market share and competition
One long distance company controls 60% of the market. Two
others divide up most of the rest, with company B having about 20%. A growing
slice of the market is taken up by small no name firms offering rock bottom
pricing. There are other new threats.
Give a choice should Company A compete with Company B on
price or other dimensions?
Imagine company A develops some new features that enhance
the value of the long distance call. This feature adds substantial fixed cost,
but does not affect variable costs. Fixed costs make copying this feature
infeasible for all but the 3 largest companies. The relationship between the
cost and added value for the 3 big companies is favorable. How should Company A
evaluate the desirability of attempting to build advantage through this
feature?
