G3-[ABS1]Dynamic Strategy (Competitive reordering ( ( (technology3),…
Worse positioned than entrant
Success in the past becomes a hindrance to making the change necessary for the future
Kodak , Remingtion Typewriter
Select not to change
fundamental trade off between existing businesses & new emerging business & their unwilling to cannibalize existing products
No better positioned than new entrant (Had no incumbent advantages)
Sears, Studebaker Brothers
Innovation needs extensive capital and expertise
Incumbent firms leverage complementary resources or capabilities to their advantage
Customers desire the assurance of established firms
Often risk averse, unlikely to try new things
Incumbent firms has a "dynamic capability " to adjust to changing business conditions
New technology may be worse at first
Because of the limitation of technology, firms have to create new one to replace it.
Some new technology may fail to improve fast enough and thus disappear
Competitive Life Cycle
What is CLC?
It describes dynamics that are similar across industries and markets.
Experiment new business model
Growth is not quite as great
Schumpeterian Rent/Entrepreneurial Rent
Earning Rents with Innovation, new business model
Market are dynamic, innovation is critical
Innovation can be imitated eventually
Innovators earn schumpeterian rent before immitation
Unlike Ricardian rent, Schumpeterian rent are temporal
Firms have to understand evolutionary dynamics
people tend to care more about environment
Technology is more viable than before
Technology has improved the efficiency
G3, so cool!