchase and experiment with a product based on a new technology.

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• Early adopters understand that the technology may have important future applications and are
willing to experiment with it to see if they can pioneer new uses for the technology. Early
adopters are often people who envision how the technology may be used in the future, and they
try to be the first to profit from its use.
• The early majority forms the leading wave or edge of the mass market and their entry into the
market signifies the beginning of the growth stage. Customers in the early majority are practical,
generally understand the value of new technology, and weigh the benefits of adopting its new
products against their costs and wait to enter the market until they are confident they will
benefit.
• The late majority are customers who purchase a new technology or product only when it is
obvious the technology has great utility and is here to stay. A typical late majority customer
group is a somewhat “older” and more behaviorally conservative set of customers.
• Laggards, the last group of customers to enter the market, are people who are inherently
conservative and unappreciative of the uses of new technology. Laggards frequently refuse to
adopt new products even when the benefits are obvious, or unless they are forced to do so by
circumstances—for example, due to work-related reasons.
Figure 6.2: Market Share of Different Customer Segments

B. Strategic Implications: Crossing the Chasm

Pioneering companies are often unable to create a business model that allows them to be successful
over time and remain as market leaders because innovators and early adopters have very different
customer needs from the early majority. In an influential book, Geoffrey Moore argues that because of
the differences in customer needs between these groups, the business-level strategies required for
companies to succeed in the emerging mass market are quite different from those required to succeed
in the embryonic market. New strategies are often required to strengthen a company’s business model
as a market develops over time for the following reasons:
• Innovators and early adopters are technologically sophisticated customers willing to tolerate
limitations of the product, but the early majority values ease of use and reliability.
• Innovators and early adopters can be reached through specialized distribution channels and
products are often sold by word of mouth, but the early majority uses mass-market distribution
channels and mass-media advertising campaigns that require a different set of marketing and
sales strategies.
• Innovators and early majority are few and are not price sensitive, so companies serving them
typically pursue a focus model, produce small quantities of a product, and price high. To serve
the rapidly growing mass-market, large-scale mass production may be critical to ensure that a
high-quality product can be reliably produced at a low price point.

The business models and strategies required to compete in an embryonic market populated by early
adopters and innovators are very different from those required to compete in a high-growth mass
market populated by the early majority. As a consequence, moving from an embryonic market to a
mass market is not easy and smooth; instead, it represents a competitive chasm. Thus, although
embryonic markets are typically populated by a large number of small companies, once the mass
market begins to develop, the number of companies sharply decreases.

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6.1 Strategy in Action

Crossing the Chasm in the Smartphone Market

The first smartphones started to appear in the early 2000s. The early market leaders included Research in
Motion (RIM), with its blackberry line of smartphones, and Microsoft with Windows Mobile operating
systems. These phones were sold to business users. Although they had an ability to send and receive e-mails,
browse the Web, and so on, there was no independent applications market, and consequently, the utility of
the phones was very limited and they were not easy to use. The market changed dramatically after the
introduction of the apple iPhone in 2007. This phone was aimed not at power business users, but at a broader
consumer market; it was easy to use, with a large touch-activated screen and a virtual keyboard that vanished
when not in use; and it was stylishly designed, with an elegance that appealed to many consumers. Also,
Apple made it very easy for independent developers to write applications that could run on the phone, and
they set up an App store that made it easy for developers to market their apps. Clearly, the iPhone was a
device aimed squarely not at business users, but at consumers. The ease of use and utility of the iPhone
quickly drew the early majority into the market, and sales surged. Meanwhile, sales of Blackberry devices
and Windows Mobile phones started to spiral downward. Both Microsoft and blackberry were ultimately
forced to abandon their existing phone platforms and strategies, and reorient themselves.

Teaching Note:

Microsoft and Blackberry did a decent job of attracting early adopters, but stumbled when making the
transition to a mass market. However, they weren’t as successful as they thought they would be as they failed
to consider the needs of mass-market customers. In addition, they were cautious in making changes and let
their rivals get ahead in innovation. Finally, they realized their mistakes and imitated their competitors, and
changed what they offered to the consumers. This case depicts how important it is for a company to pay
close attention to consumer needs to cross the chasm. Ask students if they know of any examples of
companies that did not successfully cross the chasm. Then ask them to come up with suggestions for these
companies to succeed.

Figure 6.3: The Chasm in the Smartphone Business

Managers in embryonic and growth industries must learn how to compete for the mass market and to
cross the chasm successfully.
• They must correctly identify the customer needs of the first wave of early majority users—the
leading edge of the mass market.
• They must adjust their business models by developing new strategies to redesign products and
create distribution channels and marketing campaigns to satisfy the needs of the early majority.
• They must have a suitable product available at a reasonable price to sell to the early majority
when they begin to enter the market in large numbers. At the same time, the industry pioneers
must abandon their outdated, focused business models directed at the needs of innovators and
early adopters.
• They need to develop the strategies necessary to pursue a differentiation or cost-leadership
business model in order to remain a dominant industry competitor.

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C. Strategic Implications of Differences in Market Growth Rates

Managers must understand a final important issue in embryonic and growth industries: different
markets develop at different rates. A number of factors explain the variation in market growth rates for
different products, and thus the speed with which a particular market develops.
• The first factor that accelerates customer demand is a new product’s relative advantage—the
degree to which a new product is perceived as better at satisfying customer needs than the
product it supersedes.
• A second factor of considerable importance is complexity. Products that are viewed by
consumers as being complex and difficult to master will diffuse more slowly than products that
are easy to master.
• Another factor is compatibility, which refers to the degree to which a new product is perceived
as being consistent with the current needs or existing values of potential adopters.
• Complexity, the degree to which a new product is perceived as difficult to understand and use, is
another factor.
• Another factor is trialability, which is the degree to which potential customers can experiment
with a new product during a hands-on trial basis.
• A final factor is observability, which refers to the degree to which the results of using and
enjoying a new product can be clearly seen and appreciated by other people.

