« « Competition in Computers among Companies (2)

Competition in Computers among Companies (3)

company competition

Leading in technology and controlling key standards enables a company to dominate the market and enjoy high margins that can be plowed back into further innovation. Growth further fuels the innovation cycle by ensuring there will be investors eager to underwrite expansion, talented employees willing to give their all, and a growing body of users waiting to adopt new products.

Falling behind can be devastating, because product cycles are measured in months and most of the profits are made in the first few months. Slow-growth companies can cut costs and stay profitable for a while but eventually lose the confidence of customers, key employees, and stockholders if they cannot return to a strong growth rate.

Once those groups begin to abandon the company, the decline usually becomes irreversible. One critical determinant of success is how effectively companies reach global markets and create linkages to the global production system.

Companies that fail to grow beyond their domestic market cannot sustain high growth rates and achieve the sales volumes needed to lower production costs and recoup product development costs. Those that keep production in their home country and rely on domestic suppliers have failed to capitalize on the capabilities distributed throughout the global production system.

The importance of global markets has been less apparent for some U.S. companies, which have sustained rapid growth by targeting the huge, fast-growing U.S. market; even those companies, however, are going global now as they realize that future growth will be fastest outside the United States.

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