1) Give an example where the best technology did not dominate a network effects-
ID: 355177 • Letter: 1
Question
1) Give an example where the best technology did not dominate a network effects-driven market and why? Please make sure your example is unique and not something that has already been discussed on this particular forum.
2) Identify an example of a two-sided market where both sides pay for product or service. Secondly, Identify an example where only one side pays. What factors determine who should pay? Does paying have implications for the establishment and growth of a network effect? What might a firm do to encourage early network growth? Please make sure you answer all parts of this question.
Explanation / Answer
Answer: 1
Best technology: Best technology is defined as the technology which is latest technology and no further technological development had taken place and it is the most suitable technology for the given business. Thus many businesses use the best technology to suit the business, their customers, their market and they earn desired profit and revenue for the organization.
Network effects driven market: This is the market which is influenced by the network of a particular product, service, business or organization. And the market is having such a high convincing level/ influencing level, that other/new product, service and business, can have impact on this market and the customers will not accept new product, service or business easily. In such market new player will not be able to dominate with best technology approach.
Example 1 : India Market – Entry of Daimler in Commercial market segment, which is network driven of Tata Motors.
India commercial vehicle market is a network driven market, in which the largest network of Tata Motors exists and it is very difficult for the other commercial vehicles to survive in it.
Daimler Chrysler entered in the India market of commercial vehicle with best technology in the Tipper Truck segments.
The Daimler Chrysler is world known for the best technology and quality vehicles, but still it is very difficult for the Daimler Chrysler business to make a impact and growth in the Indian commercial market with the best technology commercial tipper truck vehicles, because the Indian market is already network driven market by Tata Motors. The Indian market is fully influenced by the Tata Motors commercial Tipper Truck vehicles. Thus this is a example where the best technology could not be make a dominate impact in the network driven market.
Example 2: Dominate product of any one market generally do not make impacts in the other regional network driven market, as there exists other products for their consumers.
Wal-Mart Business may be doing very good profit in the developed countries, as it has best technology model for the business, but still it do not have dominating impact in India market specially in small cities, because small cities are network driven market and they do not influenced by best technology aspects.
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