Strategies for Incumbents to Gain Competitive Advantage in the Market

This article discusses strategies and possible solutions that incumbents can use to gain a competitive advantage in the market. It explores cost leadership, differentiation, focus strategy, and strategic alliances. It also delves into the importance of technological innovation and provides an in-depth look at one technological innovation strategy for incumbents to re-emerge in the market. The article concludes by discussing ways to measure the effectiveness of the solution and potential difficulties in its implementation.

Innovation and New
Technologies

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Strategies/possible solutions that incumbents can grasp in order to gain competitive advantage............3
One technological innovation strategy/solution in detail for the incumbent to re-emerge in the new
market......................................................................................................................................................5
Innovative and technological components of this solution and if it is a sustaining or disruptive
innovation................................................................................................................................................6
Ways to measure the effectiveness of the solution...................................................................................7
Identify potential difficulties that might be expected for the implementation of that solution.................7
CONCLUSION..........................................................................................................................................8
REFERENCES..........................................................................................................................................9

INTRODUCTION
An incumbent in a business can be defined as a company or product that is established
with a demonstrated level of success in the market. For example, when Bolt introduced its cab
sharing services in the UK market, it posed as an incumbent to companies like Uber, Kapten,
Wheely etc. On the other hand, a challenger can be defined as s company that tries to expand its
share in the market by offering its products in the market at competitive prices (Acs and et. al.,
2017). For Bolt, the challengers are Uber, Wheely and MyTaxi. Incumbents are being beaten by
challengers in business because challengers want to gain the position of market leader in the
industry. This is also because incumbents have a relatively easier access to the different
government resources. They are already established and thus, have a large base of customers
who are loyal and trust them. Challengers are just below incumbents in the market and therefore
aim to increase their market share.
MAIN BODY
Strategies/possible solutions that incumbents can grasp in order to gain competitive advantage
Since an incumbent is a company that is already established in the market, it has access to
various strategies or solutions that it can leverage in order to gain a competitive advantage
against challengers (Van de Ven, 2017). Some of the possible strategies that Uber, being an
incumbent can use are described below –
Cost Leadership – This is one of the strategies that the respective company can use in
order to gain a competitive advantage in the market. In this strategy, the company offers products
or services similar to the competitors at a lower price.
 Reducing Wastage – In this, Uber will try to eliminate competitors out of market by
constantly using different price strategies. Efforts will be made to reduce the wastage.
 Research and Development - Uber must carry out a research in order to find ways of
providing services at lower rates by effectively utilizing the resources available with it
(Four Methods of Competitive Advantages, 2020).
Differentiation – This is the second strategy that incumbents in the UK market can use in order
to set themselves apart from the challengers.

 Innovation in Service - In this strategy, incumbents like Uber, Wheely etc. will provide
the customers with services that are innovative and have unique features as compared to
the competitors.
 Interrelationships – The incumbents can even build effective interrelationships with each
other. The main objective of the incumbents behind adopting this strategy will be to gain
a competitive advantage against challengers (Biemans, 2018). This will also help them in
gaining customers that are loyal to it.
Focus Strategy – This strategy is usually used when the company has in-depth
knowledge about the market segment that it operates in.
 Identification of Competitors - This strategy will help incumbents like Uber, Wheely and
Kapten to build strong relation with each target market. Apart from this, these companies
will also get a chance to bring innovation and expertise in its services. The competition in
the market will also get restricted. The companies will serve a limited segment of the
market and try to gain as many customers possible. Thus, this will help them in gaining a
competitive advantage against challengers.
Strategic Alliances – A strategic alliance can be defined as an arrangement wherein two
companies undertake a project that is mutually beneficial for both of them.
 Research Potential Partners – The incumbents will research about potential partners with
whom they can get into a strategic alliance. This is a less complex strategy and helps
organizations in gaining a competitive advantage against competitors.
 Identify Opportunities - The incumbents can adopt this strategy in order to reach out to
new customers as well as access new opportunities (Dodgson, 2018). This is also an
affordable alternative as compared to mergers and acquisitions.

