What threat of substitutes might BMWs internet encounter?
ANS: D’Aveni’s Hypercompetition model fits the automotive industry because competitive advantages produced by the automobile industries are “rapidly created and eroded”. For example, in the case of BMW’s R&D new introduction to use Internet Protocol as the network for their future vehicles, BMW will be creating competitive advantage over its competitors because they “would be the first ones to have implemented IP technology in their cars”. Consequently, this rapid technological advantage by BMW will create disruption to its competitor’s position and advantage for BMW. On the other hand, once competitors have duplicated or outsmart BMW’s technology, BMW’s competitive advantage will be eroded and it no longer would be an benefit for BMW, but a cost of doing business.
