Seeds of Strategic Thinking: The Foundations of Insightful Strategy by Fuhrig Philipp & Lin Nidthida & Garbuio Massimo

Author:Fuhrig, Philipp & Lin, Nidthida & Garbuio, Massimo [Fuhrig, Philipp]
Language: eng
Format: epub
Published: 2020-06-19T16:00:00+00:00

The reality is that there is asymmetric information for at least one stakeholder within the process, often with the buyer who knows far less than the selling party. Information deficits result in an imbalance of intelligence and a buyer’s bias towards already established players. This means that the barriers for new entrants exist as they need to invest in order to access the customer, win trust and confidence to test out the products/services. Furthermore, the differences between sellers start rising. Direct competition increases differentiation among them, either in cost, quality and supply of services and products. Mayor players can easily influence pricing to their advantage.

Besides market power, new technology, industry trends and changes in stakeholders’ relationships do impact the pricing process. Think about the power of new technology such as IoT, drones and AI transforming the oil and gas sector. With the help of vast amounts of data, predictive analytics can already help forecasting potential locations of oil fields. Interestingly, big oil corporations are already partnering with IT technology companies like Google, Microsoft and Amazon to help them use machine learning to improve oil drilling successes. Also, the overall stakeholder relationship with the oil industry and the market players has changed over the past decade. A long-term sustainable solution to natural resources is becoming a narrative among many key stakeholders, including the media, NGOs as well as the society. Oil companies know about the trends of green energy production and, thus, they to some extent started adapting to stakeholders’ expectations.

Moving forward with this argument, competition creates a drive to catch customers through products, innovation or price. Therefore, customer loyalty cannot be taken for granted due to the potential of switching customer behavior. Hereby, switching costs for products differ among industries. If comparable priced alternatives exist, today’s customer will not need to stay loyal. Taking the fast food industry as an example, there are little pricing differences between market leaders such as McDonalds, KFC, and Subway. However, it is comparably peculiar to switch PC operating systems as software companies aim to increase dependency through offering additional services like its clouds, music and TV streaming services, business software (e.g. Microsoft Notes) and connectivity among its devices.

Finally, let us explain again why we care about this section so much. Market power is very much alive and goes undetected by regulators for a very long time or even forever, and companies (remember what Prof. Galloway said?) will thrive for a very long time as monopolist. Ah yes, if you invest in these companies your own money, you’ll be set for life, no need to stress out with other investments.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.