Technological innovation strategy for incumbent to re-emerge in the market
In order to develop a technological innovation strategy, the incumbents will be required
to conduct effective research and development. The incumbents should plan on implementing the
latest technologies in its product and service portfolio. This is because it will help in eliminating
the competition from the market. Innovation is considered as one of the key components for
gaining a competitive advantage against competitors (Evangelista, 2019). And if an innovation is
made in technology, it can help an incumbent to re-emerge in the market in an enhanced manner.
The incumbents can come up with innovation and additional unique features in its application so
that the customers get a seamless experience. Incumbents within the UK market can use
sustainable innovation to re-emerge and maintain their position in the industry. This will help
them in attracting a greater number of customers as well as their trust. Apart from this,
technology can assist incumbent companies to improve their overall products and services.
Incumbent companies like Uber and Wheely in the UK market can also implement the
use of renewable energy so that they are able to eliminate the challengers from the market. This
will be extremely beneficial because people as well as other organizations are increasingly
becoming aware of the harm that is caused to the environment because of the pollution. In order
to come up with a technological innovation strategy, incumbents can conduct brainstorming
sessions within their workplace (Schilling and Shankar, 2019). This will help the managements
of respective companies to develop strategies relating to technological innovation and re-emerge
in the market, thereby gaining a competitive advantage over challengers like Bolt etc. Security
measures relating to technology can also be added to the applications. Apart from this, artificial
intelligence, machine learning for improved customer service as well as virtual reality can also
be used in an innovative way so that a competitive edge is gained against competitors.
One technological innovation strategy/solution in detail for the incumbent to re-emerge in the
new market
After carrying out effective research, Uber uses the results to solve problems with the
proper use of artificial intelligence. This is because it can be applied in different uses which can
include improving traffic within the cities as well as helping compute ETAs or estimated time
arrival. Artificial intelligence is also a great solution for developing self-driving cars. There are
many areas of artificial intelligence that the company uses like machine learning, in order to

enhance the overall experience of transportation among riders (Science at Uber: Improving
Transportation with Artificial Intelligence, 2020). Not only this, artificial intelligence also allows
different teams like engineering and data science to make informed decisions.
This further helps in improving the overall experience of users and these different
artificial intelligence techniques allow the company to expand its business across different
verticals. Apart from this, implementing artificial intelligence within the system has helped Uber
in satisfying the increasing demands of customers and providing them pick-up experiences that
are more seamless. Uber has a special artificial intelligence team that is dedicated towards
working on projects on back-end in order to improve the overall accuracy, coverage, speed as
well as the vehicle locations on the company’s platform (Uber AI in 2019: Advancing Mobility
with Artificial Intelligence, 2020). Also, innovations in GPS can help the riders to track the
locations of their drivers more precisely.
Innovative and technological components of this solution and if it is a sustaining or disruptive
innovation
Artificial intelligence has various components like learning, reasoning, perception,
problem-solving and language understanding (Hall and Williams, 2019). Learning in the
simplest form can include trial and error. Other components of artificial intelligence include
hardware, database, framework etc. Artificial intelligence has become one of the most important
aspects within any organization and incumbents like Uber can come up with innovation in their
service. Reasoning is another component of artificial intelligence which refers to drawing
inferences that are appropriate to the current situation. Sustaining innovation helps in improving
the existing products and services of an organization. On the other hand, disruptive innovation
can be defined as an innovation that creates a new market and gradually disrupting an existing
market.
Artificial Intelligence is one of the most important disruptive innovation as it also
includes blockchain. It can also be used to improve the overall experience of the riders. Uber can
apply disruptive innovation to its current services. This is because it can also help in
understanding the different areas that can be improved, an opportunity that exists in the form of
customer needs. The incumbents will get an opportunity to create a new market. This will be
beneficial for the company and they will be able to disrupt an existing market. Therefore, these

