Reference no: EM133319472
Assignment:
GE will not remain in an industry unless it is either the largest or second largest (based on market share) competitor in the industry. Is this good a strategy to follow? Discuss.
• Depends on gap between top two firms and the next largest
o Are only the top two firms large enough to offer a complete range of brands so that they can attract the best located and most cost efficient distribution channels?
o Do the top two firms have a bargaining advantage with suppliers?
• Depends on whether the top two firms have become complacent and keep doing things the way they have for many years - opportunity for disruption by developing a new business model
• Depends on the following:
o Are there economies of scale, and are only the top two firms large enough to realize these economies and the resulting cost advantage?
o Have the top two firms created significant switching costs for customers?
o Can the top two firms, individually or collectively, deter entry?
• Dominant firms can influence the basis for competition, forcing all the other firms to compete where the dominant firms have an advantage -consider the Stackelberg model, or the first firm to win a patent race.