The business environment is a constantly changing environment where new business ventures erupt with new ideologies. These new businesses might either flop or remain relevant to the industry with their new ideologies and economies of scope. When these firms remain relevant to the latter, their implications to the new firms, therefore, are either to embrace the changes or fight them through the old existing strategies. Technological advancements are the most dynamic economic ventures. New businesses and business ideas are constantly developed in the industry to ensure that new inventions are made to satisfy the constant needs of the customers. However, old business ventures implemented different strategies from those strategies used in the present day. This not only poses a challenge of adoption of the new strategies of the entrants, but also makes the former firms irrelevant.
Nevertheless, there exists an interplay in the external factors such as timing of entry, pricing of the firms products, distribution of the market share, changes in organizational leadership in the determination of the success of either the old businesses or the new entrants. These factors, coupled with the economies of scope determine the diffusion of technology and the incentives of market circumstances. While considering the IBM and Microsoft cases presented in this article, it is identifiable that both companies used strategies that have been considered outdated and failed to embrace the new business economies of scope to remain relevant to business and compete with the new entrants.
Competition is a common phenomenon in the business environment. While new entrants into the market might offer competition to the old firms, determining the resultant victor ...
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...cope. Dynamism is a common phenomenon in business that might keep some firms irrelevant, especially the old incumbent firms. New entrants often offer challenges to the former, which implies that the old incumbent firms require adjustments to match the new entrants and economies of scope, necessarily shared assets also ensure that both the old incumbent firms and the new entrants in the business environment share responsibilities. Nevertheless, the old incumbent firms have an advantage over the new entrants if they use proper economies of scope coupled with their large financial base because the ideas require financial backing for proper implementation.
Works Cited:
Timothy Bresnahan, Shane Greenstein, & Rebecca Henderson. “Schumpeterian competition and diseconomies of scope; illustrations from the histories of Microsoft and IBM.” Harvard Business School. Pp. 1-69
Competitive rivalry examines how intense the competition currently is in the marketplace, which is determined by the number of existing competitors and what each is capable of doing. (Arline, 2015).
Competition is seen daily amongst Pepsi and Coca-Cola. In most cases individuals even compare the two just because they are major competitors that are always creating and innovating new ideas. The key to competition always making sure there is a plan to become successful. Businesses have to always have to stay ahead of the game. The businesses must always be put into place and remain one step ahead of the competitor. One business may target only the elderly generation. While on the other hand another business is targeting the generation to come or the present generation. Children may not like what the older generation
Bresnahan, T. Greenstein, S. & Henderson, R. “Schumpeterian competition and diseconomies of scope; illustrations from the histories of Microsoft and IBM.” Harvard Business School, Working Paper 11-077, (2011): 1-69.
As our text explains, "The action of competitors exerts pressure to put more money now into marketing, research, and product development" (Drafke, 2009. p. 143) it is truly a never ending competition. Therefore, there are many aspects that affect the resources a business has to work with from prices of product, operating costs, payroll, and many more. The business world uses all its resources to stay on top of the competition. . That is why any business must stay on the forefront of technology, as this is a huge asset in the world today for any business. It must use technology help in managing time, cost containment, and product in order to compete in this world of overabundance
The threat of new entrants into the industry can be a big, due to the greater number of competitors with equal or the same products and service can sway the power of the industry. New entrants are attracted by the profitability
Innovation has become a must in many businesses considering the current economic climate and the variety of needs of customers. With stagnating economic climate and the amount of competition in each market businesses have been in hard ground. The growing competition for businesses has made it much harder to for businesses to have a good margin for their profits.
High degree of interdependence: the behaviour of firms are affected by what they believe other rivalry firms might do
“The entry of new competitors into the area is basically when a new business or organization begins and implies different increment of capacity. Many ideas have to be view when starting up such as economics, differentiation of production, capital needs, and cost of conversions and lack of distribution according to Porter. All these steps must be consider when becoming a new entrant.
The risk of entry from potential competitors is low, due to the barriers of entry. The barriers of entry are high, traceable to the cost of starting the business and what it costs to re...
Wheeler, (2001). Loosing the Competitive Advantage: Timely Organization Change Might Restore the Advantage. The Management Science Journal, 4, 152-87.
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This essay will utilise the following structure. It will commence by providing the reader with a brief history about Microsoft and then go onto explaining what corporate strategy is. Following this will be Microsoft’s diversification strategy in parallel with the reasons why they choose to diversify. Within this section the author plans to explore Microsoft’s related diversification approach, their corporate rationale, alongside why skill transferring is essential to them sustaining a competitive advantage and also how they achieved and utilized economies of scope (EOS). In the section regarding reasons why Microsoft chooses to diversify will be notions of proactive and defensive reasons, along with the idea of increasing market power and spreading risk. Then finally, a conclusion will follow summing up Microsoft’s overall ability to sustain a competitive advantage.
Santos, J. et al. (2009) «Toward a Theory of Business Model Innovation within Incumbent Firms», Working Paper version 20.03.2009. Fontainebleue: INSEAD.
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