Strategic Management Study Guide FINAL

8/18/2019 Strategic Management Study Guide FINAL

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`Strategic Management Study GuideQuestions For Professor

1) Uber and Lyfta. Do they have CA’! b. Are they utainab"e!c. #$o ided mar%et!

i. &t i not c"ear right no$' but if one get a mono(o"y through thi ubidiation' one cou"ddeve"o(

d. *o$ i it a t$o ided mar%et!i. +inner ta%e a""

1. +hat are (oitive net$or% effect' and $ho i the ide $ith the high mu"ti,homing cot!

Margina" cot may decreae-ou gain va"ue from more uer' and then more driver' "i%e a t$o ided mar%et' o benefit off gro$th of both uer.#hey benefit& +# higher than cot! Uber i right no$ "ooing money#oday i /ut the tarting (oint' a +# may be much higher but they $ant a mono(o"y&t i not c"ear that they are creating va"ue0ut $e do not %no$#ai mar%et i regu"ated' it fai" at ome (oint' and rate i fied

Su(("y i fied2uetion for #atiana1) &ndutry fact from (rofeor for 0ergerac3) Gra(h for im(ediment of CA

Lecture 14:

Game #heory4 +e ue game theory a a too" to (redict outcome in ituation $here agent interact and affect eachother’’ (ayoff $ith their choice.

Decision problems with no interactions (single-agent optimization):

1. Conumer maimiing uti"ity3. 5irm chooing in(ut to minimie (roduction cot6. Mono(o"it chooing a (rice

7. 5irm chooing 8uantity in a erfect"y Com(etitive mar%et

Problems with strategic interactions:

1. Co%e deciding (rice of a can3. A(("e chooing feature to add to ihone 96. :erion deciding $hether to enter the Canadian $ire"e mar%et7. ;(rice (ace and9. (ortfo"io?. Mar%et entry deciion@. Com(any deciding bid for 5M broadcat auction by 5CC

trategic !hin"ing: ever aume that your o((onent’ behavior i fied. Bey i to (redict their reaction to your

behavior.


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b. Se8uentia" move*% +ature of conflict

a. e(eated b. Sing"e,Shot Game

Aum(tion About Game41. ationa"ity3. Common Bno$"edge

+ash ,uilibrium: &t i the et of trategie uch that' ho"ding the trategie of a"" other ("ayer contant' no pla#ercan obtain a higher pa#off b# choosing a .ifferent strateg#%

Dominant trategies: trategy that (roduce a higher (ayoff than any other trategy the ("ayer can ue for every (oib"e combination of it riva".

/est 0esponses: trategy that maimie a ("ayer’ (ayoff given it be"ief about it riva"’ trategie

,liminate .ominate. strategies first

1. &f you can find a ing"e o"ution uing dominant trategie' thi i a ah


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#he %ey $ith e8uentia" move i you firt figure out bet move for American $hich i H9' then figure out $hat betmove i for United a they have the net move or after (in% moment).

ubgame4 A"" deciion that ("ayer ma%e ube8uent"y are made given the action a"ready ta%en and the

corre(onding ("ayoff.

#he $ho"e game i a ubgame o Se8uentia" S


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threat i credib"e4 if you donKt e""' &Km committed to bui"ding the e$age ("ant. Since you %no$ thi' you no$ havean incentive to e"" me your "and in order to eca(e it ruination.

5irt mover ha advantage

Commitment i41. *ard to revert3. Long,term im(act6. Mut be

a. :iib"e b. undertandab"ec. credib"e

Sometime' bet $hen inf"eib"e' or tying your hand

5irm ue commitment trategica""y a"" the timerice Matching guarentee&nvetment in ne$ techno"ogy


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artels4Are a grou( of firm that e("icit"y agree to coordinate activitie

1. #hey do thi in term of 8uantitie' 8ua"ity' and (rice

The legality:

Co""uion i "arge"y i""ega" in the United State' Canada and mot of the antitrut "a$' butim("icit co""uion in the form of (rice "eaderhi( and tacit undertanding ti"" ta%e ("ace.

Examples:

;


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A Mot,5avoured,Cutomer C"aue M5C) i a contractua" arrangement bet$een com(any and cutomer thatguarantee the cutomer the bet (rice the com(any give to anyone. #he M5C (revent a com(any from treatingdifferent cutomer different"y in negotiation.

