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This article explores how established firms respond to threatening technologies in young industries, analyzing strategies of participation, timing of entry, and organizational separation. It offers insights on avoiding pitfalls based on a survey of 27 leading "threatened firms" and highlights the importance of technological evaluation and competitive positioning. Results show the risks of early entry, magnitude of commitments, and degrees of organizational separation impacting success in new industries. The competitive strategy and pitfalls to avoid are also discussed.
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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