When a market is rapidly growing, and the popularity of a new product increases or spreads in a way
that is analogous to a viral model of infection, a related strategic issue arises. Lead adopters (the first
customers who buy a product) in a market become “infected” or enthused with the product, as
exemplified by iPhone users. Subsequently, lead adopters infect other people by telling others about
the advantages of products. After observing the benefits of the product, these people also adopt and
use the product. Companies promoting new products can take advantage of viral diffusion by
identifying and aggressively courting opinion leaders in a particular market—the customers whose
views command respect.

IIV. Strategy in Mature Industries

A mature industry is commonly dominated by a small number of large companies. Although a mature
industry may also contain many medium-sized companies and a host of small, specialized companies, the
large companies often determine the nature of competition in the industry because they can influence the six
competitive forces. In mature industries, business-level strategy revolves around understanding how
established companies collectively attempt to moderate the intensity of industry competition in order to
preserve both company and industry profitability.

A. Strategies to Deter Entry

There may be cases in which scale and brand, although significant, are not sufficient to deter entry. In
such circumstances there are other strategies that companies can pursue to make new entry less likely.
These strategies include product proliferation, limit pricing, and strategic commitments.

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1. Product Proliferation

One way in which companies try to enter a mature industry is by looking for market segments
or niches that are poorly served by incumbent enterprises. The entry strategy involves entering
these segments, gaining experience, scale and brand in that segment, and then progressively
moving upmarket. A product proliferation strategy involves incumbent companies attempting
to forestall entry by making sure that every niche or segment in the marketplace is well served.
A product proliferation strategy therefore, because it gives new entrants very little opportunity
to find an unoccupied niche in an industry, can effectively deter entry.

2. Limit Price

A limit price strategy may be used to deter entry when incumbent companies in an industry
enjoy economies of scale, but the resulting cost advantages are not enough to keep potential
rivals out of the industry. A limit price strategy involves charging a price that is lower than that
required to maximize profits in the short run, but is above the cost structure of potential entrants.
Figure 6.4: Limit Pricing

If incumbents charge the price that the market will bear, this will be above the unit cost structure
of new entrants, allowing them to enter and still make a profit under the pricing umbrella set by
incumbents. In this situation, the best option for incumbents might be to charge a price that is
still above their own cost structure, but just below the cost structure of any potential new
entrants. As it deters entry, the limit price might be thought of as the long-run profit-maximizing
price. Because it deters entry, the limit price might be thought of as the long-run profit-
maximizing price.

3. Strategic Commitments

Strategic commitments are investments that signal an incumbent’s long-term commitment to a

market, or a segment of that market. It involves raising the perceived costs of entering a market,
thereby reducing the likelihood of entry. Other strategic commitments that might act as an entry
deterrent include making significant investments in basic research, product development, or
advertising beyond those necessary to maintain a company’s competitive advantage over its
existing rivals. Incumbents might also be able to deter entry if they have a history of responding
aggressively to new entry through price cutting, accelerating product development efforts,
increased advertising expenditures, or some combination of these. One thing to note here is that
when making strategic commitments, a company must be careful not to fall foul of antitrust law.

B. Strategies to Manage Rivalry

Beyond seeking to deter entry, companies also wish to develop strategies to manage their competitive
interdependence and decrease price rivalry. Unrestricted competition over prices reduces both
company and industry profitability. Several strategies are available to companies to manage industry

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rivalry which include price signaling, price leadership, non-price competition, and capacity control.

1. Price Signaling

A company’s ability to choose the price option that leads to superior performance is a function
of several factors, including the strength of demand for a product and the intensity of
competition between rivals. Price signaling is the process by which companies increase or
decrease product prices to convey their intentions to other companies and influence the way
other companies price their products. Companies use price signaling to improve industry
profitability.

Companies may use price signaling to announce that they will vigorously respond to hostile
competitive moves that threaten them. For example, they may signal that if one company starts
to aggressively cut prices, they will respond in kind. A tit-for-tat strategy is a well-known price
signaling maneuver in which a company does exactly what its rivals do: if its rivals cut prices,
the company follows; if its rivals raise prices, the company follows. By consistently pursuing
this strategy over time, a company sends a clear signal to its rivals that it will mirror any pricing
moves they make; sooner or later, rivals will learn that the company will always pursue a tit-for-
tat strategy. a tit-for-tat strategy also signals to rivals that price increases will be imitated,
growing the probability that rivals will initiate price increases to raise profits. Thus, a tit-for-tat
strategy can be a useful way of shaping pricing behavior in an industry.

2. Price Leadership

When one company takes the responsibility of setting prices that maximizes industry
profitability, that company assumes the position as price leader. Formal price leadership, or
when companies jointly set prices, is illegal under antitrust laws; therefore, the process of price
leadership is often very subtle. The price set by the weakest company—that is, the company
with the highest cost structure—is often used as the basis for competitors’ pricing.

Although price leadership can stabilize industry relationships by preventing head-to head
competition and raising the level of profitability within an industry, it has its dangers. It helps
companies with high cost structures, allowing them to survive without needing to implement
strategies to become more efficient. In the long term, such behavior makes them vulnerable to
new entrants that have lower costs because they have developed new low-cost production
techniques.

3. Nonprice Competition

A third very important aspect of product and market strategy in mature industries is the use of
non-price competition to manage rivalry within an industry. The use of strategies to try to
prevent costly price cutting and price wars does not preclude competition by product
differentiation. In many industries, product-differentiation strategies are the principal tools
companies use to deter potential entrants and manage rivalry within their industries. Product and

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market segment dimensions are used to identify four non-price-competitive strategies based on
product differentiation: market penetration, product development, market development, and
product proliferation.
Figure 6.5: Four Nonprice Competitive Strategies

4. Market Penetration

When a company concentrates on expanding market share in its existing product markets, it is
engaging in a strategy of market penetration. This strategy uses heavy advertising to promote
and build product differentiation.