&f & go "o$ a 5irm 1 then & $i"" have 6N more cutomer than firm 3' but o$e 6N cutomer refund from the "atround ma%ing it not $orth going "o$' a va"ue i $ore no$ com(ared to firm 3.

&t ma%e ure that you chooe high high.

A the net "ide ho$' M5CC i a (romie to %ee( (rice high. A net round' & $i"" o$e 6N cutomer refund.


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5irt eam("e i not $ith M5CC' but econd inc"ude cot of refund cauing 9N'9N to be o(tima".

#hi e("oit cutomer (rice a$arene' enitivity' and "o$ $itching cot $hich i $hat ma%e (rice com(etitiono bruta".

Mut be done by one (arty' you can match but not over,reta"iated


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Mut %ee( com(etitive reaction (rivate' and mut have "egit /utification for (rice cut' (rice increae' hand"ing rea""y $e""

C"ear (ricing tactic $ith attorney.

L+ 1& ustaining ompetitie $.antage

Competiti!e ad!antage: 5irm’ abi"ity to out(erform indutry

#he CA i utainab"e if it (erit de(ite com(etitor’ effort to du("icate it or neutra"ie it.

Examples: Coca Co"a' +a"t Diney' 0M+' ;ti' 5aceboo%

Eroded ones: A(("e 1HH?)' Microoft' De""' and Sony

"easons it is not easy to sustain C#:

1. Mar%et tructurea. interna" riva"ry can be (rob"em)

3. &mitation and innovation6. Change to "andca(e

Perfectl# ompetitie D#namic

#he above "ine are u(("y ide.

A"" firm move to$ard tangency $ith (erfect"y com(etitive mar%et $ith cot"e imitation and free entry. rofit;A) $i"" converge $ith cot of ca(ita" in thi ituation.


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#he "ine i u(("y ide

Dennis 7uller tu.#

found that "o$ ;A and high ;A manufacturing firm' ta%ing a tudy of 9NN' $ou"d move to$ard each other. Sti""high ;A and "o$ ;A firm do not converge to a common mean.

$ustaining competiti!e ad!antages

1. eritence in difference in reource>ca(abi"itie $ith com(etitor3. &o"ating mechanim

a. &m(ediment to imitation b.


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#he ("ayer are thee reource $hich erve a a CA.


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Some good ma%e u( a Tvirtua"T net$or% of uer' meaning that a"though actua" connection do not eit amonguer' virtua" connection eg' information and com("ementary good hared among (roduct uer) do eit. Goodin virtua" net$or% tend to e(erience indirect net$or% effect. 5or eam("e' conumer donKt va"ue the Microofto(erating ytem /ut becaue a great number of (eo("e ue it. *o$ever' a more (eo("e ue +indo$' morecom("ementary good become avai"ab"e eg' oft$are a(("ication).

,3amples

Com(uter ;S' :ideo Game cono"e' Beyboard o actua" connection' but va"ue added by more (eo("e uing it

et$or% good evo"ve around tandard

Two key questions with this are:Shou"d a firm com(ete for the mar%et' or in the mar%et!& it (oib"e to to(("e eiting tandard!


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i. +ho rea" buyer iii. +hat doe the buyer $ant

iii. +hat are they $i""ing to (ayiv. *o$ uccefu" are com(etito ar fu"fi""ing cutomer needv. *ard (art4 narro$ing cutomer need to ma"" roter

d. *orionta" differentiation4 va"ue (roduct different"y & "i%e non fiction you "i%e nove")e. :ertica" differentiation cutomer agree on $hich (roduct i better' buf dffer ho$ much they $i""

(ay)i. e(one i egmenetation of cutomer $ho hare (reference and ana"ye +# of

egmenet1. Some even argue to$ard ma cutomiation

f. Limit4i. May be difficu"t to ma%e (recie

1. Mar%et reearch tehchni8ue he"( 8uantifyii. Leary of thoe on ne$ (roduct or one need they do not even rea"ie they have yet

