ABSTRACTTitle: The Effect of Customer Preferences Dynamism on Incumbent Firms:The Case of Nokia in the Mobile Phone industry.Authors: Adnan Kandeel kandeeladnan@gmail.comDinsel Sali dinsel08@yahoo.comFaculty: Department of Management and EngineeringDate: 27th of May 2013Background: The study of the dynamism of customer preferences’ effect onincumbent firms offers in-depth understanding of the active roleof customers in affecting the position of incumbent firmswhich has been neglected in the vast majority of literaturethat examined the declining position of incumbent firms.Aim: The aim of this thesis is to examine the dynamism of customerpreferences’ effect on incumbent firms.Definitions: Incumbent firm: the dominant firm in an industry.Customer preferences: the collection of attributes including explicitand implicit attributes of a certain product.Preference stereotypes: the implicit prejudgement by customers about a certain product that can not be ascribed to an explicit attribute.Methodology: A qualitative approach where online historical data from 1100 NokiaMobile phone user reviews for 11 years were collected, profiled, andthen analyzed.Completion and results: Incumbent firms are affected by the dynamism of explicit andimplicit preferences through their effect on radical and incrementalinnovation. Furthermore, preference stereotypes can affect incumbentfirms’ ability to impact the change of product meanings throughradical innovation and investment in technology.Keywords: Incumbent firms, Customer preferences dynamism, Radical innovation

This paper examines the effect on incumbent firms of industries which Amazon.com, Inc. enters. Using event study methodology, this paper tests the returns for incumbent firms on the day Amazon announces entrance into their industry. The paper studies the effects on two portfolios for each industry, a market capitalization weighted and an equally weighted. Each portfolio’s expected return is computed using the market model and then compared to actual returns to find the abnormal return. The results are mixed. Five industry portfolios have significant 1 – day abnormal returns and 2 – day CAR while the six other industries show no significance in either metric. The results prompt a discussion and logic? behind the markets response to Amazon entering new markets. The leading explanation of the industries that saw effects is the time in which Amazon entered.

The digital transformation, providing disruptive digital technologies, changed customer needs, and new digital entrants, is starting to affect the insurance industry. Although, the insurers are struggling to become digital and excel on technologies such as Artificial Intelligence. Therefore, the purpose of this thesis was to identify and investigate the factors necessary for incumbent insurers to achieve digital transformation and excel on related technologies, to stay competitive in the fast-changing environment. The overall theoretical foundation was built on the ability to create dynamic capabilities to achieve digital transformation. The study further linked the dynamic capabilities theory to the context of the change currently happening in the insurance industry, achieved by performing a single case study on a Swedish incumbent insurer. The case study included two units of analysis which investigated (1) how, and under which circumstances, the identified key factors were met, and (2) how the attempts of implementing Artificial Intelligence have been perceived, received and achieved. Both qualitative and quantitative data collections were performed, but where the qualitative was predominate. The findings proved that the incumbent insurer is at the start of its digital transformation and does realise the need to transform. However, it was found that many of the essential dynamic capabilities’ activities are limited at the case company and that hierarchical structures, riskaversion and legacy systems are hindering the insurer’s attempts to transform. Some good initiatives though proved that the insurer is starting to build more dynamic capabilities, but there are also many areas where the company must improve. A central contribution to the study was further the realisation that the implementation of Artificial Intelligence was well related to the parts of the dynamic capabilities’ theory. As digital transformation is an ongoing journey of strategic change, once more dynamic capabilities are in place, the incumbent insurer will be ready to excel on the possibilities that digital transformation entails. / Den digitala transformationen har börjat påverka försäkringsbranschen och medför nya omvälvande digitala tekniker, förändrade kundbeteenden och nya digitala konkurrenter. Många försäkringsbolag kämpar därför med att bli digitala samt att förstå sig på nya tekniker, så som Artificiell Intelligens. Syftet med denna studie var därför att identifiera och undersöka vilka faktorer som är nödvändiga för väletablerade försäkringsbolag att klara sig igenom den digitala transformationen, och adaptera nya uppkommande tekniker som förändringen medför. Detta för att kunna behålla sin marknadsposition och klara sig i en snabbförändlig värld. Huvudsakligen var den teoretiska grunden för detta arbete byggt på förmågan att kunna skapa dynamiska förmågor för att överleva den digitala transformationen. Vidare så sammankopplade studien teorin om dynamiska förmågor till den pågående förändringen inom försäkringsindustrin, genom att utföra en fallstudie av ett väletablerat försäkringsbolag i Sverige. Fallstudien innefattade två analysdelar beskrivna enligt följande: (1) Hur, och under vilka förhållanden, uppfylls de identifierade faktorerna och (2) hur har försöken att implementera Artificiell Intelligens uppfattas, mottagits och uppnåtts av försäkringsbolaget. Både en kvalitativ och kvantitativ datainsamling utfördes, där den kvalitativa delen dominerade. Resultaten visade på att det studerade försäkringsbolaget är i början av sin digitala transformation, men har insett betydelsen av att behöva förändras. Det blev även bekräftat att många av de grundläggande dynamiska förmågorna var begränsade hos företaget samt att hierarkiska strukturer, riskundvikande och legacy förhindrar möjligheten att förändras. En del goda initiativ visar att företaget börjar bygga dynamiska förmågor men att det finns många områden där ytterligare fokus krävs. En stor insikt i studien var att implementationen av Artificiell Intelligens var relaterad och stämde väl överens med faktorerna identifierade i teorin. Den digitala transformationen är en pågående resa av strategiska förändringar, och försäkringsbolaget kommer kunna ta del av dess möjligheter när fler dynamiska förmågor uppnås.