In a mature industry, advertising aims to influence customers’ brand choice and create a brand-
name reputation for the company and its products. In this way, a company can increase its
market share by attracting its rival’s customers. Because brand-name products often command
premium prices, building market share in this situation is very profitable. In some mature
industries—for example, soap and detergent, disposable diapers, and brewing—a market-
penetration strategy becomes a long-term strategy.

5. Product Development

Product development involves consistently creating new or improved products to replace

existing ones. Product development is crucial for maintaining product differentiation and
building market share. Refining and improving products is a crucial strategy companies use to
fine-tune and improve their business models in a mature industry, but this kind of competition
can be as vicious as a price war because it is very expensive and can dramatically increase a
company’s cost structure.

6. Market Development

Market development involves finding new market segments for a company’s products. A
company pursuing this strategy wants to capitalize on the brand name it has developed in one
market segment by locating new market segments in which to compete.

6.2 Strategy in Action

Toyota Uses Market Development to Become the Global Leader

Beginning as a focused cost leader, Toyota has risen to making an ever-increasing range of reasonably priced
vehicles tailored to different segments of the car market. Toyota has been a leader in positioning its entire
range of vehicles to take advantage of new, emerging market segments.. Evolving to a broad differentiation
business model, Toyota is geared toward making a range of vehicles that optimizes the amount of value it
can create for different groups of customers. The company remains constrained by costs to maximize
revenues and profits as are all industry competitors aiming for suiting the needs of different customers.

Teaching Note:

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This case demonstrates the use of price competitive strategies coupled with market development as strategies
to manage rivalry. Ask students how market development plays a crucial role in Toyota’s success. How can
Toyota’s broad differentiation business model help in generating maximum revenues and profits?

7. Product proliferation

The strategy of product proliferation generally means that large companies in an industry all
have a product in each market segment (or niche). Product proliferation thus allows the
development of stable industry competition based on product differentiation, not price—that is,
non-price competition based on the development of new products.

6.3 Strategy in Action

Non-Price Competition at Nike

The way in which Nike has used non-price-competitive strategies to strengthen its differentiation strategy is
highly instructive. Bowerman’s, co-founder of Nike, dream was to create a new type of sneaker tread that
would enhance a runner’s traction and speed, and after studying the waffle iron in his home, he came up with
the idea for Nike’s “waffle tread.” The founders of Nike began by selling it out of car trunks at track meets.
Nike’s amazing success came from its business model, which was always based on differentiation; its
strategy was to innovate state-of-the-art athletic shoes and then to publicize the qualities of its shoes through
dramatic “guerrilla” marketing. Nike’s marketing is designed to persuade customers that its shoes are not
only superior, but also a high-fashion statement and a necessary part of a lifestyle based on sporting or
athletic interests. Nike’s strategy to emphasize the uniqueness of its product obviously paid off, as its market
share soared. However their market shares started to fall when they found it difficult to create new shoes—its
strategy of market penetration and product development was no longer paying off. Nike initially shunned
sports like golf, soccer, etc, but when its market shares started to fall it began to pursue market development
and product proliferation as well as the other non-price strategies. This strategy significantly strengthened its
differentiation business model, which is why its market share and profitability have continued to increase,
and also why Nike is the envy of competitors.

Teaching Note:

This case demonstrates the strategies used to manage rivalry, more specifically, market development and
product proliferation strategies coupled with non-price strategies. Emphasize to students the need to look at
changing strategies in a mature industry. Ask students about the impact of Nike’s brand name in its success
at market development. How did Nike demonstrate product proliferation?

8. Control Capacity

Excess capacity arises when companies collectively produce too much output; to dispose of it,
they cut prices. When one company cuts prices, other companies quickly do the same because
they fear that the price cutter will be able to sell its entire inventory, while they will be left with
unwanted goods. The result is a developing price war. To prevent the accumulation of costly

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 13
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excess capacity, companies must devise strategies that let them control—or at least benefit
from—capacity expansion programs.

9. Factors Causing Excess Capacity

The problem of excess capacity often derives from technological developments. Excess capacity
occurs because new technology can produce more than the old. In addition, new technology is
often introduced in large increments, which generates overcapacity. Overcapacity may also be
caused by competitive factors within an industry. Entry into an industry is one such a factor.
The recent economic recession caused global overcapacity and the price of steel plunged; with
global recovery the price has increased. Sometimes the age of a company’s physical assets is the
source of the problem.

10. Choosing a Capacity-Control Strategy

Given the various ways in which capacity can expand, companies clearly need to find some
means of controlling it. Companies have two strategic choices:
• Each company must try to preempt its rivals and seize the initiative. To preempt
rivals, a company must forecast a large increase in demand in the product market and
then move rapidly to establish large-scale operations that will be able to satisfy the
predicted demand. This is a risky strategy because it involves investing resources before
the extent and profitability of the future market are clear.
• Companies must collectively find indirect means of coordinating with each other so that
they are all aware of the mutual effects of their actions. To coordinate with rivals as a
capacity-control strategy, caution must be exercised because collusion on the timing of
new investments is illegal under antitrust law.

V. Strategy in Declining Industries

Sooner or later, many industries enter into a decline stage, in which the size of the total market begins to
shrink.

A. The Severity of Decline

When the size of the total market is shrinking, competition tends to intensify in a declining industry,
and profit rates tend to fall. Four critical factors determine the intensity of competition in a declining
industry:
• The intensity of competition is greater in industries in which decline is rapid, as opposed to
industries such as tobacco, in which decline is slow and gradual.
• The intensity of competition is greater in declining industries in which exit barriers are high.
• Related to the previous point, the intensity of competition is greater in declining industries in
which fixed costs are high.
• The intensity of competition is greater in declining industries in which the product is
perceived as a commodity in contrast to industries in which differentiation gives rise to

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14
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significant brand loyalty.

