Incumbent firms vs. new entrants within the telecom industry

Abstract: In the contemporary competitive environment incumbent firms have to face the
challenge of meeting new competitive actions from the internal threat of
existing firms as well as external threat of new entrants. Incumbent firms
can create barriers to entry, whereas new entrants have to face different
barriers to entry. Competitive actions can be responded with aggressive
reactions, as well as non-aggressive reactions depending in the industry and
market. The purpose of this thesis has been to gain a deeper understanding
of how incumbent firms versus new entrants compare in a competitive
environment. To reach this purpose a qualitative embedded single-case study
of an incumbent firm within the telecommunications industry has been made.
Three competitors to the incumbent firm, i.e. new entrants within that
specific market, were chosen as subunits. Data have been gathered through
an interview with an employee of the incumbent firm as well as through
archival records, documentations and online- and offline data. In this
study, it is shown that an incumbent firm is more focused on securing
its position on the market, whereas a new entrant tends to use a more
aggressive approach in order to gain market shares. The conditions are
different for an incumbent firm in comparison to a new entrant since it has
more financial resources, well established networks and customer base as
well as organizational advantages. On the other hand, new entrants tend to
have a faster decision-making as well as a technological state-of-the-art
competence that is often used in order to niche towards a narrow segment.