Question

Identify markets in which actual sales and growth was less than expected. Why was that the case? What would you say was the most important reason that the bottom fell out of the dot-com boom? Why did all the B2B sites emerge, and why did they collapse so suddenly?

Answer 1

In the year 1974, the electric utility companies in the USA has a plan to increase the generation capacity by two-fold till the mid-1980s as they were expecting an annual increase in demand of 7%. This kind of forecasting is quite important for these organization as if the firms need to meet the future demand then they must focus on establishing the production units from now as it will take a lot of tie for the construction of production units. But in actual since there was only an increase of 2% in the actual load. Due to much postponement and cancelling the different projects, the financial position of the industry was really hit badly and he resulted in higher customer rates.

The main feature of the Dot-Com bubble which was witnessed during the era of the 1990s and early part of 2000s is newly developed technology which resulted in the creation of new markets which has a number of potential products and services and lots of investors were attracted towards this industry with the expectations of having greater return on their investments and almost all the entrepreneurs were surprised and blindfolded due to early success. The main reason of this crash was that the potential of the industry was not based on some real and hard facts, in fact, all the decisions related to investments were based on speculations and no research was made. In fact, most of the investors invested in those firms which were not having any kind of real business and this resulted in the fall of the market.

Once the market crashed, both the investors and the companies took a more cautious path while investing in the new technology ventures. We can notice that due to present increase in the popularity of mobile phones, smart watches, tablets and so on, the investors are again looking to have infinite possibilities and the success of some recent tech IPOs has given the hope to an altogether new generation of companies which are looking to capitalize this emerging opportunity. But the million dollar question is whether this time again some kind of wisdom will prevail among the investors or not.