Figure 6.6: Factors That Determine the Intensity of Competition in Declining Industries

Segments within an industry may decline at different rates. In some segments, demand may remain
reasonably strong despite decline elsewhere.

B. Choosing a Strategy

Companies can adopt the following four main strategies to deal with decline:
• A leadership strategy, by which a company seeks to become the dominant player in a
declining industry.
• A niche strategy, which focuses on pockets of demand that are declining more slowly than
the industry as a whole.
• A harvest strategy, which optimizes cash flow.
• A divestment strategy, by which a company sells the business to others.
Figure 6.7: Strategy Selection in a Declining Industry

1. Leadership Strategy

A leadership strategy aims at growing in a declining industry by picking up the market share of
companies that are leaving the industry. This strategy makes most sense when a company has
distinctive strengths that allow it to capture market share in a declining industry and when the
speed and intensity of competition in the declining industry are moderate.

The tactical steps companies might use to achieve a leadership position include aggressive
pricing and marketing to build market share, acquiring established competitors to consolidate
the industry, and raising the stakes for other competitors. The leadership strategy signals to
competitors that a firm is willing to stay and compete, and may speed up exit of competitors
from the industry.

2. Niche Strategy

A niche strategy focuses on pockets of demand where demand is stable, or declining less slowly
than the industry as a whole. This strategy makes sense when the company has some unique
strengths relative to those niches in which demand remains relatively strong.

3. Harvest Strategy

A harvest strategy is the best choice when a company wishes to exit a declining industry and
optimize cash flow in the process. This strategy makes the most sense when the firm anticipates
a very steep decline and intense future competition, or when it lacks strengths relative to
remaining pockets of demand in the industry. A harvest strategy requires the company to halt all
new investments in capital equipment, advertising, research and development and so forth. In
practice, this strategy may be difficult to implement because employee morale suffers, and if

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 15
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customers realize what is happening, they may defect rapidly and hasten the decline.

4. Divestment Strategy

A divestment strategy rests on the idea that a company can recover most of its investment in an
underperforming business by selling it early, before the industry has entered into a steep decline.
This strategy is appropriate when the company has few strengths relative to whatever pockets of
demand are likely to remain in the industry and when the competition in the declining industry
is likely to be intense. The best option may be to sell to a company that is pursuing a leadership
strategy in the industry.

The drawback of the divestment strategy is that its success depends upon the ability of the
company to spot industry decline before it becomes detrimental, and to sell while the company’s
assets are still valued by others.

Teaching Note: Ethical Dilemma

This dilemma illustrates a common practice in highly-competitive U.S. consumer goods marketing. Students
will have ample examples of companies who practice all of the strategies suggested in the case. Breakfast
cereal is an example of a product in a mature industry that competing companies continually try to
differentiate using these tactics. Instead, the leadership of the companies should be pursuing strategies to
deter entry of rivals including targeting every segment in the market, reducing prices, and maintaining excess
capacity. The tactics suggested in this feature box are risky as customer switching costs are low and
availability of substitutes high: should the public perceive they are getting less utility and quality for their
money, they will choose to spend elsewhere. Furthermore, because of the proliferation of social media,
consumers have more power than ever to spread negative perceptions of products and companies, potentially
igniting a public relations disaster should the tactic backfire.

Answers to Discussion Questions

1. Why are industries fragmented? What are the primary ways in which companies can turn a fragmented
industry into a consolidated industry?

Industries may be fragmented because of the following reasons:

• Lack of economies of scale may mean there are few cost advantages to large size.
• Brand loyalty in the industry may primarily be local. It may be difficult to build a brand through
differentiation that transcends a particular location or region.
• The lack of scale economies and national brand loyalty implies low entry barriers.

The main ways in which companies can turn fragmented industries into consolidated ones include
value innovation, chaining, franchising, and horizontal mergers. To pursue value innovation, the value
innovator defines value differently than established companies, and finds a way to offer that value that
lowers costs through the creation of scale economies. Chaining is a strategy designed to obtain the

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16
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advantages of cost leadership by establishing a network of linked merchandising outlets

interconnected by information technology that functions as one large company. Franchising is a
strategy in which the franchisor grants to its franchisees the right to use the franchisor’s name,
reputation, and business model in return for a franchise fee and often a percentage of the profits. A
horizontal merger is a way of consolidating a fragmented industry by merging with or acquiring
competitors, combining them together into a single larger enterprise that is able to realize scale
economies and build a more compelling national brand.

2. What are the key problems in maintaining a competitive advantage in embryonic and growth industry
environments? What are the dangers associated with being the leader in an industry?

The key to profiting from innovation in a growth environment is to create, exploit, and sustain a
competitive advantage over industry rivals. Over time, rivals will also be developing their technical
competencies, so to maintain their advantage companies need to defend their reputation, which has
built them brand loyalty; quickly move down the experience curve to keep ahead of rivals; develop
control over scarce assets, including inputs, and over distribution networks; and strive to retain
customers by making it very difficult for them to switch products.

The dangers associated with being a leader include the high costs of start-up, which can leave a
company with a crippling debt burden, and the likelihood that the company’s innovative ideas may be
copied by later entrants at lower cost.

3. What investment strategies should be made by: (a) differentiators in a strong competitive position, and
(b) differentiators in a weak competitive position, while managing a company’s growth through the
life cycle?

Differentiators in a strong competitive position should follow the strategies of share building, then
growth, and then share increasing to consolidate their position. Then, depending on the level of
industry competition and the strength of the five forces, they should pursue either a hold-and-maintain
or a profit strategy. In the decline stage, their choice depends on the strength of their competitive
advantage and might consist of market reduction, harvest, or turnaround strategies.

Those in a weak competitive position should select strategies that allow them to obtain the maximum
revenue advantages from their strategy at an investment cost consistent with maintaining their
competitive advantage. Generally, they should not become broad differentiators (that is, companies
that compete in many market segments) and should engage in share building and market concentration
in a directed set of market niches. As conditions become worse, they should systematically retrench
and choose a harvest strategy or a liquidation strategy to maximize profitability under unfavorable
circumstances.