Sharing economy businesses have increasingly began to inhibit the competitive landscape of many different industries. Their growth can be primary connected to general digitalization developments. At its core, the sharing economy concept is built around efficiently using excess resources. In this thesis, it is argued that sharing economy businesses should be considered disruptive innovations, partly because they present incumbent firms with significant challenges. While the sharing economy business concept facilitates effective peer-to-peer exchange, and in the process provides new possibilities of employment, customer-centric innovation and market development, it can also be tied to a decreasing demand for goods and services offered by incumbents in the same marketplace. Examples of businesses built around the sharing economy concept include – but are not limited to – Airbnb, Vrbo, Uber, Lyft, Zilok, and Hygglo. Prior to the beginning of this research project, very little research regarding potential strategic countermeasures for incumbent firms to employ against sharing economy competitors had been conducted. As a result, this thesis serves the purpose of investigating the impact of sharing economy businesses from the perspective of incumbents and theorizing about potential responses. In order to facilitate this purpose, the hospitality industry was chosen as a representative of an industry that has experienced sharing economy business entrances and sharing economy business competition to a researchable extent. Through this thesis and its accompanying qualitative data collection process, several challenges that are presented to incumbents as a result of sharing economy business entrances were identified. Additionally, a focus was placed on evaluating both tried and prospective strategic measures, using existing theory and insights from the data collection to discover the key aspects needed for the development of potential responses to sharing economy businesses. A similar process was undertaken regarding business models, as the crucial and core elements of a perceived successful business model needed to be identified. The findings generated by the data collection process were then analyzed using a thematic analysis, centered on the themes of: Strategic Management in the Hospitality Industry; Current Trends in the Hospitality Sector; Fundamentals of a Successful Hotel Business; and Future Strategy Suggestions and Industry Prospects. After conducting the three identification and analyzation stages, the findings were discussed in the penultimate chapter of the thesis, where the findings’ relation to existing theory was explored. Following the discussion, the possibility to answer the main research question of this thesis appeared. After discussing our findings, our analysis, and the connection to existing theory, we were able to conclude that incumbent firms can successfully compete with sharing economy businesses. Specifically, they could ensure this through strategic changes and business model innovations built around efficiently exploiting the incumbents’ internal strengths and advantages that are currently not easily imitable by sharing economy businesses. As such, they should look to create, deliver, and communicate unique value to its customers, and suggestions on how this could be achieved by both incumbent hospitality managers and others are provided.