During the 1970's a there was a great increase in the rise of entrepreneurs .Though entrepreneurs are better at what they do but they had to face challenges continuously due to the dynamics of the business. The low profit companies moved up the middle market and finally challenged the already established companies at the top end. By the time managers of the establoshed companies are ready to act, the problem is that it is usually too late.In the 1970 ‘s the makers of the 14 inch disk supplied manufacturers of main frame computers on a large scale. When new disk drive companies designed the 8 inch dives, manufacturers of 14 inch drives asked their customers whether they were interested in 14 inch drives. The mainframe computer manufacturers refused to buy them and preferred 8 inch drives. The 8 inch drive manufacturing companies sold products instead to new generation of minicomputer makers, including Digital Equipment and Wang. These companies became the new success.
The rise of Internet turned out to be the biggest challenge and affected the profits of certain companies on a big scale.The bookstore Barnes and Nobles, the office supply chains staple and other companies followed Christensen's advice in addressing the challenge from the Internet, the greatness disruptive technology of the past decade. The set up of a separate dot Com businesses designed to disrupt the established organizations from the outside. The bursting of the dot Com bubble, however, eventually poked holes in the strategy. As the stock prices collapsed, it reminded managers of why they cared about the profit margins in the first place, to guarantee that they had enough cash to be in business tomorrow. Staples former CEO Tom Steamer remarked that setting up Staples dot Com sector was his biggest mistake in the Internet retailing that had ever happened.
In the 1980's, certain groups of companies were swept aside as the personal computers became the rage. The pattern was the same as before the companies Digital and Wang saw the personal computer coming, yet their customers did not want the new technology. By the time the personal computer rose to challenge them at the high end of their business, it was too late. Christensen’s thought enjoyed enormous popularity in the late 1980's as the Internet grabbed severeness because of it reach and turned out as a great challenge for the already established companies. His thoughtful analysis seemed to explain why it was a smart act to gamble on companies that might generate big profits in the future, even though they where currently in the low profit sector among all the companies. Unlike many management theorists, Christensen had the specific advice for the long in the tooth companies and said that they should set up a separate corporate that could operate out of the existing rules.
Through a detailed analysis on dynamics of a business it was found that, unfortunately, the desire for short term returns can be the undoing. The fattest profit margins are usually at the top, so customers willing to pay a high margin for a superior product become the main focus. The lower margin business at the bottom end receives less and less attention. Yet the greatest threats usually come from the bottom—the very segment established groups are not interested in guarding and there is the starting point for failure. Challengers are able to mount an attack on companies and the become the weakest flank. A disruptive technology is born when someone invents a way to do something more simply and cheaply and they turn out successful with their business strategy. Major innovations often do not work very well when they are first introduced but they are successful in the long run. The top end customers do not want them because they are a threat in business.
