Fashion Fair,the first mover in the "all year discount" stores market,lost its market share to a late entrant-Brand Fair.Brand Fair operated its discount stores solely over the Internet,which,in turn,saved a lot of expenses.However,Fashion Fair was unable to adopt the online store business model due to its existing contracts with suppliers and investment in a physical infrastructure.This is an example of:
A) incumbent inertia.
B) monopoly rents.
C) path dependency.
D) technology spillover.

Question

Quizplus · Accepted Answer

The situation described is an example of incumbent inertia, which refers to the difficulty that established firms have in adapting quickly to changes in their industry or market. Fashion Fair was unable to adopt the online store business model due to existing contracts and investments in physical infrastructure, which likely hindered its ability to respond to the rise of e-commerce competitors like Brand Fair.

Fashion Fair,the First Mover in the "All Year Discount" Stores