Today I have been...
Thinking about mobility barriers and NFP organisations
Why?
Reflection
So What?
Depending on the sector, I guess there is a greater chance of there only being one NFP organisation in any determined strategic group, compared to for-profit.
Many of the mobility barriers may be insurmountable for an NFP, for example its geographic coverage. A charity looking after the homeless in London would have geographic coverage as a deliberately self-imposed mobility barrier, for example.
There may be additional barriers not listed in table 4.1 p50 unit2. For example regulatory limits.
How will I use it?
Tuesday, 30 November 2010
Sunday, 28 November 2010
Strategic Group analysis as a predictive tool
Today I have been...
Reading session 4.2 of unit 2 about strategic group analysis
Why?
Required
So What?
The concept is not unchallenged. Is there a relationship between group membership and performance? How valid are the methods used to identify the groups.
In the greek dairy example, the farmers may consider if they are in the strategic group that they wish to be, and use the concept of mobility barriers to determine if moving is feasible.
Remember though, strategic groups are not static!
A strategic group map can be used (p58) to indicate positioning of various groups and reflect the resources on which they are based.
There is a list of possible mobility barriers in table 4.1 on p50.
How will I use it?
Reading session 4.2 of unit 2 about strategic group analysis
Why?
Required
So What?
The concept is not unchallenged. Is there a relationship between group membership and performance? How valid are the methods used to identify the groups.
In the greek dairy example, the farmers may consider if they are in the strategic group that they wish to be, and use the concept of mobility barriers to determine if moving is feasible.
Remember though, strategic groups are not static!
A strategic group map can be used (p58) to indicate positioning of various groups and reflect the resources on which they are based.
There is a list of possible mobility barriers in table 4.1 on p50.
How will I use it?
Strategic Groups and Strategic Space (session 4, unit 2)
Today I have been...
Reading about Strategic Groups and Strategic Space (u2s4, p49)
Why?
Required Reading
So What?
Definition: Strategic Group - cluster of firms within an industry following the same or similar strategy.
EG. Porsche & Mazda - same industry but different strategic groups as they do not compete directly with each other. Members of the same group are not equally capable and so there will be differing levels of performance within those groups (Toyota vs Rover, for example).
Porter (1979) said firms in a strategic group have similar:-
Effectively, membership of the group rests on configuration of resources common to members. These configurations act as mobility barriers, similar to entry barriers, limiting entry into the group or movement between groups. They do this by retarding imitation.
Height of these barriers is determined by the extent in tangible and intangible assets, and ability to copy competitors.
How will I use it?
Bear in mind while I read case study.
Reading about Strategic Groups and Strategic Space (u2s4, p49)
Why?
Required Reading
So What?
Definition: Strategic Group - cluster of firms within an industry following the same or similar strategy.
EG. Porsche & Mazda - same industry but different strategic groups as they do not compete directly with each other. Members of the same group are not equally capable and so there will be differing levels of performance within those groups (Toyota vs Rover, for example).
Porter (1979) said firms in a strategic group have similar:-
- cost structures
- degrees of product diversification
- formal organisation
- resource profiles
Effectively, membership of the group rests on configuration of resources common to members. These configurations act as mobility barriers, similar to entry barriers, limiting entry into the group or movement between groups. They do this by retarding imitation.
Height of these barriers is determined by the extent in tangible and intangible assets, and ability to copy competitors.
How will I use it?
Bear in mind while I read case study.
Standards Wars
Today I have been...
Reading an article entitled "The Art of Standards Wars" by Carl Shapiro and Hal R Varian
Why?
Required reading
So What?
The article tells a few stories (AC vs DC, Betamax/VHS, CBS/RCA for N/America colo(u)r TV etc).
They state you need
Is your technology and your rivals' technology backwards compatible?
Is only yours backwards compatible?
Is only yours not backwards compatible?
Is neither backwards compatible?
Control over an installed base allows you to pursue an evolution strategy.
If you have strong copyrights/patents you have the intellectual property right advantage.
If you have the ability to innovate you can often out-engineer your competition.
If you have done lots of product development work and so are farther down the learning curve you have a first-mover advantage.
If you have good manufacturing capability you can use this to your advantage in a standards battle.
Strength in complements allows you to use your advantage in, eg. other products (sony ps3 and blu-ray, intel motherboards/interfaces and cpus).
A reputation and good brand name can give you instant credibility in your market.
Pre-emption - build an early lead so positive feedback works to your advantage. One way is to be first to market. Find pioneers and sign them up.
Expectation management - one way to do this is vapourware. Announce a great new product and watch your rival's sales dry up - even if your product is some way off. Assemble allies and make your claims about your product's current or future popularity.
Once you've won - stay on your guard. Technology marches forward. Offer customers a migration path as you move forward. Commoditise complementary products, whether yours or someone else's. And be careful about competing against your own installed base. Video games producers are not huge fans of the second hand games market. Protect your position. Leverage (ugh) your installed base. Stay a leader.
But if you don't win? Usually it's not possible to wrest leadership from another technology that is as good and more established. Why not position yourself to make a run at the next generation of technology. Be careful about damaging your reputation by stranding customers. Consider adapters and interconnection. But avoid survival pricing.
How will I use it?
To note:
The winner is likely to be the one who has the best strategy, not the best technology.
Not all standards battles are alike.
It can be worth building an alliance.
The focus is entirely on markets. Regulatory influences can also occur.
Reading an article entitled "The Art of Standards Wars" by Carl Shapiro and Hal R Varian
Why?
Required reading
So What?