4. Discuss how companies can use (a) product differentiation and (b) capacity control to manage rivalry
and increase an industry’s profitability.

(a) The virtue of product differentiation as a competitive weapon is that it reduces the risk that

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 17
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companies will compete for customers on price. Price competition decreases the level of industry
profitability. In many industries, product-differentiation strategies are the principal tools companies
use to deter potential entrants and manage rivalry within their industries. Product differentiation allows
industry rivals to compete for market share by offering products with different or superior features,
such as smaller, more powerful, or more sophisticated computer chips, or by applying different
marketing techniques. Product and market segment dimensions are used to identify four non-price-
competitive strategies based on product differentiation: market penetration, product development,
market development, and product proliferation.

Market penetration involves using advertising and marketing to create a differentiation advantage to
increase market share. This also raises barriers to entry, thus increasing industry profitability and
reducing rivalry because companies can forecast their rivals’ actions.

Product development means creating new and improved products to sustain consumer demand for
products. It keeps companies on their toes and lessens the likelihood that a new entrant will be able to
come into the industry with a superior product to seize market share. In this sense, product
development acts like a barrier to entry. At the same time, it builds reputation and brand loyalty.

Market development involves finding new market segments in which to exploit a company’s products
or distinctive competencies. Market development and the development of niche marketing can cause
intense rivalry between firms as new spheres of competition are created. Moreover, market
development may provide a means for competitors to enter the market, for it opens a niche through
which they can enter. Thus market development is probably the most competitive of the four product
differentiation strategies, since it creates the most opportunity for gain or loss in market share.

Product proliferation is an effort to stabilize the uncertainty created by market development. By filling
all the market niches, companies are trying to respond to competitors’ actions in order to stabilize the
industry situation. At the same time, product proliferation also promotes barriers to entry since it
makes it difficult for competitors to enter the market by finding a new niche. It therefore also helps
stabilize competition in the industry.

(b) Capacity control strategies also allow the firm to manage rivalry and promote industry
profitability. Capacity control can be used to deter rivals, since it provides companies with a credible
threat that they will respond to the threat of entry by increasing capacity and driving down price.
Inside the industry, the need is for a strategy that lets firms indirectly coordinate their capacity
decisions and avoid the wasteful excess capacity, which can occur if all firms make the decision to
build new plant capacity. Such a strategy stabilizes competition and industry profitability.

5. What kinds of strategies might: (a) a small pizza place operating in a crowded college market, and (b)
a detergent manufacturer seeking to unveil new products in an established market use to strengthen
their business models?

Students’ answers may vary. In both cases, managers should try to accurately make an estimation to
know their rivals’ strengths and weaknesses, and to seek a dominant strategy. For the pizza place’s

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18
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managers, this would mean taking actions such as differentiating their product in some way from the
other products, such as offering more varieties, using tastier or fresher ingredients or having faster
delivery. Another possible action would be to single out just one competitor and then focus on driving
them from the industry. This would work if the competitors were also small, local firms.

For the detergent maker, the principles are the same but the choices would be quite different, due to
different industry structures. For example, when competing against powerful rivals niche strategies
may be effective. The detergent maker could consider developing specialty products, such as extra-
mild soaps for fragile fabrics or baby clothes.

In neither case would a price war be recommended, due to its negative long-term effects on the entire
market.

Practicing Strategic Management

Small-Group Exercise: Creating a Nationwide Health Club

This exercise asks students to break into small groups. One group member is appointed as a spokesperson
who will communicate the findings to the class. You are the founders of a health club. The health club
industry is quite fragmented, with many small players, and just a few larger players. Your backers want you
to devise a strategy for growing their business, quickly establishing a nationwide chain of health clubs.
1. Is there scope for value innovation in this industry? What might a value innovation strategy look like?
2. Describe how your chosen strategy would enable you to create a national brand and/or attain scale
economies.
3. What would your growth strategy be: chaining or franchising? Be sure to justify your answer.

Teaching Note:

This exercise focuses students’ attention on the problems associated with competition in an industry
dominated by smaller rivals as well as larger, more powerful rivals. They should describe if there is scope for
value innovation in this industry and what might a value innovation strategy look like. They should describe
how their chosen strategy would enable them to create a national brand and/or attain scale economies. Ask
your students what their growth strategy would be: chaining or franchising? Also, ask them to justify their
answers.

Strategy Sign-On

Article File 6

This exercise asks students to choose a company (or group of companies) in a particular industry
environment and explain how it has adopted a competitive strategy to protect or enhance its business-level
strategy.

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Teaching Note:

Students will readily find examples as virtually all firms use competitive strategies to protect their overall
generic strategy. You can then ask students to describe how the competitive strategy gives these benefits. For
example, consider the choice of a firm in a mature industry that has adopted the nonprice competitive
strategy of market penetration, which Whirlpool used in introducing its electric appliances into eastern
Europe. Students can describe how this strategy allowed Whirlpool to sell more products than its competitors
that did not enter the industry, enabling economies of scale and learning curve effects. Whirlpool also gained
first-mover advantages, and had valuable expertise in the regional market before others. Finally, Whirlpool
was able to leverage its existing investments in advertising and product R&D to increase its capital
productivity.

Strategic Management Project: Developing Your Portfolio 6

This part of the project continues the analysis of the student’s company’s business-level strategy and
examines how the nature of the industry environment affects the company. Remind students to link this
analysis to their analysis in the previous module. With the information you have available, perform the tasks
and answer the questions listed:
1. I n what kind of industry environment (e.g., embryonic, mature, etc.) does your company operate? Use
the information from Strategic Management Project: Module 2 to answer this question.
2. Discuss how your company has attempted to develop strategies to protect and strengthen its business
model. For example, if your company is operating in an embryonic industry, how has it attempted to
increase its competitive advantage over time? If it operates in a mature industry, discuss how it has
tried to manage industry competition.
3. What new strategies would you advise your company to pursue to increase its competitive advantage?
For example, how should your company attempt to differentiate its products in the future, or lower its
cost structure?
4. On the basis of this analysis, do you think your company will be able to maintain its competitive
advantage in the future? Why or why not?