=. Ste( 74 5ind $ay to bui"d $edgea. Conider com(etitor reaction' $hat drive com(etitor b. Mot thin% about a (roduct' but hou"d thin% about fu"" range of activitie

i. Dra$ not /ut one va"ue chain' but cutomer chainc. &n ra(id change' give b"eeding ege cutomer (ecia" attention

i. -ahoo giving o(hiticated cuer a tet veriond. ;ne $ay to increae $edge i by increaing co(e of o(eration either via vertica" integration or

horionta"9. Ste( =4

a. 5ina""y go bac% to "oo%ing at the $ho"ei. Many time mut change activitie in uniion

ii. ;n"y o many choice' but a "ot of interactaction of choice

L+ 1 ;us"# 'n


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5our area they ave are4

1) urchaing e(ene

3) ein (er year

6)


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b. #hey have "o$er (rice' even if "o$er e(ertie

6) arro$ range of (roduct

a. ?NV of revenue from


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#hey cut cot' cut 3 "ayer of hierarchy' decentra"ied deciion ma%ing' and Aian e(anion

Shou"d have focued on +# advantage due to cot aving by continuing to bui"d D a $e"" a conveying added

va"ue intead.


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2uetion to (re(

o 1. What is usky!s "trate#y$

%ncredible technolo#y

&har#e a price premium

'er a ull srice

o *. Are usky in+ection moldin# systems worth the premium price the company char#es$ &an you

perorm a quantitatie relatie WT, analysis$

o -. What has caused usky!s current (1/) diiculties$

0isprediction o demand or resin

ntry o new player with similar technolo#y at lower costs

% 'n.ustr# tructure

Characteritic4

1. #echno"ogica""y (rogreive

3. Cyc"ica" indutry

6. Ue of ("atic i gro$ing

7. Large ditribution of return $ith indutry

=. 0ut in genera" indutry (rofit are "o$' though *u%y ha high ;


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'+ ,old - competiti!e

+ ,achine - less competiti!e

.+ /n general0 there are lo profits

1+ /s it possi2le to ha!e C# in the industry

2es throu#h dierentiation in the orm o eiciency3 and talk about usky 4'3

eladin# to hi#h proits3 and WT, is hi#her. Thou#h we do not know costs3 we know

WT, hi#her3 and 4' hi#h3 which means WT, hi#her.

'r we could ar#ue we do not know costs3 as WT, is hi#her. We can make an

inerence or say we do not know.

,rocessors (car makers3 ood packa#in#3 cellphone 5 downstream manuacturers 5

are hetero#eneous (some may care about quality3 some may care about prices)) buy

equipment rom manuacturers like usky to conert resin into products

0achine 6usiness

&onsolidated

6arriers to entry (reputation3 dedicated actory3 0" 788

machines9year)

6uyers: processors (price sensitie3 low switchin# costs3 contract

throu#h biddin#)

"uppliers ("teel3 hydraulic controls)

0old 6usiness

ra#mented (small shops)

;o barriers to entry

"uppliers (skilled labor 5 black art)

ot 4unners

4obotics


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Value added "erices

o roceor buy e8ui(ment from manufacturer "i%e *u%y to convert

rein into (roduct

Machine buine

Mo"d buine

*ot unner

obotic

:a"ue added ervice

o #hey have in/ection mode" ytem

o &ndutry characteritic

#echno"ogica""y (rogreive indutry4 many (roduction (rocee' many (roduct c"ae

and heterogeneity in buyer

Cyc"ica" indutry W de(end in the (rice of rein $hich de(end in the (rice of oi"

Since they are not diverified' they are vu"nerab"e to ban%ru(tcy in the

do$nturn

Ue of ("atic i gro$ing

Large ditribution of return $ithin the indutry

#here i room for differentiation and ome ("ayer can ma%e a "ot of (rofit "i%e

*u%y

o Ue rein that $i"" become ("atic in/ect into the mo"d' %ee( under

(reure' coo" do$n and ma%e the (roduct

Some com(anie on"y do thi need machine to $or% and have (roduct at "o$ cot and

a"$ay avai"ab"e)

Machine to in/ect rein into the mo"d

o *u%y doe the machine and the mo"d

#hey he"( cutomer deign the entire ytem

Cutom baed o"ution


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#hey have higher va"ue added than com(etitor

#hey are not the bigget ("ayer' but have good re(utation and and ma%e the bet (roduct

ed3 so re#ional mana#ers hae more control

Technical back#round3 products are custom made

,roduction o molds

Very mechanised


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'pposite o how they produce machines

