Network Effects Are Characterized by a Positive-Feedback Loop, Where the Biggest

question 29

Multiple Choice

Network effects are characterized by a positive-feedback loop, where the biggest networks continue to grow bigger. What implication does this positive-feedback loop have on network markets?

• A) Formation of alliances to counter the growing influence of dominant firms
• B) Early, fierce competition between rivals
• C) Loss of revenue for market leaders due to arrival of new entrants
• D) Emergence of several firms that constantly swap market dominance
• E) Shrinking of market size due to the ambivalent nature of competition

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Definitions:

Divisional Structure

An organizational framework divided into semi-autonomous units or divisions based on product, service, market, or geography.

Similar Customers

Individuals or organizations with comparable needs, interests, or characteristics, targeted by businesses offering tailored products or services.

Geographic Region

An area defined by natural or artificial boundaries characterized by specific physical, economic, cultural, or political conditions.

Divisional Structure

A type of organizational structure where operations are divided into semi-autonomous units or divisions based on product, service, market, or geography.