Teaching Note:

Use this module to reinforce the linkages between a firm’s competitive environment, its choice of strategy,
and its performance. You can point out to students that even the best strategy will not lead to success if it is
inappropriate for its environment. Also remind students that competitors’ actions can have a very important
effect on a strategy’s outcome.

CLOSING CASE

Consolidating Dry Cleaning

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No large companies dominate the U.S. dry-cleaning industry. The industry is a favored starting point for
many immigrants, who are attracted by the low capital requirements. More than 80% of industry revenues
can be attributed to individual retail customers, with hospitals, hotels, and restaurants accounting for much of
the balance. A weak economy shrunk the demand for dry cleaners. Convenience is what makes the consumer
choose one dry cleaner over the other. The founders of Staples established a dry-cleaning chain called Zoots.
They had visions of transforming the dry-cleaning industry, consolidating a fragmented industry and creating
enormous economic value for themselves in the process. Zoots promised to get dry-cleaning done right,
reliably, and conveniently, and to do this at a reasonable price. They later found out that the nature of dry
cleaning made it impossible to standardize the process. Costs were significantly higher than anticipated,
quality was not as good as management hoped, employee turnover was high, and demand came in below
forecasts. Today Zoots has less than 40 stores and remains concentrated in the Boston area. The founders are
no longer involved in the business and, clearly, it did not come close to transforming the industry.

Teaching Note:

The case of Zoots shows how easily a business can fail and not be as profitable as it promises to be due to
strategic inattention. Ask your students what will it take for Zoots to be better than the other dry cleaners.
Will adopting the chaining strategy help Zoots become successful and what might be the possible risks? Ask
them to think of other examples of companies who faced the same issues as Zoots.

Answers To Case Discussion Questions

1. Why do you think that the dry-cleaning industry has a fragmented structure?

Students’ answers may vary. The dry-cleaning industry does not have one company that dominates it.
It is mostly started by immigrants who are attracted to businesses with low- capital requirements. As
there is no one company that dominates the industry, an individual who is starting their own dry-
cleaners need not be worried about the competition. This is also true because individuals mostly
choose dry-cleaners out of convenience. Dry cleaning has been described as a classic low-interest
category as there is very little about dry cleaning that excites consumers. These could be the reasons
for the dry-cleaning industry to have a fragmented structure. The industry has also defied all efforts to
consolidate it.

2. The larger enterprises in the industry seem to serve large customers with standardized needs, such as
hotels and hospitals. Why do you think this is the case?

Students’ answers may vary. The larger enterprises in the industry seem to serve larger customers with
standardized needs such as hotels and hospitals because they have the revenue, the infrastructure, and
the resources to back their standardized process. A smaller enterprise may have more difficulty doing
this as they may not have the resources to support such a process. Smaller enterprises would be able to
serve individuals better as they may find it easier to appease their specific needs.

3. Why do you think that Zoots was unable to consolidate the dry-cleaning industry, despite adequate
capital and the managerial talent that created Staples?

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Students’ answers may vary. Despite the adequate capital and managerial talent that Zoots had, they
were unable to consolidate the dry-cleaning industry because they promised a standardized, low-cost,
and reliable process without taking into account the service intensity of the dry-cleaning and the
variable nature of clothing. The costs incurred by Zoots were significantly higher than anticipated,
quality was not as good as management hoped, employee turnover was high, and demand came in
below forecasts. Zoots failed at consolidation because it failed to take in all the factors involved in the
process of dry-cleaning.

4. If you were to try to consolidate the dry-cleaning industry, what strategy would you pursue and why?

Students’ answers may vary.

