New forms of business continue to enter industries that have long-established fi

Question

New forms of business continue to enter industries that have long-established firms and expected competitive behaviors. These new businesses are changing the nature of the industries they enter and also the competitive landscape of that industry. Two examples stand out: Airbnb and Uber, a taxi-like firm familiar to most of us. The entry of these firms with generally new ways of doing business are creating a great deal of chaos in their respective industries. What do you see as some of the strategic implications (identify at least two) of this type of entry.

Explanation / Answer

Generally, all established businesses prefer going the traditional ways of doing business which restricts them from giving the extra benefits or levrage to its customers. They tend to forget that by investing in technology would cost them but also bring them greater returns in the long term. This is where the newer businesses are capitalising. The advantage for them is that they know the pros and cons of the business and they work on minimising cons which is a catch point for minting more money from customers across.

The strategic implications are:

a. Provide better and innovative ways to customers which attracts them and also addresses their pain points. In the case of Uber, they gave the leverage to customers to sit at home and book their cab rides rather than waiting on the road for the cab to arrive. This helped customers to utilise their time for more productive things rather than wasting their time waiting for the cabs to arrive.

b. Service is another strategic implication that most of the new businesses focus upon. Service is the one which differentiates similar businesses from each other. By investing on technology and not providing the best service will again be a loss of investement.

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