Fashion Fair Corp.,the first mover in the "all-year discount" stores market,lost its market share to a late entrant,Brand Fair Inc.Brand Fair operates its discount stores solely through the Internet,which saves a lot of expenses.Fashion Fair has been unable to replicate this strategy by adopting the online store business model due to its existing contracts with suppliers and heavy investment in retail stores.Fashion Fair has been experiencing:
A) incumbent inertia.
B) monopoly rents.
C) path dependency.
D) technology attrition.

Question

Quizplus · Accepted Answer

Fashion Fair Corp. is facing incumbent inertia, which refers to the tendency for established companies to stick to their existing strategies and structures even in the face of changing market conditions. Fashion Fair's existing contracts with suppliers and heavy investment in retail stores prevent them from quickly adapting to the new business model of online discount stores.