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 PETER NANSEN

MARIA
EN BOG OM KÆRLIGHED

FEMTE OPLAG

K J Ø B E N H AV N
GYLDENDALSKE BOGHANDELS FORLAG (F. HEGEL &
SØN)
Trykt hos J. Jørgensen & Co. (M. A. Hannover)
1902
 I.
Min Elskede er den atraaværdigste af Kvinder. Andre Kvinder har
skænket mig deres Kærlighed. De kom og gik, nogle kun en enkelt
Gang, andre ofte. Jeg er dem alle taknemmelig, men jeg glemte
dem i samme Nu, de var udenfor min Dør. Der var kun Én, som jeg
altid huskede, ogsaa naar de andre var hos mig, thi hun var det
straalende Mønster, mod hvilket de alle maaltes og blegnede; der var
kun Én, som jeg altid ønskede vilde træde ind ad min Dør, thi hun
kom altid ny og ung. Der er kun Én, jeg ønsker at leve med, thi
sammen med hende faar Livet gyldent Maal og solklar Mening; der
er kun Én, jeg gærne vil dø med, thi sammen med hende kender jeg
ikke Frygt.
Min Elskedes Navn er Maria. Hun er dejligere end alle andre Kvinder.
 II.
Jeg giver intet for den Ros, en Digter skænker den Kvinde, der er
hans eneste Elskerinde. Han dømmer som en uvidende Bonde, og
der er alle Sandsynligheder for, at hun ikke fortjener de smukke Ord,
han til hendes Fordel bestjæler sit Sprog for. Hvis en Mand kun
kendte én Farve og han sagde: Denne Farve, den blaa eller den røde
eller den gule, er den ypperste af alle Farver, vilde han ganske vist
ikke dømme som den blinde, men derimod som den meget lidet
seende. Og havde jeg en Elskerinde, der slog sig til Taals, naar jeg
sagde: Du er min første og eneste, Du er den bedste i Verden — da
vilde jeg med Foragt støde hende bort. Var hun sikker paa sit Værd,
satte hun Pris paa min Tilbedelse, vilde hun sige: Tag Dig ti, tag Dig
tyve andre Elskerinder, vælg blandt dem, hvem Mænd mest
efterstræber, og hvis Du, efter at have ejet dem, endnu kalder mig
den bedste i Verden, da vil jeg være stolt og lykkelig.
Naar jeg siger til Maria: Du er dejligere end alle andre — tør hendes
Hjærte banke i stolt Lykke. Thi jeg blev hende ikke tro, før jeg
vidste, jeg talte sandt.
 III.
Jeg vidste ikke, jeg talte sandt, før jeg troede hende tabt for stedse.
Det er den Prøve, jeg ønsker alle Mænd for deres Kærlighed. En
Prøve, som volder megen Sorg, men en Ildprøve.
Sorgen lutrer og Sorgen gøder.
Den Kærlighed, som Letsind saaede, opstaar gennem Sorgen frodig
og ren.
Velsignede Sorg, der benaadede min Kærlighed til Maria.
 IV.
Hun kom til mig som et uvidende Barn. Jeg ser hende endnu, som
hun den Gang var. Saa overlegen og selvsikker som kun de
Uskyldige kan være. Hun gav sig en Mine af at være en Dame med
den modneste Erfaring. Hun talte om Livet, som om hun kendte det
til Bunds, havde prøvet og vraget, var skuffet og forlængst træt. Hun
forsikrede med nysgærrige Baby-Øjne, at hun for Alvor tænkte paa
at gaa i Kloster. Hvad havde hun at haabe af Livet? Hun vidste, at
kun i stille Resignation fandtes den taalelige Lod, der var hende
beskaaren for Resten af hendes Levetid.
Thi — som hun sagde med Overbevisning — alene i Kærlighed er
der Lykke. Og med Kærligheden er jeg færdig. Jeg ha r en Gang
elsket. Den Student, jeg var forlovet med, foragter jeg nu. Hans
Kærtegn var mig modbydelige. Hans forelskede Talemaader vamlede
mig. Jeg egner mig ikke til Kærlighed.
Det sagde hun med træt Stemme, med blussende Kinder og
skinnende Øjne. En til Kydskhed indviet Kvinde, der kun egnede sig
til ét: Kærlighed.
Det var, da hun stod foran mig, den høje, spinkle Pige, og talte om
sine triste Erfaringer, at jeg blev forelsket i hende.
Hvor nydelig hun var i sin troskyldige Bedrøvelse, hvor sød hun saá
ud i sin fine Kjole!
 V.
Marias fine Kjole fra vor første Bekendtskabs-Tid. Aldrig glemmer jeg
den Kjole.
Der kom en Tid, hvor Maria havde mange smukke og dyre Kjoler.
Men i ingen af dem saá hun saa yndig ud som i den, der i hine Dage
var hendes eneste fine. En Kjole med et lyst blomstret Bluseliv, der
lignede Silke, men ikke var det, rynket over Brystet og stramt lukket
om Halsen med en lille forgyldt Barne-Sølje.
En rigtig lille Søndagspige i den beskedne Stads, røbende hendes
egne dameagtige Ærgærrighed og en moderlig Økonomi. Det
blomstrede Liv, saa fornuftigt og pynteligt, og saa bange hun var for
at spilde paa det. Og da Ulykken alligevel skete, hvilken Iver hun
udfoldede for at faa de slemme Vinpletter vaskede af og hvor
ligegyldig hun samtidig agerede, som om hun havde fuldt op
derhjemme af ganske anderledes kostbare Klædningsstykker.
Du lille dameagtige Søndagspige, Du søde, gennemskuelige
Hyklerske, der, mens Du gned og gned paa Pletterne, ustandseligt
forsikrede, at det gjorde saamæn sletingen Ting med »den gamle
Kjole«.
»Den gamle Kjole«, din eneste fine Kjole — — mine Øjne bliver
fugtige, naar jeg tænker paa den. Gennem det tynde blomstrede Liv
har jeg første Gang indaandet Duften af dit Jomfrulegeme, første
Gang følt dit Hjærtes urolige Banken.
 VI.
Ogsaa den Gang blev jeg rørt over den lille Pige i det blomstrede Liv
og med den overlegne Dameerfaring. Jeg tror, det blomstrede Liv
havde væsenligst Andel i, at jeg tog saa varsomt paa Maria. Det
blomstrede Liv, som var hendes fineste Pynt og som saa nødigt
maatte plettes.
Mænd bærer sig som Regel grumme taabeligt ad overfor Kvinder. De
er altfor forsigtige. Kvinder vil ikke overtales, de vil erobres. De har
— saa at sige alle — det nedarvede Instinkt i sig til at ville føle sig
som de svage og voldførte. De vil have Mandsviljen stærk og
bydende over sig. De foragter, uden at gøre sig det klart, de Mænd,
der trygler sig frem til deres Gunst. Hvor ofte har de ikke i deres
stille Sind raabt Idiot efter den Mand, der lod sig skræmme af deres
Dyds-Skanser, dem de kun opstiller, fordi de sætter Pris paa at blive
tagne med væbnet Haand?
Jeg behøvede ikke at gaa saa strængt til Værks overfor Maria. Jeg
vidste, at hun en Dag af sig selv vilde søge til min Favn som til det
Sted, hvor hun naturligt hørte hjemme. Jeg vidste det af den
vigende Maade, hvorpaa hun mødte mit Blik og mit Haandtryk. Jeg
vidste det, da jeg den første Dag stod bagved hende — uden at hun
havde hørt eller sét mig — og en sitrende Skælven bevægede
hendes Legeme ned gennem Ryggen og ud i de lange nervøse
Fingre.
Den fremfusende Landsknægt-Strategi behøvedes ikke overfor
Maria. Og det blomstrede Liv gjorde mig blød om Hjærtet. Jeg
ønskede end ikke, at hun hastigt blev min. Som en Gartner glæder
sig ved Dag for Dag at se en sjælden Blomst udfolde sig af Knoppen,
ikke rører ved den, kun forsigtigt fjærner en hæmmende Kvist eller
et dækkende Blad og giver den tilpas Lys, Varme og Vand, saadan
nød jeg Marias Udvikling til fuldbaaren Kvindelighed, til bevidst
Forelskelse.
Og en skønne Dag aabnede det blomstrede Liv sig naturnødvendigt
for den taalmodigt ventende Gartner.
 VII.
Næsten for taalmodigt ventede Gartneren.
Der kom et Øjeblik, hvor Maria, højtrødmende, men med et Blink af
Evaspot, rykkede mig i Ærmet og sagde: »Er Du dum?«
... Kvinder bilder sig ind, at Mænd beundrer og skatter de Fagter,
hvormed de til det sidste hævder sig som forførte. Disse Fagter bør
benyttes med Sparsomhed overfor voksne og erfarne Mænd. De kan
gøre den tilsigtede imponerende Virkning paa de Mandjomfruer, der
føler sig som Forbrydere, naar en Kvinde lægger sig i deres Arme.
Men for os andre kommer der et Punkt, hvor Fagterne, altid de
samme, frister os til brutale Ord eller Handlinger. Hvilket betager
Begivenheden meget af dens Skønhed og Højtidelighed og
forskærtser vedkommende Dame Livets yndefuldeste Minde.
Maria, Du finest forstaaende af Kvinder, jeg priser Dig og takker Dig,
fordi Du forskaanede mig for alle Fagter, for raa Snærpethed, der
besmykkes som Blufærdighed, for hysterisk Angst og hyklerisk
Graad.
 VIII.
Min Jomfrubrud, min Maria.
Hvor mange er der vel, som forstaar den hellige Skønhed i en
Jomfrus Hengivelse? Med sjofle Tanker og simple Flovser krænker
vore Dages Mennesker Livets højtidsfuldeste Akt. Den gammeldags
plumpe Gemytlighed havde Saft og Vid. Nu befamler liderlige
Moralister den jomfruelige Brudeseng med salvelsesfuld Tvetydighed
og videnskabelig Fripostighed.

