MP3 / MD740 Strategy
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Transcript of MP3 / MD740 Strategy
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MP3 / MD740Strategy & Information Systems
Nov. 3, 2004
Technology & Industry Competition
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Topics Covered
• Strategy & the Internet – a critical look
• Tech’s impact on the five forces of industry competitiveness
• Recognizing competitor threats
• Information Systems and dealing with competitor threats– Readings discussions on mass-customization,
brand, and scope, among others
• Buyer / Supplier power
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ICA: Industry & Competitive Analysis
(Porter’s Five Forces)
Industry Competitors
Potential New Entrants
Substitute products or services
Power of Suppliers
Power of Buyers
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Value Chain
Inbound Operations Outbound Marketing Servicelogistics logistics & Sales
Infrastructure: general mgmt, planning, finance, ISHRM: recruiting, hiring, training, and developmentTech. Development: R&DProcurement
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Competitor related threats– Growth industry w/above average profits– Fragmented industry - no clear leader / national brand– Low startup costs– Lack of scale economies– Low differentiation– Weak brands / low customer loyalty– Low customer switching costs– Available distribution networks– Technology & Regulatory shifts– Similar products/services/industries exist
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Addressing Competitive Threats– Economies of Scale– Differentiation– Scope / Multiple Business Lines / Slack Resources– Develop / Strengthen Brand– Proprietary technology, learning curve/know-how, geography– Contrived Deterrence
• over-capacity, pre-announcements
– Government Regulation– Switching Costs and Network Effects– Create / secure distribution channels– Alliances (with complementary firms & competitors)
The Role of Timing
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IS as an Enabler
• IS resource yields competitive advantage– (ex. Alcoa)
Competitive Advantage
Scale, World-leading mfg. & sales
Integrated IS across plants / offices
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Creating / Enhancing Resources• Created when resources combine for additional benefit.
– e.g. embedded technology
Competitive Advantage
Service Network
Monitoring IS
R & D
Superior Service/Switching Cost/
Inventory Efficiencies
Superior Products
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Google Revenue Streams
AdWords
AdSense
Google Search Appliance
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Google(GOOG)
Yahoo(YHOO)
eBay(EBAY)
Net incomelatest four quartersin millions
$222 $542 $715
Market cap(10/26/04)
$63.0 $49.8 $47.7
Source: Fortune, Nov 15, 2004
Comparing Google
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Supplier related threats
• Small number of suppliers• Suppliers sell highly differentiated products• Suppliers not threatened by substitutes• Cost to switch suppliers is high• Firm is not an important customer for
suppliers• Suppliers threaten forward integration• Information asymmetries
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Addressing the supply-side
• Foster relationships with more suppliers• Acquire & leverage information• Lower switching costs
– Lower product complexity - turn supplier products into commodities
– be less dependent on a given supplier
• Integrate backwards• Tightly integrate suppliers into your operations
– make suppliers more dependent on your firm
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Reduce Switching Costs & Enhance Choice
Firms have a greater choice of suppliers
Firms arelimited to a
few suppliers
SWITCHING COSTS
LOW HIGH
Information Systems
ExamplesEDI, WebServicesComputer Aided Design (CAD), Computer Aided Engineering (CAE), Computer Aided Manufacturing (CAM)Integrated Robotics
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Buyer related threats
• Small number of highly influential buyers• Buyers purchase commodity products• Products sold to buyers consume a high portion of
the product’s final cost• Buyers are not earning significant economic profits• Buyers threaten backward integration• Information asymmetries
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Addressing the buy side• Seek or create new buyers / new markets• Acquire & leverage information• Reduce buyer costs / assist buyer in expanding
markets• Differentiate products• Tightly integrate with buyers• Integrate forwards
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Differentiating Products
Commodities DifferentiatedGoods
LEVEL OF CUSTOMIZATION
LOW HIGH
ExamplesCustomer-driven Ordering SystemsMass-customization SystemsJust In Time (JIT) Manufacturing Systems
Information Systems