are some of the technological and innovative components of artificial intelligence that
incumbents can use in order to re-emerge.
Ways to measure the effectiveness of the solution
Artificial intelligence has become an important component for all incumbents that want
to re-emerge and gain a competitive advantage against others in the market. Once it has been
implemented within the system, it is important for the organizations to measure the effectiveness
of the same. One of the ways of measure the effectiveness of artificial intelligence is to analyze if
the problem that the company has decided to solve is being addressed efficiently or not (How to
Measure Success of an AI Project, 2020). This can also be done by analyzing if the needs of
customers are being addressed effectively and if there has been an increase in the overall
customer base has increased.
Implementation of artificial intelligence cannot be successful if the users have been
having a bad experience. Artificial intelligence is basically implemented to improve the overall
experience of the customers and if they are not satisfied, it means that their problem has not been
solved and the solution has not been successful (Kittner, Lill and Kammen, 2017). Therefore, it
is important to define objectives that are not only clear but can also be obtained efficiently. The
effectiveness of the solution can also be measured by asking for feedbacks from the customers
and then analyzing the same. This will help the incumbent company in determining the overall
success of the project. And this should be made a regular practice to maintain the position in the
market.
Identify potential difficulties that might be expected for the implementation of that solution
There can be various difficulties that incumbents like Uber and Wheely can come across
while implementing artificial technology in their system. The first and foremost difficulty that
the organizations can come across is related to data, which means that there is a heavy amount of
customer data that is available in the market. Therefore, there is a need to analyze the same and
draw results. This can pose a difficulty wherein the companies will have to understand and
implement different tools and techniques before implementing artificial intelligence (Lynd and
et. al., 2017). There can be some parts of data that are missing and are difficult to access.
Another difficulty is the lack of required skills among the employees of the company. It
is important for incumbent organizations to hire people who have an expertise and proper

knowledge of how artificial intelligence can be implemented in order to attain the desired results.
Companies that have a limited budget may find it difficult to do so. Cost is another difficulty
because the soft wares for artificial intelligence are expensive and not all companies can
purchase the same. Development, deployment and maintenance of AI soft wares involve a lot of
costs and can prove out to be quite out of the budget (Santoro and et. al., 2018). If an
organization fails to deploy storage, data handling, scaling etc. effectively, it can pose difficulty
during implementation.
CONCLUSION
From the above report, it can be concluded that there can be different incumbents that
struggle in the market for their share as well as position in the market. This is because they face a
lot of competition from different challengers who offer similar products at competitive prices.
They can either similar products or innovations in the market which attracts a lot of customers.
Apart from this, there can be various difficulties that organizations can come across while
implementing specific solutions in their systems so as to re-emerge in the market and gain a
competitive advantage against them. When the solution is implemented, it can be measured
through various strategies.

REFERENCES
Books & Journals
Acs, Z. J. and et. al., 2017. National systems of innovation. The Journal of Technology Transfer.
42(5). pp.997-1008.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation (Vol. 11). Routledge.
Evangelista, M., 2019. Innovation and the arms race: How the United States and the Soviet
Union develop new military technologies. Cornell University Press.
Hall, C. M. and Williams, A. M., 2019. Tourism and innovation. Routledge.
Kittner, N., Lill, F. and Kammen, D. M., 2017. Energy storage deployment and innovation for
the clean energy transition. Nature Energy. 2(9). p.17125.
Lynd, L.R. and et. al., 2017. Cellulosic ethanol: status and innovation. Current opinion in
biotechnology. 45. pp.202-211.
Santoro, G. and et. al., 2018. How SMEs engage in open innovation: a survey. Journal of the
Knowledge Economy. 9(2). pp.561-574.
Schilling, M. A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Van de Ven, A. H., 2017. The innovation journey: you can't control it, but you can learn to
maneuver it. Innovation. 19(1). pp.39-42.
Online
Four Methods of Competitive Advantages. 2020. [Online]. Available through:<
https://smallbusiness.chron.com/four-methods-competitive-advantages-32344.html >.
How to Measure Success of an AI Project. 2020. [Online]. Available through:<
https://www.gflesch.com/blog/ai-project-success>.
Science at Uber: Improving Transportation with Artificial Intelligence. 2020. [Online].
Available through:< https://eng.uber.com/improving-transportation-artificial-intelligence/
>.
Uber AI in 2019: Advancing Mobility with Artificial Intelligence. 2020. [Online]. Available
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aa18f1d38efe>.