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How established firms respond to threatening technologies (article #4). Group № 4 MITIM students: Anastasia Loseva, Anna Kichigina, Vi с toria Tikhonova. general description of the survey. General description of the survey; Young industries and technological threats;
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How established firms respond to threatening technologies (article #4) Group №4 MITIM students: Anastasia Loseva, Anna Kichigina, Viсtoria Tikhonova
general description of the survey • General description of the survey; • Young industries and technological threats; • Strategies of participation connected with timing of entry, magnitude of commitments, degree of organizational separation, competitive strategy for the new business; • Avoiding pitfalls.
general description of the survey the goal - highlighting the problems of entering young industries and giving recommendations for avoiding them; twenty-seven leading “threatened firms” from 8 young industries were analyzed; secondary datawas used: annual reports, business articles, industry surveys, stock reports;
Young industries & technological threats • new entrants can be a substitution threat for successful companies from established industries; • to determine technological threats, firms should evaluate the new technology; • the main difference between established & young industries was dynamic nature of companies' competitive positions; • the periods of “introduction” and “rapid growth” were analyzed because of high levels of uncertainty and risk.
Young industries & technological threats • different strategies were used by companies, depending on the vision of competition; • companies had to cope with the rapid rates of permanent changes in production methods; • strong R&D department and financial capabilities were needed; • new industries required new technical resources and skills.
Timing of entry • risks of early entry: • rejection or less acceptance of a new product; • usage of unproven technologies; • speed of market acceptance; • lack of transparence of requirements for success. • Results of survey: • 21 companies out of 27 entered the market earlier; • 8 of the 21 companies were unsuccessful at the beginning; • 2 of 8 achieved success within 1 year; • other 6 firms – in more than 9 years; • the mistake was mostly in overestimating R&D potential.
Magnitude of commitments • types of behavior at the stage of entrance: • limited early investments • major early investments: • long-term success and strong competitive position; • unprofitability; • Results of survey: • 24 of 27 companies made substantial investment over time • only 4 did it aggressively from the start • other 20 made limited investments and wait
Degree of organizational separation • established organization for the new product: • advantages: cost savings and existence of skillful executives • disadvantage: total difference between traditional and new technologies → the failure of the company • Results of survey: • the tendency of usage close organizational linkages
Competitive Strategy for the new business • companies that were historically successful usually use the same approach in the new field • less success because of: • new product concept • seldom creation of the new design • slow reaction to the implications
