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The dynamics of a fledgling high‐technology growth market: Understanding and managing growth cycles
Author(s) -
Morecroft John D. W.
Publication year - 1986
Publication title -
system dynamics review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.491
H-Index - 57
eISSN - 1099-1727
pISSN - 0883-7066
DOI - 10.1002/sdr.4260020104
Subject(s) - reputation , system dynamics , market structure , industrial organization , dynamics (music) , growth model , diffusion , duration (music) , economics , computer science , microeconomics , literature , artificial intelligence , art , social science , physics , sociology , acoustics , thermodynamics
This paper presents a system dynamics model of the fledgling market for automated storage and retrieval AS/RS systems based on a case study of a leading firm in the industry. The model examines how marketing effort, capacity expansion, and industry reputation interact to produce growth cycles of eight to nine years' duration in demand and capacity for AS/RS systems. A series of partial model simulations is used to explain how the growth cycles are generated by the feedback structure and behavioral assumptions of the model. A policy experiment is presented to show how a mature firm in the industry can influence the growth cycles to improve its financial performance. Finally, the feedback structure governing market diffusion and capacity expansion is generalized to other high‐technology products and markets.