They are ery eicient

&an en+oy economies o scale

1. ;(eration , aemb"y of cutomied machine in /ob ho( etting' mo"d o(eration are

automated

3. Sa"e and Service , em("oy re(reentative g"oba""y' ame genera" manager that

rotate bet$een a"e and ervice o they can "earn the technica" %i"" and rea""y

undertand the (roduct

6. #echno"ogy Deve"o(ment , invetment "eader at AMC

7. rocurement

• +# Ca"cu"ation

o What is the most a company can char#e and still make a sale$

o ?nderstand each consumer@s economics: identiy releant customer

costs

o &alculate dollar alue o sain#s associated with each cate#ory

&apital "ain#s

ner#y "ain#s

4esin used per year

,lant "ain#s

o oes usky hae a cost adanta#e or disadanta#e$

o +hen there are more than 3 (roduct' it i inf"uenced by the econd

baed a"ternative


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o OOO #he cutomer $ho $ant to (roduce at ma ca(acity hou"d buy a

*u%y ytem

• +# Ca"cu"ation4


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o e$ cam(u in :ermont

o 5actory to (roduce com(onent in 0o"ton

o Dro( in (rice

o &; in 1HH@

Lecture 1*: cope of orporation

+# for (roduct X i cot of (urchaing econd bet a"ternativeYaving if X i ued intead

1. ;vervie$a% !he trateg# tatement

i. *ave a Long term trategy

ii. Define the co(eiii. Define $hich com(etitive advantage you $i"" achieve and utainiv. reent "ogic for 1' 3' 6

b. :ertica" co(e 0ergerac)4 invo"ve in activitie further do$ntream or u(tream in the (roduct"ine

i. *o$ hou"d $e (erform thoe activitie!c. *orionta" Sco(e Diney)4 firm e(and into ne$ (roduct or ervice

i. roduct and ervice a firm chooe to offer ii. Diverification

% 8rganizing the ertical chain

a. +hat hou"d be the breath of the firm! b. +hat are ome activitie outourced and other (roduced in houe!

c. +hy do $e oberve different arrangement for firm that o(erate in the ame indutry!6. 5u""y integrated4 She""' Chevron'


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v. #o e(enive for u to ac8uire' the admin cot are "e than the negotiating cotc. :irtua" cor(oration4 "imit cae in $hich each e"ement in the vertica" chain i (roduced

inde(endent"y


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d+ Technical efficiency (2uy): maret minus hierarchy

i. A"$ay more efficient for omeone to ma%e itii. #he more (ecific the aet i to u' the tronger the incentive for i to ma%e it but ma%e

more ene to outource due to economie of ca"ee+ #gency efficiency (mae): maret minus hierarchy

i. Cot of getting a good dea"ii. Cot of finding a good u(("ier and negotiating

f% @ is the .egree of asset specificit# A to pro.uce B6 how refine. an. specific is it to pro.uceC

i% #he more (ecific an aet' the "o$er it (otentia" rea"e va"ue or rede("oyabi"ity.Com(anie may be re"uctant to invet in uch aet in a (oor or uncertain economy.

+hen a com(any (urchae a high"y (ecific aet' thi (urchae i conidered a un%cot' ince the aet $i"" "i%e"y not be a"eab"e or ueab"e for (ur(oe other than itintended (urchae.

ii% Aet (ecificity i uua""y defined a the etent to $hich the invetment made tou((ort a (articu"ar tranaction have a higher va"ue to that tranaction than they $ou"dhave if they $ere rede("oyed for any other (ur(oe. +i""iamon 1H?=' 1H@=' 1H@9)argued that tranaction,(ecific aet are non,rede("oyab"e (hyica" and humaninvetment that are (ecia"ied and uni8ue to a ta%. 5or eam("e the (roduction of acertain com(onent may re8uire invetment in (ecia"ied e8ui(ment' the ditribution of acertain (roduct may neceitate uni8ue (hyica" faci"itie' or the de"ivery of a certain

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ervice may be (redicated on the eitence of an uncommon et of (rofeiona" %no$,ho$ and %i"".

