List Two (2) examples of firms that have used imitation as a way of reducing the
risk of entry. What aspects of risk was it meant to reduce? Was it successful? What
aspects of the firm were not generated by imitation, made the firm unique, and were a
potential source of advantage over competitors?
Two examples of Firms that used Imitation as a way to reduce risk of entry are Xiaomi
Inc a Chinese smartphone manufacturer and second is Didi a Chinese ride sharing
company. Xioami imitates the strategy of Apple by being innovative and selling unique
design and feature smartphones but at less price. Didi Is imitating the business model of
Uber to start ride sharing services in China.
The aspect of risk these companies meant to reduce areThese companies want to save the cost associated with research and doing market
analysis to generate new ideas. a business idea and its market analysis is not cheap so
these companies decided to save the cost and imitate the business model of big
companies.
These companies reduce the risk of investment in hiring and training of employees
because when a new business with new ideas is generated then it needs workers and
employees who either have knowledge or are trained. As there are already employees
working in the mobile industry and Drivers in the ride sharing industry, there is no need
to invest in training and hiring as these companies can recruit from the market. for
example- drivers are everywhere so part time drivers are hired by didi and there is also
no lack of engineers in electronics and software for Xioami.
The risk of customer’s perception as when a new service or business starts, customers
show lack of interest in new business but there are already existing businesses so this
saves the investment of these new companies to attract customers.
for example- if the ride sharing service was new then customers would fear or hesitate
to book a cab but as uber already set strong perception in ride sharing service so it is
easier for DIDI to get customers.
Yes, both firms are successful as DIDI has already become stronger than DIDI and
Xioami is leading the Indian Market with its smartphone and has started to cover
Europe.
The aspects that not generated by imitation by these firms areXiaomi is not able to generate competitive advantage in the premium segment as Apple
has a strong brand image and customer loyalty. so every customer would prefer Apple
over Xiaomi.
Didi was not able to generate an image of first mover advantage because Uber being
the inventor of the ride sharing business model. Customers will know Uber more all over
the world as compared to Didi which is financially successful but has limited brand
image.
