In a long-standing industry, the competitive landscape has b…
In a long-standing industry, the competitive landscape has been disrupted by a fundamental shift in the supply chain; the previously fragmented group of raw material providers has consolidated into a powerful duopoly that now dictates pricing. While downstream buyers remain numerous and unorganized, a parallel industry has introduced a “software-as-a-service” model (applying the Gamma-3 protocol) that accomplishes the same results for clients without requiring the focal industry’s hardware. Despite these pressures, new production techniques have emerged that require far less specialized infrastructure, driving the minimum efficient scale (MES) to historic lows. Identify the two most threatening forces. Beyond the provided text, explain how the drop in MES specifically changes the ‘Exit Barriers’ for these firms. Based on this change, does the industry become more or less attractive for the legacy incumbents specifically? Defend your position using appropriate class frameworks.