g% !he more asset specific6 the lower the effect of .eman. aggregation a firm has

i% &n the abence of (ecific aet' there i no contraint on demand aggregation and thigive eterna" (roduction a coniderab"e edge in achieving "o$er (roduction cot.*o$ever' a techno"ogie become more (ecific' the aggregation of demand fromdifferent firm generate fe$er aving. 6

h% Defining AC a the unit (roduction cot difference for a given demand by the do$ntream firm'i% 8nl# loo"ing at agenc# costs6 there comes a point where it is more efficient to pro.uce in

house


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'ncrease. economies of scope b# sharing resources6 economies of scale b# selling more of same pro.uct6

increase. mar"et power with suppliers or .ownstream channels6 re.uction in cost of international tra.e

potentiall#

;ne of the c"earet eam("e of horionta" integration i 5aceboo%K ac8uiition of &ntagram in 3N13 for a re(orted1 bi""ion. 0oth 5aceboo% and &ntagram o(erated in the ame indutry and $ere in imi"ar (roduction tage inregard to their (hoto,haring ervice. 5aceboo%' "oo%ing to trengthen it (oition in the ocia" media and ocia"haring (ace' a$ the ac8uiition of &ntagram a an o((ortunity to gro$ it mar%et hare' increae it (roduct "ine'reduce com(etition and acce (otentia" ne$ mar%et.

2+ Expand into ne 2usiness units only if the !alue under one roof is larger than independent

c+ 3usiness units should 2e compati2le ith corporate structure0 system and processes

17.


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i. Gra(h $ith a horionta"' y a vertica"' "inear "ine a geogra(hic b. Given that i $hat $e do' ho$ hou"d $e do it!

1H. 5inancia" caea. Adminitrative cot are "e than the negotiating one to get $hat you $ant b. Conider the o((ortunity cot

3N. Strategic caea.


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!he cope of the orporation 0ea.ing

1. #hree dimenion a firm can e(and ona. Geogra(hy' :ertica" va"ue chain)' and (roduct>cutomer horionta")

3. #$o 8uetion to a%a.


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1. 5rig buine $ou"d not do $e"" in "o$ cot refrigerator if they are focued onhigh end (remium (roduct

v. evere "in%age of tarting ne$ buine "eading to reource u(gradec+ 3usinesses

i. Sco(e economie from buine to buine "in%age' or e("oiting ynergy1. Bey i to a% $hether better off in mar%et A by being in mar%et 0

a. Diney i better having theme (ar%' a it further cement (eo("e intocharacter' $hich he"( 0

i. &ncreae +# of (eo("e for toy a $e""3. Can be rationa" to e(and co(e into buine it "ooe va"ue in' if benefit

overa"" cor(orationa. decreae of (rice

ii. C"aic eam("e i GM and 5icher $hich & $ent through a"readyiii. #C condition

1. Durabi"itya. e8uire continuity of tranaction' auction $ou"d not have high

tranaction cot3. Aet (ecifcicty

a. &f aet (ecific then there i high tranaction cot


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6. Uncertaintya. Uncertainty in indutry can caue tranaction cot

7. 5re8uencyiv. A"" of thi "ead that $hen tranaction cot are too high interna"iation :& ma%e ene

f. Agency Coti. eron act in hi bet interet' rather than (rinci(a" or buine)

ii. Mot cot"y $hen em("oyee critica" to firm’ (erformance9. Start from cratch or buy

a. Starting from cratchi. A"" (rofit to firm

ii. &ntegrated to firm $ith cor(orate cu"tureiii. 0ad

1. Can be "o$3. Can fai"

b. Ac8uiitioni. Looe ome money from ac8uiition (remium (aid

ii. ro i it i fat' and immediate acce to reource?. Divet buinee

a. 5e$ $i""ing b. 5e$ ho$ abi"ity to retructure (ortfo"io of buine $ithout (reure

@. 5igure 9 in the caea. +ith buine co(e' interna" organiation cot go u(' reource va"ue goe do$n

i. 5ina""y tranaction cot indene(dent b. A coordination intenity increae' more interna" governance cot occur' and thu u((ort a more

narro$ co(e

Lecture 1 /ergerac ase

eed note for indutry fact1. 0ergeracK net income>a"e in 3NN? E HV3. Gro$ing mar%et demand6. Com(etitive and fragmented u(tream mar%et of ("atic u(("ier (.=)

7. :o"ati"ity in (etrochemica" indutry affected u(("y of cartridge om(onent by Genie#ech and


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o Abai

Com(arab"e to &de but "ight"y more cot effective and eaier to ue

o *e%a

Lo$er end in 8ua"ity and "e innovative

o 0ergerac

Uer friend"y' re8uired no training

rice (oint be"o$ Abai' giving a "o$er cot (er ue choice Gained traction among vet

CA!1. Cot are "o$er than com(etitor cauing (otentia" $edge3. 0ut you do not %no$ +# of the buine6. & $ou"d ay do not %no$

0aed on the buine cha""enge decribed in the cae' hou"d 0ergerac integrate bac%$ard into the manufacture of ("atic cartridge com(onent! &f o' then ho$!