The article tells a few stories (AC vs DC, Betamax/VHS, CBS/RCA for N/America colo(u)r TV etc).
They state you need
- Control over an installed base of users
- intellectual property rights
- ability to innovate
- first-mover advantages
- manufacturing capabilities
- strength in complements
- brand name and reputation
Is your technology and your rivals' technology backwards compatible?
- You have a Rival Evolutions war.
Is only yours backwards compatible?
- You are fighting an evolution vs revolution war
Is only yours not backwards compatible?
- You are fighting a revolution vs evolution war.
Is neither backwards compatible?
- You are fighting a Rival Revolutions war.
Control over an installed base allows you to pursue an evolution strategy.
If you have strong copyrights/patents you have the intellectual property right advantage.
If you have the ability to innovate you can often out-engineer your competition.
If you have done lots of product development work and so are farther down the learning curve you have a first-mover advantage.
If you have good manufacturing capability you can use this to your advantage in a standards battle.
Strength in complements allows you to use your advantage in, eg. other products (sony ps3 and blu-ray, intel motherboards/interfaces and cpus).
A reputation and good brand name can give you instant credibility in your market.
Pre-emption - build an early lead so positive feedback works to your advantage. One way is to be first to market. Find pioneers and sign them up.
Expectation management - one way to do this is vapourware. Announce a great new product and watch your rival's sales dry up - even if your product is some way off. Assemble allies and make your claims about your product's current or future popularity.
Once you've won - stay on your guard. Technology marches forward. Offer customers a migration path as you move forward. Commoditise complementary products, whether yours or someone else's. And be careful about competing against your own installed base. Video games producers are not huge fans of the second hand games market. Protect your position. Leverage (ugh) your installed base. Stay a leader.
But if you don't win? Usually it's not possible to wrest leadership from another technology that is as good and more established. Why not position yourself to make a run at the next generation of technology. Be careful about damaging your reputation by stranding customers. Consider adapters and interconnection. But avoid survival pricing.
How will I use it?
To note:
The winner is likely to be the one who has the best strategy, not the best technology.
Not all standards battles are alike.
It can be worth building an alliance.
The focus is entirely on markets. Regulatory influences can also occur.
A discussion on industry dynamics (unit 2 session 3.3)
Today I have been...
Reading about industry dynamics
Why?
Required reading
So What?
5F model can't distinguish all characteristics of competition in some industries. For example, industry standards in the tech sector means other factors need to be considered.
5F gives a snapshot. But what is the dynamic of the industry?
Examples:- network effects. This is particularly the case in tech sectors. The satisfaction that a user derives increases in line with the number of other consumers of that product. eg Telephone (more usable the more people have them) - a direct effect but also indirect eg ipod, iphone. Sometimes an early lead gained by one product can be self-reinforcing.
The more a product gains prevalence, the more likely it will become an industry standard. In industries subject to network effects, entry timing could be a key competitive advantage.
How will I use it?
Useful knowledge to bear in mind.
Reading about industry dynamics
Why?
Required reading
So What?
5F model can't distinguish all characteristics of competition in some industries. For example, industry standards in the tech sector means other factors need to be considered.
5F gives a snapshot. But what is the dynamic of the industry?
Examples:- network effects. This is particularly the case in tech sectors. The satisfaction that a user derives increases in line with the number of other consumers of that product. eg Telephone (more usable the more people have them) - a direct effect but also indirect eg ipod, iphone. Sometimes an early lead gained by one product can be self-reinforcing.
The more a product gains prevalence, the more likely it will become an industry standard. In industries subject to network effects, entry timing could be a key competitive advantage.
How will I use it?
Useful knowledge to bear in mind.
Friday, 26 November 2010
Substitutes p34 u2s3 (part of porters 5f)
Today I have been...
Reading about the 5th force, the threat of substitutes
Why?
Required reading
So What?
Markets group together firms whose products can be substitutes for each other, from the buyer's p-o-v. Industries do the same from the supplier's p-o-v.
Cars & trucks are part of the auto industry, but not the same market. Whether something is a substitute is a matter of judgement.
Porter points out that the degree to which a substitute poses a thread depends on the price/performance trade-off from the buyer's p-o-v.
Reading about the 5th force, the threat of substitutes
Why?
Required reading
So What?
Markets group together firms whose products can be substitutes for each other, from the buyer's p-o-v. Industries do the same from the supplier's p-o-v.
Cars & trucks are part of the auto industry, but not the same market. Whether something is a substitute is a matter of judgement.
Porter points out that the degree to which a substitute poses a thread depends on the price/performance trade-off from the buyer's p-o-v.
Thursday, 25 November 2010
The 4th Force - supplier power
Today I have been...
Reading about supplier power
Why?
Required reading in the section on porter's 5 forces. p33 u2s3
So What?
A large concentration of suppliers (eg a small number) relative to the concentration of the buyers (eg a larger number)
A small number of substitutes
A more differentiated product/service being supplied
The more credible the threat of forward integration (outsourcing?)
...all increase supplier power.
It's similar to the buyer relationship - between seller and buyer. There is increasing symbiosis between firms and their suppliers.
How will I use it?
All relevant!
Reading about supplier power
Why?
Required reading in the section on porter's 5 forces. p33 u2s3
So What?
A large concentration of suppliers (eg a small number) relative to the concentration of the buyers (eg a larger number)
A small number of substitutes
A more differentiated product/service being supplied
The more credible the threat of forward integration (outsourcing?)
...all increase supplier power.
It's similar to the buyer relationship - between seller and buyer. There is increasing symbiosis between firms and their suppliers.
How will I use it?
All relevant!
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