Hellige Nat, da Maria blev min.

Stilhed ude og inde. Kun en enlig Kærte lyser.
Jeg træder ind, og se, paa Lejet hviler min Brud, hvid og fin og
smilende. Med Andagt knæler jeg ned og kysser hendes Mund, den
lovende, hendes Haand, den givende, og hendes Bryst, hvor jeg
hører Forventningen banke.
Og jeg er i hendes Arme, dem hun tillidsfuldt aabner mig. Jeg ser
kun hendes Øjne, jeg følger i deres Afspejlinger den angstfulde
Bryden ud af Jomfrupuppen, Forbavselsen, Taknemligheden, Jublen
ved at skue ind i Livets hidtil uanede Dejlighed.
Rummet fyldes af brusende Musik. Der bliver højt over os og vidt om
os, og sammen, tæt omslyngede, Mund mod Mund, svæver vi bort
fra al Jordelivs Tynge og Sorg.
Hellige Nat.
 IX.
Maria var min.
Men jeg var ikke hendes, eller troede ikke at være det. Hun troede
det ejheller. Hun troede mig ikke over en Dørtærskel.
Hvad hun troede, véd jeg. Hun sagde mig det tit, og jeg bestred det
ikke, for aldrig var hun sødere. Skinsyg til Fingerspidserne, men saa
klog samtidig, saa fornuftig, saa indrømmende og imødekommende.
Hun troede, jeg havde ti Elskerinder om Dagen.
I allerkæreste Smaapiger, I overdriver ganske urimeligt Eders Tillid til
den mandlige Ævne. Det kommer sig af, at I ikke kan den lille Tabel.
Fantasien løber løbsk med Jer. Maria var i det Stykke ingen
Undtagelse.
Hun kom til mig mindst de seks af Ugens syv Dage, og hun fandt
mig ingensinde sovende paa min Post. Alligevel forsikrede hun med
den mest smigrende Alvor, at jeg — det vidste ogsaa hele Byen —
havde Elskerinder i Snesevis.
Javist bedrog jeg Maria.
Dog var jeg hendes langt mere end hun troede, end jeg troede.
For ikke at tale om »hele Byen«.
 X.
»Hele Byen«. Jeg væmmes ved det Sladderens Kryb, som gennem
Nøglehuller og Dørsprækker sniger sig ind i vore Hjem og drager
efter sig en Stribe af egne Uhumskheder. Sæt dobbelte Ruder, sæt
Skodder for dit Privatliv. »Hele Byen« har ialfald staaet udenfor og
haft smudsige Tanker. Og Smudset klæber ved dine Vinduer og
Døre.

Der sidder paa mit Sovekammer-Vindue hver Dag en gammel fed

Spyflue. Den er graanet af Ælde og synes saa dvask, at den knap
gider røre sig. Men ikke saasnart nærmer jeg mig den, før den, vips,
er borte. Jeg hører den summe mellem Sengeforhænget, jeg hører
den klaske tungt mod Loft og Vægge. Jeg aabner alle Vinduer og
jager den med et Haandklæde. Pludselig forsvinder den. Den
gemmer sig i Tæppet foran Sengen, bag Spejlet eller paa Rammen
af et Billede. Dér sidder den uden at give en Lyd fra sig, til jeg er
træt af at søge. Men hver Morgen er den igen paa min Rude. Den
forlader mig aldrig, den lægger sit sorte Skarn paa mine Lagener,
den summer hver Nat sin skiddenfærdige Sladder over min Seng.
Og en Aften, da Maria klædte sig af foran Spejlet, sad det lede Dyr
paa hendes hvide Ryg.