+hat i the economic and trategic cae for the recommendation!


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o +i"" integration of Genietech em("oyee to 0ergerac ytem be mooth

ro4Genietech ha a core com(etence in ("atic in/ection mo"ding5"eibi"ity to e(eriment $ith (roducing ne$ diagnotic techno"ogie

Con4

Ditract management from core buine>(roduct deve"o(mentedundancy in overhead;((ortunity cot of =.?= mi""ion

Strategic ecommendationCartridge a"e de(end on ana"yer a"e' o invet = mi""ion in core buine

S(ecifica""y1. e$ (roduct deve"o(ment3. More a"e>ervice em("oyee6. 5inancia" hedging againt oi" (rice hoc%

Deve"o( com(rehenive ourcing trategy1. &ncreae "eaverage $ith u(("ier for better 8ua"ity and or (rice by e(anding u(("ier bae

o Su((ort ne$ entrant3. Disne# ase

Lecture : !wo i.e. 7ar"ets

#$o,ided mar%et!wo-si.e. mar"ets' a"o ca""ed two-si.e. networ"s' are economic ("atform having t$o ditinct uer grou( that

(rovide each other $ith net$or% benefit. #he organiation that create va"ue (rimari"y by enab"ing direct

interaction bet$een t$o or more) ditinct ty(e of affi"iated cutomer i ca""ed a multi-si.e. platform (7P).Q1R

#$o,ided net$or% can be found in many indutrie' haring the (ace $ith traditiona" (roduct and ervice

offering.


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1. Difference $ith traditiona" mar%et3. Strategie for ("atform

6. Sutainabi"ity of com(etitive advantage

e$ Lingo4

Cro,ided net$or% effect

A t$o,ided net$or% ty(ica""y ha t$o ditinct uer grou(. Member of at "eat one grou( ehibit a (reference

regarding the number of uer in the other grou( thee are ca""ed cro,ide net$or% effect.


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rice a (eron i $i""ing to (ay for a bund"e coniting of t$o (erfect ubtitute $i"" be the one $hich he ue either

of them and hence there $ou"d be no va"ue for a firm to enve"o(e a ("atform $hich act a a (erfect ubtitute for it

o$n offering. *o$ever' there i a va"ue to be created $hen $e have in 8uetion a et of $ea% ubtitute.


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evenue can come from any ide

&nta""ed baed and ti"ting

#here may be ti"ting bet$een

ricing i %ey to generate %ey dynamic

ricing

Subidy ide v. Money Side

ot o re"evant in hared ("atform "e com(etition for the mar%et)

+ho hou"d be ubidied more!

1. rice enitivity ide3. Side that demand high 8ua"ity6. Side $ith no variab"e cot of erving

egative ame ide effect

A negative ame,ide net$or% effect a((ear $hen there i com(etition bet$een u(("ier in an on"ine auctionmar%et or com(etition for date on Match.com.

Mar8uee uer4


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;r being $i""ing to hare ("atform

!he threat of enelopment

Good (ricing and +#A management are needed but not ufficient


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o Com(anie that ma%e money by "in%ing mar%et from different ide of the cutomer net$or%

Uber4 eo("e and Driver

e$(a(er4 eader and advertier

;n"ine recruitment4 Zob ee%er and em("oyee

:ideo game "ayer deve"o(er

+ifi4 Lato( uer and acce (oint

3. "atformo roduct and ervice that bring together grou( of uer

+ To sided !s+ traditional

o #raditiona" you have revenue on "eft and cot on right

#hin% grocery tore

o &n t$o ided

evenue and cot on both "eft and right

Driver ha cot and revenue

Uer ha cot

#hey are "in%ed together through Uber

7. "atform va"ue come from va"ue given to uer on the other ide=. Sucefu" ("atform en/oy increaing return to ca"e

o Margin im(rove a uer bae gro$

o &n traditiona" buinee' gro$th beyond a certain (oint "ead to diminihing return

o Sucefu" ("atform can ue "everage for D' "o$er (rice' and drive out $ea%er riva"

