K e ytak e aways

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Unformatted text preview: that makes the netwo rk ef f ect even stro nger. When users exchanging inf o rmatio n attract mo re users, they can also attract f irms o f f ering co mplementary pro ducts. When develo pers o f co mplementary pro ducts invest time writing so f tware—and users install, learn, and custo mize these pro ducts—switching co sts are created that enhance the staying po w er o f a given netwo rk. Fro m a strategist’s perspective this can be great news f o r do minant f irms in markets where netwo rk ef f ects exist. The larger yo ur netwo rk, the mo re dif f icult it beco mes f o r rivals to challenge yo ur leadership po sitio n. K E Y TAK E AWAYS Products and services subject to network effects get their value from exchange, perceived staying power, and complementary products and services. Tech firms and services that gain the lead in these categories often dominate all rivals. Many firms attempt to enhance their network effects by creating a platform for the development of third‐party products and servic...
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