BUSM177_session 3.pdf - Session 3 Innovation strategy and global competition Module BUSM177 Innovation and global competitions Lecturer Dr Joanne Jin

BUSM177_session 3.pdf - Session 3 Innovation strategy and...

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Session 3 Innovation strategy and global competition Module: BUSM177 Innovation and global competitions Lecturer: Dr Joanne Jin Zhang Week 3, Semester A, 2019-2020
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Outlines n Case discussion – The video game console industry n Competing for standards n Timing of entry n Technology cluster and national innovation system Dr Joanne J. Zhang QMUL 2
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Case discussion: Video game console industry n What are the key success factors in the video games hardware industry? n In what sense and for what reasons is this a “winner- take-all” industry? n What factors have changed the dynamics of competition and the basis for competitive advantage in the industry during recent years? n Looking ahead, which factors will determine the basis of success in the next (the 8th) product generation? Dr Joanne J. Zhang QMUL 3
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Competing for standards
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Companies that Own Technical Standards COMPANY PRODUCT CATEGORY STANDARD Microsoft/Intel PC operating systems Wintel (Windows OS & Intel *86 series processors Matsushita Videocassette recorders VHS system Iomega High capacity PC disk drives Zip drives Intuit Software for on-line financial transactions Quicken Rockwell/ 3Com 56K modems V90 Dolby Laboratories Sound processing systems Dolby sound reduction Qualcomm Digital wireless telecom signals CDMA Adobe Systems Common file format for creating and viewing documents Acrobat Why do standards emerge in some product markets and not in the others? Dr Joanne J. Zhang QMUL 5
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The Emergence of Standards n Emergence of dominant design n Model T in autos n IBM 360 in mainframes n Douglas DC3 in passenger aircraft n Emergence of technical standards n Emerge in industries where there are network externalities - the value of a product to an individual customer depends on the number of other users of that product. n Positive vs. negative network externalities. Dr Joanne J. Zhang QMUL 6
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Sources of Network Externalities n User linkages, e.g. n Telephone systems—only value of telephone is connection to other users n Video game consoles—same platform allows users to exchange games and play interactively n On-line auction—value of auction depends on number of buyers and sellers participating n Also, social identification—listening to same music, watching same TV shows, wearing same clothes in order to conform n Availability of complementary products, e.g. n Most PC applications software written for Windows, not Apple Mac. n In economy autos, easier to get parts and repair for a Ford Focus than for a Maruti or Proton n Economizing on switching costs, e.g.
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