This paper examines the strategic approach of two exemplar internet firms belonging to the first generation of dot.coms. The analysis identifies and compares their corporate strategic approach as one of the factors that helped these companies to escape the internet disaster and maintain their market leadership for more than ten years.
The study develops a methodological process for identification of growth‐oriented strategic decisions taken and implemented by the two internet corporations in a period of five years. The strategic decisions were classified and compared based on the methodology proposed by I. Ansoff.
The classification and comparison of the strategic course of the two firms reveals interesting similarities in their managerial approach and deviation from traditional strategic procedures and thinking. The most important conclusion is that successful firms in a market with low entry barriers maintain their market leadership by focusing on short‐term rather than long‐term competitive advantages. Such a strategy requires managerial flexibility and deviation from traditional strategic practices and thinking.
Further research is required in order to obtain a more comprehensive picture of the strategic practices of successful virtual firms as well as in order to identify the critical differences between the online and the physical strategic practices.
Focusing on short‐term competitive positions as a strategy for survival and success in the virtual marketplace requires the continuous critical analysis of the external environment, efficient decision‐making processes and focus on continuous innovation and transformation.
The paper illustrates scientific evidence that transformation and innovation are the strategies most likely to contribute to the long‐term survival and success in unpredictable, sometimes chaotic and certainly fast evolving marketplaces like the internet One could assume that the findings could apply to physical markets characterized by evolution and change.
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