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The Internet has disrupted many industries, thus opening myriad opportunities for Internet-based companies to challenge “bricks & mortar ” incumbents. has parlayed its Internet expertise to compete very successfully against traditional “bricks & mortar ” book retailers such as Barnes & Noble, and Borders; Priceline has leveraged its e-commerce patents and business model to challenge the incumbent travel agent industry. Thus, the pure Internet plays are very well-positioned to leverage the Internet to overwhelm their incumbent competitors who are locked into their “bricks & mortar ” channels. However this is not necessarily true for all industries. If an incumbent can update its business model and supporting organizational infrastructure, it can successfully leverage the Internet just as effectively as the pure Internet companies to meet customer needs. How then can an incumbent respond to the competitive changes enabled by disruptive innovations? This case study examines the discount brokerage Charles Schwab that has been able to successfully leverage the Internet to become a “clicks & mortar ” competitor, while the full-service brokerages are encountering difficulties in doing the same. The case study traces the evolution of the retail brokerage industry prior to 1975 up till the current Internet-driven marketplace. The case study examines th

Year: 2011
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