Market Dominance as a Precursor of a Firm's Failure: Emerging Technologies and the Competitive Advantage of New Entrants.

Author List: Clemons, Eric K.; Croson, David C.; Weber, Bruce W.;
Journal of Management Information Systems, 1996, Volume 13, Issue 2, Page 59-75.
New entrants in many industries are able to challenge the business of historically dominant firms. In many markets, dominant players have pursued pricing and service policies that, although once highly effective, now make their markets attractive targets for aggressive new entrants. The entrants' strategies rely on lower overhead costs, new technologies, alternative distribution channels, and the active targeting of profitable customers. Several factors will make it possible for entrants to attack dominant players; simplistic historical pricing mistakes or policies of promising or providing universal service will make it attractive for new entrants to attack. Restrictions on the flexibility of incumbents--both externally and internally imposed--may make it difficult for dominant players to defend themselves effectively against attack by more flexible entrants with cream-skimming strategies and newer technology. We develop a set of alternatives for incumbent firms facing increasing "contestability" in their markets and the threat of agile entrants.
Keywords: banking;contestability;death spiral;dominant firms;insurance;market entry;market segmentation;strategic use of information
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List of Topics

#242 0.433 market competition competitive network markets firms products competing competitor differentiation advantage competitors presence dominant structure share using incumbent make important
#179 0.139 technologies technology new findings efficiency deployed common implications engineers conversion change transformational opportunity deployment make making improve powerful choosing enhance
#16 0.081 infrastructure information flexibility new paper technology building infrastructures flexible development human creating provide despite challenge possible resources specific advances developing
#125 0.064 framework model used conceptual proposed given particular general concept frameworks literature developed develop providing paper developing guidelines concepts appropriate set
#207 0.057 design artifacts alternative method artifact generation approaches alternatives tool science generate set promising requirements evaluation problem designed incentives components addressing
#192 0.056 small business businesses firms external firm's growth size level expertise used high major environment lack resources companies internally factors internal
#73 0.055 security threat information users detection coping configuration avoidance response firm malicious attack intrusion appraisal countermeasures benefit costs threats ability rate