MODELING AND SIMULATION OF THE COMPETITIVE DIFFUSION OF MULTIPLE GENERATIONS OF PRODUCTS: AN APPLICATION TO THE STRATEGIC ANALYSIS OF COMPETITION BETWEEN TWO SOFTWARE FIRMS

摘要

Modeling and simulation constitute a cognitive approach which is well-founded theoretically and methodologically to address the understanding of various complex phenomena of enterprise management. This paper takes up recently published works that propose formal models to represent the diffusion of products under different conditions. The starting point is the Bass model of diffusion of new products, with the improvements mat have been built to date; on this basis, we develop a simulation model that incorporates competition between firms for the potential market with multiple versions of substitute products; network externalities; pricing strategies; and the effects of investment in innovations activities. The specific phenomenon of analysis of this study is the competition between a software company from a developed country which is already established in the market, and a late entrant firm that belongs to a developing country. The special characteristics of production and market dynamics associated with software products, as well as the peculiarities of the types of competing firms, lead to new developments in the simulation model proposed, compared to those described in the literature. The model simulation runs allows us to identify development trajectories mat can be induced by strategic decisions in an environment in which comparative advantages either support or restrict the competitiveness of companies. The simulations suggest mat, if a late entrant firm has sound strategies for building its innovation capabilities, then its production costs might decrease, the number and timing of competitive product versions might increase and the network effects of its products might strengthen its market position. The study also reveals the potential of simulation for strategic analysis in the case of competition between software firms with different market entry order and under different conditions of innovation capacities. From these analytical possibilities, it is feasible to explore the confluence of public policy and business strategies that create advantageous competitive scenarios for software firms from developing countries mat enter late the international market.