Product Life Cycle and Competitive Strategies

Abstract

In high-tech industries, technology is typically believed as a so-called key success factor. However, technology itself cannot secure incumbents’ long-term survival; the more competitive industry’s competition is, the smaller the contribution of technology on firm survival will be. This paper scrutinizes the impacts of product portfolio capability and marketing capability on long-term survival. For this purpose, a game-theoretic model is constructed. According to the model, both product portfolio capability and marketing capability can enhance firm survival but they can deteriorate profitability. Therefore, it is too much to say that the stronger the product portfolio and marketing capabilities are, firms are always better off. This prediction is supported empirically in the rigid disc drive industry; Surely, the stronger the portfolio and marketing capabilities firms own, they are more likely to stay longer in the HDD market. However, such effects are found to be marginally decreasing in the long-run.