9. Uua""y dominated by a "arge ("ayer "i%e credit card com(anie?. -et they have trugg"ed to utain t$o ided net$or%

o


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Sometime $orth not inc"uding certain uer

&n face of negative ame ide net$or% effect' too much of one uer

Shou"d conider granting ec"uive right to a inger uer in each tranaction

category1% Li%e on"ine car buying ervice attached to one ing"e dea"er

Uer’ brand va"ue

Sometime mar8ue uer can he"( attract im(ortant (artci(antLi%e big buyer "i%e U.S government

;r maybe high (rofi"e u(("ier' "i%e anchor tore in ma""

Can acce"erate gro$th by getting ec"uive (artici(ation

Can be e(enive to do o

o =inner !a"e $ll D#namics

%+ /ncreasing returns to scale can lead to WT# dynamic

2uetion i $hether to fight or hare ("atform

'+ Netored maret is liely to 2e ser!ed 2y a single platform occurs hen the folloing:

Mu"ti,*ome cot are high for at "eat one uer ide

*oming cot com(rie a"" e(ene net$or% uer incur' from o((ortunity

cot to ado(tion' in order to etab"ih ("atform affi"iation1% Uber a(( have "o$ net$or% cot% ;ther ide i $indo$ for o(erating ytem a it i e(enive'

difficu"t to have mu"ti("e o(erating ytem+hen high cot' uer need good reaon to have mu"ti,("atform

+ $ingle platform increases hen same side netor effects are high (users share !ideo

games or softare files)0 or cross side netor effects are high and strong

.+ Neither sides users ha!e a strong preference for special features

&f (ecia" feature $anted' may be differentiated ("atform

D:D ha high mu"ti,homing cot' high cro ie net$or% effect for both

conumer and tudio' and technica" differentiation i moderate;+ Winning the 2attle

eed differentiation

5irt mover advantage can be ignificant but not a"$ay decider

Later mover cou"d $in a they acoide (oitioning error of (reviou ("ayer "i%e Goog"e

Sti"" $ant to get uer a 8uic%"y a (oib"e' urgency i a((ro(riate

@e# is onl# .one if businesses is scalable6 an. fun.ing will be

forthcoming shoul. capital mar"ets turn negatie

1% rone to boom and but va"uation cyc"eo #he threat of enve"o(ment

1% "atform fre8uent"y have overa""(ed uerCan ma%e it attractive for one ("atform to $a""o$ net$or% of other


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Anti trut ti"" in di(ute for ho$ you dea" $ith it

:igi"ence i crucia"

Mut coordinate trategie through firm

Sony ha had troub"e $ith thi $ith it video game' movie' and muic

buine for many year

L+ 1> Disne#

Questions

4o has Disney sustained its success

1. #hrough their brand e8uity [ Mic%ey Moue

a. &mage of the brand4 fami"y' univera"' honet' harm"e , overa"" a conitent brand

3. &nnovation and ri% ta%er

a.


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a. &n movie' made (reentation to home video' conumer (roduct' and theme (ar% grou(

b.


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3.


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d. ;(ened Monday

e. Dieny deve"o(ment com(any

9. Coordination of buinee

a. Synergie to bui"d on each other

b. Media (urchaing together

?. ;ther (ar%

a.


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c. Batenberg

i. 5ocued on (eo("e $ho $ere in career "um( or "e %no$n

ii. Made moderate"y budgeted fi"m $ith financia" bo $here ti"" cou"d be creative

d. #heme (ar%

i. 5ocued on attendance bui"ding and revenue>(rofit gro$th

ii. Ued nationa" te"eviion ad

iii.


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d. +ent big budget $hich did not go $e""

e. evenue in video $ere dro((ing

f. &nternet reu"t $ere uneven

i. *ad to hut do$n Go.com and ubcri(tion ervice $a fai"ure

g. Cot cutting a "ot and e""ing non trategic aet "i%e 5airchi"d

7.


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A"" buinee $ith (otentia" of "ong term (rofitabi"ity

0udget Conciou

#ranfer (ricing for economic incentive

&dentify the $ea%et "in% in the ytem

&dentify reource in big com(anie

Magica" #urnaround4

1.


