This is because smaller competitors and especially those that intend to enter the market addressed by IBM find it at least difficult to provide product prices in accordance with those provided by IBM. These smaller companies do not have the ability of reducing their production or operating costs, which does not allow them to introduce competitive prices on the market. This way, they are clearly disfavored by IBM's position and market power.
In addition to this, in a field like it, it is imperative to make continuous investments into the research and development activity. This requires significant capital amounts from these companies. The investment levels that IBM reaches cannot be reached by many of these companies. This makes it difficult for these companies to keep up with IBM and its products and services. IBM is moist of the times at least one step ahead of its competitors because of its capacity of investing large amounts of capital in innovation of products and services that create new needs of customers.
Also, technological developments have become extremely important for all business sectors, but they are mostly important in the it sector. IBM has almost become a synonym with technological development. In other words, the company establishes very high technological standards that must be met by competitors too in order for them to maintain their competitiveness on the market. While these competitors must invest important financial resources into these technological development, instead of focusing on other areas, IBM is able to maintain its focus on reducing production costs that its competitors cannot do.
In addition to these barriers that derive naturally from the strong position and market power of IBM, the company is accused of implementing a series of actions and activities intended to limit its competitors' activity on the markets addressed by IBM. The European Commission investigates the fact that IBM has apparently used its dominant position on the market in order to limit or deny the access of certain competitors to spare parts that IBM is the only source for. This way, IBM intended to keep some of its competitors from addressing the market (O'Gara, 2010).
IBM is also under the investigation of the Justice Department in the U.S. The company is accused of antitrust activities, mainly of preventing its competitors of purchasing certain types of software and other supplies. IBM has denied the accusations (Koppel, 2009). As mentioned above, IBM is the subject of two European Commission investigations, which means that the company has engaged in several anticompetitive activities (Kawamoto, 2010).
Conclusions
The market conditions that international institutions want to be met by companies addressing these markets become more and more often the object of investigations of companies that have...
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