Market entry Flashcards
Lieberman & Montgomery
1988: Sources of first mover advantage: 1) technology leadership (learning curve, patents), 2) pre-emptive acquisition of assets, 3) buyer switching costs First mover disadvantages: 1) free riders on R&D investment, 2) technology uncertainty, 3) shifts in technology/customer needs, 4) incumbent inertia
Helfat & Lieberman
2002: Types of entrant: 1) Diversifying existing firm - e.g. Gmail, Google had money to throw at the project 2) Parent-company ventures - e.g. Tesco Finance, leveraged trust in the brand 3) Start-ups - e.g. TaskRabbit. People have histories, so even start-ups are not resourceless Greater similarity between pre‐entry firm resources and required resources in an industry means greater likelihood that the firm will enter the industry, and greater likelihood that they will survive and prosper
Chandler
1992: In the past firms began through integrating production and distribution, then grew through expanding into new markets. Thus it is established firms rather than start-ups that create new industries - costs of R&D, cumulative organisational learning, 3-pronged investment
Ansoff
1957: Growth matrix
Existing/new products for existing/new customers
Cohen & Levinthal
1990: Absorptive capacity = the ability of a firm to recognise the value of new external information, assimilate it, and apply it to commercial ends - a function of it’s level of prior related knowledge
Markides & Geroski
2004: Most large companies didn’t create the market in which they exist - they let the market create radical new products, and then consolidate E.g. McKinsey - took the idea of consulting and made it big - lots of people, McKinsey Quarterly…
Sorensen & Stuart
2000: Big firms have lots of patents but they’re only incremental changes; small firms have fewer patents but they’re bigger leaps
Teece
1986: Success for the product, not necessarily the innovator - e.g. RC Cola were first to develop diet cola, but Pepsi and Coca Cola then sprang up Ability to profit from innovation determined by: 1) regime of appropriability, 2) dominant design paradigm, 3) complementary assets E.g. Kodak invented digital cameras
Sapiro & Varian
1999: Recommendations for standards wars: 1) Assemble allies 2) Pre-empt and build an early lead through having the right resources (reputation, rights etc.) 3) Manage consumer expectations 4) Don’t rest easy when you’ve won 5) Avoid survival pricing when you fall behind E.g. BluRay / HD DVD; Facebook/MySpace?
