Business Analysis: Schumpeterian Competition

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I. Introduction
Goggle replaced Yahoo, and Yahoo replaced AltaVista and other search engines. These are examples of how fast new players may take over sales in a certain categories on the market. Since 1990s, the market has leaders and innovators that are winner-take-all concentrated, and focused on taking over the market. Competitive advantage is being run for and more companies are investing in IT in order to reach quality and quantity of goods and services. They are replacing their operating models by using Internet and new software’s. Organizations that are making changes in their sectors by including information technology innovations are gaining competitive advantage. This is called Schumpeterian competition. This turn towards innovations
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Some choose it for achieving competitive advantage. They try to implement their processes, and achieve it, and some fail in implementation process. On the other hand some do not try at all, because they do not believe in the power of IT. Those that succeed in implementation and become effective begin to spread rapidly. Thus, they become more competitive and the ones with best processes win market sectors. In this case the competitors react more aggressively and they introduce new IT innovations, instead of imitating the first mover. Competitors compete by introducing new innovations and attracting customers so that they begin to switch from one to another. Therefore they are responding to changing environment. Industry rivalry brings intense and dynamic movements in the market. This Schumpeterian environment consists of innovations that multiply fast. Managers need to be turn towards strategic…show more content…
Example:
In the mid 1990s Cisco introduced a single ERP platform for entire organization. This was bad because managers could purchase as many applications and tools to be part of the platform. This resulted in nine different tools for checking order status. Each was providing different information in different way, and created conflicts in order reports through entire organization.
This was resolved by upgrading the system with business processes: market to sell, lead to order, quote to cash, issue to resolution, forecast to build, idea to product, and hire to retire. The system had configuration that supported the sub process for each stage. This innovation gave consistency and a positive influence on Cisco's performance.
In 2002 similar thing happened to Otis, a company 149-year-old. Their information system was not very fragmented. The difficulties were connected to the core processes. They also replaced old software, and implemented new platform called e*Logistics. The new enterprise platform had four processes: sales, order fulfillment, field installation, and job closing. The processes were uniformed every time. The result was obtaining higher revenue and profit and shorter time

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