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Increasing Returns and the New World of Business

Increasing Returns and the New World of Business. By W. Brain Arthur. Presented by: Alexandra Mezhenina Vladimir Fedotov Yaroslav Pavlov. New reality of economy. Transformation from application of raw energy to application of ideas, from resources to information. Two economical worlds.

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Increasing Returns and the New World of Business

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  1. Increasing Returns and the New World of Business By W. Brain Arthur Presented by: Alexandra Mezhenina Vladimir Fedotov Yaroslav Pavlov

  2. New reality of economy • Transformation from application of raw energy to application of ideas, from resources to information

  3. Two economical worlds • World of diminishing returns • World of increasing returns

  4. Diminishing-returns world • Commodities production depends heavily on resources and lightly on know-how • Diminishing returns and nearly perfect competition • Still exists in modern economy in bulk processing

  5. Increasing-returns world • New rules of the game • Market became unstable, unpredictable…

  6. The reasons of this phenomena • Up-front cost • Network effects • Customer groove-in

  7. Factors of new system • Flat hierarchy, mission orientation, flexibility in strategy… • Because: • adaptation never stops • every participant of the process becomes very important

  8. Playing the high-tech casino • Discount strategy • Psychological positioning • Cross-company mutual feedback

  9. Increasing returns in service-industries • Services can also be described in terms of this phenomena • Two consequences: • A lot of small companies concentrated on one service • Winner-take-most

  10. Managing two economical worlds • Do I understand the feedback in my market? • Which ecologies I am in? • Do I have resources to play? • What games are coming next?

  11. Thank you! • Comments • Questions yaroslav.pavlov@gmail.com - Yaroslav Pavlov sasha.gsom@gmail.com - Alexandra Mezhenina vaavilen@yandex.ru - Vladimir Fedotov

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