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;(ened (ar% on Monday

Created retai" tie,in

Added more hote" net to theme (ar%

Coordination among buinee

egotiated interna" tranfer (rice for any activity (erformed by one diviion for

another

Created an in,houe media grou( etab"ihed to coordinate media buying for the

entire com(any

Cor(orate Mar%eting 5unction

0ui"t on each other for ynergie

e$ 0uinee


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0eiew ession

5or e8uentia"' not imu"taneou' you need a tree diagram.

5irt you ma%e the econd mover the right co"umn at end' and firt mover a firt co"umn

5irt do bac%$ard moving and find econd mover bet three move' then find bet move' baed on thoe three' for

the firt mover. #hat i the o(tima" move.

&t i a contingent ("an $hen e8uentia"

&n carte" $ant to maimie indutry (rofit by ta%ing highet (ayment.

Uber Lyft vie$4

Uber and Lyft do not current"y have a CA' but if they gain mono(o"y' then +# i higher

Additiona" eading7icro tars6 7acro ,ffects

1. Macro economit have dreadfu" ta% $ith fai"ure (redicting economy and interet rate3. *o$ever' thoe at Goog"e and Microoft are changing ho$ buine deciion are made

o reton McAfee hired by -ahoo in 3NN?' and no$ Goog"e

1. *e ho$ed t$o (art tariff or higher (rice $hen demand (ea%) cou"d hift time,enitive

ta% to night,time' a""o$ing band$itch cot to be more efficient6. fe$er time' "oe out in hor term

1. 0ut other force in ("ay "i%e more re"evant ad im(rove uer e(erience' and uer number rie Led to more c"ic% of ad

9. Microeconomit are "oo%ing at (rob"em through tech a $e""o Li%e uing googe" earch engine and %ey $ord "i%e /ob offer dai"y chart' even better than month"y

for (o"icyma%er on em("oyment

aming the #stem

1. Student a"" too% N' $hich gave them a"" A’ in Zohn *o(%in c"ao ;ne e8ui"ibrium i no one ta%e tet' and other i everyone ta%e i

1. 5irt one i un"i%e"y due to tremb"ing hand (erfect #he idea i that a mita%e occur one (eron ("ay different

&f one mita%e made for firt' HHV fai"' $hi"e econd on"y one (eron fai"

o rofeor %e(t core but made change "ater

First moer .isa.antage

1. #here i a benefit to being firto Uer get "ating im(reion' earning trong brand recoignition

3.


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1. Can a"o ado(t ne$ and more efficient (rocee and tech' $hi"e other ("ayer may be

entanched6. 5inding $a4

o Signficant a"e advantage for firt mover' but a"o cot diadvantage

o ioneer $ere a"o "e (rofitab"e by mu"ti("e ;& (ercentage (oint

1. 0ig thing i eecutive hou"d be carefu" to ay firt mover "ead to "ong run (rofit advantage

Com(anie More rone #o Go :ertica"

1.


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1. 5urthermore it ha bi""ion in financing' and "ured ome =N engineer from CM

to "aunch r(bot buine3. &t ued money to a"o further ubidie a it ta%e over (ace6. ;ne day $ith mono(o"y cou"d increae +#7. :ery c"ear $inner ta%e a"" menta"ity $here once the dominant and on"y ("atform

they can have a"" the (o$er4 imi"ar to Amaon

c. ;n the other ide' for tudent the mu"ti,homing cot are very "o$ a they have 3'6'7 of theea((' and adu"t are fo""o$ingi. 0ecaue of thi it i eay' "i%e credit card' to have mu"ti("e ("atform

ii. Sti""' if Uber become o dominant that there i /ut o much greater eae' then they $i""

chooe thi return mode"

*u%y Math

Purchasing ,3pense

Dai"y Cyc"e umber4 Average o(erating cyc"e hour (er day>cyc"e time

Dai"y roduction Ca(acityEumber of (reform (er cyc"eOnumber of cyc"e

Do it for hu%y and com(etitor

+#E#hen hu%y>com(etitor get you ratioO com(etitor (urchae (riceE1.67

SavingE1.67 mi""ion,1.3 mi""ion *u%y cot)E.17 mi""ion of va"ue add or aving

aings of raw material

+eigt of (reform for each

*u%y 37.6H

Ma/or Com(etitor 37.73

.N6 aved from *u%y

Dai"y (roduction ca(acity from before)O69= for year"y

#hen mu"ti("y by .N6 gm differenceO.?N center (er %i%o

Get you 3@7N

Strategic Management Study Guide FINAL

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