Question

Explain how technology can be a driving force that shapes competition and the way a market...

Explain how technology can be a driving force that shapes competition and the way a market functions. Be specific in indicating how technological change can (a) affect the rivalry among incumbent competitors, (b) change barriers to entry into the industry, (c)(c) affect the competitive pressures from substitute products (d) provide incentives firms to use technology be a leader in the industry and offer competitive advantage.

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Answer #1

A firm that can discover a better technology for performing an activity than its competitors thus gains competitive advantage. In addition to affecting cost or differentiation in its own right, technology affects competitive advantage through changing or influencing the other drivers of cost or uniqueness.

New firms are forced to either license processes and technology from established firms or tie up capital in an attempt to match established firms' capabilities. In the electronics industry as a whole, high customer switching costs and brand loyalty are common barriers to entry.

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