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Hypercompetition is a phenomenon that has recently impacted markets everywhere. It is the state of rapid competition occurring in markets, which is often characterized by an unsustainable competitive advantage Business Dictionary, In fact, many people believe that the concept of sustainable competitive advantage is no longer relevant.
He says that the idea of sustained competitive advantage is dead Rifkin, This paper seeks to understand the characteristics of hypercompetition as well as the resulting changes that have occurred within the global markets. Traditionally, markets have been identified with slow-moving oligopolies Rifkin, There was a possibility to achieve competitive advantage, which would sustain the company in the long term.
Companies Definition of hypercompetition on reducing and avoiding competition. They would avoid price wars and head-to-head competition, as well as increase entry barriers to keep new competitors out of their industries Rifkin, Today, this is no longer the case. The best performers were disrupting markets, acting as if there were no boundaries to entry" Rifkin, A notable change has occurred in how competition between companies works. ly, maintaining a competitive advantage was the standard.
Now, this is impossible. This is hypercompetition, and it is forcing companies to completely rethink how they do business. Resulting from hypercompetitive activity, industry lines have blurred as companies reduce entry barriers and break into new sectors. Cross-industrial players have emerged and will continue to drastically shape the market environments.
The current market is one marked by rapid changes, instability and creative disruption. The concept of hypercompetition has been around since the s, but it maintains its relevance still today. Hypercompetitors is the term for the companies that are actively competing in this manner. Historically, in the s, the United States experienced the fifth merger and acquisition wave. This wave was marked with emerging technologies such as the developing internet and mobile telecommunications.
The market was becoming truly globalized and connected in this time, with emerging market players from all over the world. During this time, shareholder value also became imperative, as did the perceived need to augment resources and capabilities Economy Watch, Mergers and acquisitions reached an all-time high in this time period, which aligns also with the rise of Definition of hypercompetition concept of hypercompetition.
ificant merger activity coincides with a hypercompetitive environment, where instability is common. The global economy has been a key contributor to this kind of competition. Hypercompetition has created a more complex Definition of hypercompetition. Hypercompetition is characterized by four driving forces: customer changes, technological change, falling industry boundaries and deep pockets among competitors Rifkin, These driving forces encourage competitiveness and have thus resulted in hypercompetition. Each of these forces will be further discussed.
The first driving force is customers; customer preferences are constantly changing. Often, customers have many fragmenting tastes, which companies must be able to adapt to. Customization of products has become essential, as has the timeliness of delivery.
Companies must constantly be aware of customer needs, and work relentlessly to not only meet, but exceed, these expectations. They should also predict Definition of hypercompetition needs of customers to have a first-mover advantage. The responsiveness to consumer needs drives hypercompetition.
Especially in recent years, technological changes have paved the way for companies. As more Definition of hypercompetition more technologies are released, companies are changing the way business is done. Also, these changes have created new business opportunities. The era of technology is a large contributor to the rapid movements and disruptions that companies make.
Companies exist today that no one could have predicted only a few years before. Especially within technology, revolutionary changes have occurred. With technology, there is a Definition of hypercompetition for innovation in a timely and flexible manner. These technological changes have contributed to hypercompetition and enabled companies to transform.
As markets globalize, there are falling geographic as well as industry boundaries. Globalization has brought people and ideas, as well as trade, closer together than ever before. With close proximity, entry barriers have fallen ificantly and has thus resulted in increased competition.
Geographic lines are also no longer limiting, with agreements such as the General Agreement on Tariffs and Trade GATT as well as the integration of countries. Free trade has allowed companies to trade on a global level and has helped the spread of ideas. The global economy has allowed hypercompetition to flourish as competition continuously increases as a result of falling industry boundaries.
Also, companies are networked so that a large bank, a group of companies, or even the government, can help finance a company should they need help. The increasing global flow of financial capital has allowed companies to expand immensely.
Having financial backing also acts as a form of protection and gives companies the ability to take the larger risks needed to achieve competitive Definition of hypercompetition. The global economy is a term for the globalization of the economy. With this global movement, there are opportunities and challenges that arise. Companies have more potential to expand globally, but they also face Definition of hypercompetition risks from global competition. The global economy is one of the key contributors to the state of hypercompetition that companies are facing.
Hypercompetition often involves market disruptions and disruption allows companies to have a temporary advantage. The arenas of competition will be further discussed later, but they stem from the four driving forces of hypercompetition. Disruption is essential in order to keep the cycle of competition going. Risk of a perfect market would mean that there are no players who are winners, so companies must make disruptive choices in order to win in the marketplace.
As these new technologies and business models are introduced, other companies must respond to these changes as well. First, is the vision for disruption. Consumers are the ones who decide if a product or service has value, and stakeholder happiness is a key component in the success of Definition of hypercompetition firm.
Strategic soothsaying is the second S, and it deals with the understanding of what customers will want in the future. Being able to anticipate market changes gives the company an advantage in being a first-mover. A firm must work with their competencies in order to create disruption within the market. They must be aware of their skills, and be able to perform better than anyone else. Timing is paramount; responding to changes in the marketplace is necessary to maintain market position.
By surprising competitors, a company can help better protect themselves and keep other market players further from achieving the same know-how. aling means that a company communicates their strategic intent to the market. By shifting the rules, the company creates their own rules which le to disruption in the marketplace. H K Hanna Kattilakoski Author. Add to cart. Table of Contents 1 Introduction 1. Read the ebook. Global Marketing and Global Human Res Human Resources in the Global Market.
Global markets and global civil socie Influences of Asian Cultural Identity Samsung Electronics and the Global Ma Time Based Competition. The Key Drive Global Marketing of Locally Made Prod Change Prozesse in einem Globalen TeaDefinition of hypercompetition
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Hypercompetition. Characteristics and Changes within the Global Markets