The product life cycle: a tool for functional strategic alignment.

INTRODUCTION

The current competitive environment is forcing managers to reevaluate how their firms react to rapidly changing opportunities and threats in an evolving global marketplace. Research on business strategy has identified several models that attempt to explain competitive behavior. Leading examples include Porter's Cost/Differentiation[1] and Value Chain models as well as Miles and Snow's Strategic Types.[2] Despite the rigorous attempts to advance strategic research, implementation has remained a stumbling block - firms continue to have difficulty translating business strategies into cohesive competitive strategies.

One of the foremost difficulties is achieving greater cooperation across functional boundaries. For at least a decade, the literature has called for greater integration of corporate, business, and functional level strategies within the firm.[3] The opportunity to use process integration across functional boundaries is now considered a key to competitive success.[4] The dilemma remains to find an approach or a tool that can be used to facilitate or guide the firm's integration efforts. The product life cycle theory possesses certain characteristics that make it a likely candidate to serve as an integrating facilitator.

Since its initial conceptualization in the early 1950s, the product life cycle (PLC) theory has gained significant recognition as a tool for effective marketing strategy formulation and implementation. As a result, managers across a variety of functional areas are quite familiar with the fundamentals of the PLC. Moreover, the PLC has an intuitive appeal that lends itself to prescriptive use as a strategic framework. The PLC was founded on the notion that products pass through a cycle of life much as humans do (birth, maturity, death). From this perspective, the PLC provides a degree of structure to the life of products and thereby provides direction for the diverse functional efforts required to produce and deliver product/service offerings. The PLC is thus uniquely positioned to act as a tool for the strategic alignment of functional competitive efforts, helping focus the decision making of the firm so that actions of each level reinforce, instead of detract from, the attainment of company goals.

To help develop a prescriptive and proactive framework that is capable of facilitating cross-functional integration, this research takes an empirical look at the product life cycle and its influence on decision making in three value-adding functional areas: logistics, operations, and purchasing. An empirical approach is necessary because the majority of the work in the area has been conceptual and descriptive in nature. The focus of previous efforts has been in the strategy formulation area and on methods for achieving implementation. Many of the proposed implementation methods target the impact of organizational structure, communication channels, or planning issues. The existing frameworks are sound, but do not offer specific direction or guidelines for better alignment. This limitation is a result of their functional orientation. To date, no common strategic denominator that would be applicable across a wide variety of strategic scenarios has been identified and evaluated. As noted above, the PLC possesses several characteristics that make it an ideal candidate to serve as the common thread to coordinate strategies. Therefore, this article considers the value and potential of the PLC to act as a "common strategic denominator" through which the competitive efforts of different areas of the firm can be effectively aligned.

THE PLC AS AN INTEGRATIVE FOUNDATION

Despite its limitations, the PLC concept continues to be an integral part of strategic research in many disciplines. In addition to its application in purchasing[5], research into relationships between the PLC and other functional areas continues (see Table I on page 39). In manufacturing, the life-cycle concept is a critical element of manufacturing strategy models.[6] In logistics, several efforts have been made to link business strategy to functional decision making utilizing the PLC concept.[7] These efforts each suggest that different competencies are required to support product and firm strategies during different stages of the life cycle.