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Strategy dynamics through a demand-based lens: the evolution of market boundaries, resource rents, and competitive positions

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The authors develop a novel approach to strategy dynamics grounded in an explicit treatment of consumer choice when technologies improve over time. They address the evolution of market boundaries, resource rents, and competitive positions by adapting formal models of competition with differentiated products. Their model captures the central strategy insight that competitive interactions are governed by superior value creation and competitive advantage. More importantly, it shows how the interplay between improving technologies and consumers' valuation of resulting performance improvements affects which market segments new technologies are able to enter, how the rents from different types of resources change over time, and whether or not markets are segmented according to classic generic strategies. Their focus on consumer choice and value creation complements the traditional focus in the strategy literature on competition and value capture.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2003/2003-01.pdf

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Copyright INSEAD. All rights reserved