Class 9 - Industry Evolution

Class 9 - Industry Evolution - Industry Evolution A product...

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Unformatted text preview: Industry Evolution A product innovation that creates larger value than available substitutes Different bets on what buyers want Competition on product features, innovation Many competitors with different product concepts Small sales, few customers High cost, low quality products First mover advantages Strategic pricing Advantages Resulting from Entry Timing Preemption occurs if 1 st mover secures better access to the following than followers: ▪ Strategically valuable assets ▪ channels ▪ location ▪ capacity ▪ positioning Reputation Effects advantage accruing to 1 st movers based on ability to achieve premium brand-name Buyer Switching Costs arises if 1 st movers can lock-in customers Patents or institutional barriers advantages that can arise if governing authority restricts future entry Advantages resulting from Size Economies of Scale cost advantage: resulting in situations in which average costs decline as current output increases Economies of Scope arise if provision of multiple different goods or services by single firm lower costs &/or higher WTP Network Effects arise when value of product or service depends on # of other people already using it ▪ occurs especially in information-based products/services ▪ e.g., Windows/Office, eBay, QWERTY keyboard Learning Effects cost advantage: arise in situations in which average costs decline as function of cumulative output Source: Pioneering costs...
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This document was uploaded on 11/04/2011 for the course BUSI 471 at UNC.

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Class 9 - Industry Evolution - Industry Evolution A product...

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