Topic2.StrategyRevisited

What are the key drivers of profitability in

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Unformatted text preview: ers value your product less when they have the other firm’s product available Complementor: When customers value your product more when they have this other firm’s product than when they have your product alone… Can one firm can be a compe8tor to one firm, and complementor to another? Can one firm can both be a compe8tor and complementor to another? 33 28/04/12 67 UPF - International Strategic Management 2012 Illustration… What are the key drivers of profitability in Intel’s business model? What are the key drivers of profitability in Microsoft’s business model? 68 UPF - International Strategic Management 2012 Wintel Intel Architecture Microprocessors Large WTP Invest heavily in new generation microprocessor High prices Large Volume Large profitability Low marginal cost Learning/ experience 34 28/04/12 69 UPF - International Strategic Management 2012 Wintel Microsoft Windows Large WTP Many applications Lots of ideas to improve product Large potential market for productivity applications Invest in new generation High applications OS prices Large installed base Low OS price Large profitability Large volume 70 UPF - International Strategic Management 2012 Wintel Two different business models Large WTP Invest heavily in new generation microproce ssor Large WTP High prices Large Volume Large profitability Low marginal cost Lots of ideas to improve product Learning/ experience Low OS price Many applications Large installed base Large potential market for productivity applications Invest in new generation OS High applications prices Large profitability Large volume 35 28/04/12 71 UPF - International Strategic Management 2012 Wintel Two different business models …but related Large WTP Invest heavily in new generation microproce ssor High prices Low marginal cost Large installed base Large Volume Large profitability Many applications Lots of ideas to improve product Large potential market for productivity applications Invest in new generation OS High applications prices Large profitability Learning/ experience Low OS price 72 UPF - International Strategic Management 2012 Growth Phase of an Industry & Strategic Opportunities Available Growth Stage Opportuni7es Available Technological leadership Emergent Industry First-mover Advantage Preemption of strategically valuable assets Creation of customer “switching costs” 36 28/04/12 73 UPF - International Strategic Management 2012 Growth Phase of an Industry & Strategic Opportunities Available Growth Stage Opportuni7es Available Product refinement Mature Industry Investment in service quality Process innovation 74 UPF - International Strategic Management 2012 Growth Phase of an Industry & Strategic Opportunities Available Growth Stage Declining Industry Opportuni7es Available Harvest Overall leadership Niche Divest 37 28/04/12 75 UPF - International Strategic Management 2012 Strategic Groups: Tool for Identifying T & O within the Industry A strategic group consists of those rival firms with similar competitive approaches and positions in the market Plot the firms on a twovariable map using pairs of differentiating characteristics Assign firms that fall about the same strategy place to the same strategic group Draw circles around groups to the size of the group’s Degree of services offered Use of distribution channels Product-line breadth Degree of vertical integration Geographic coverage Price/quality range Iden...
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This note was uploaded on 10/18/2012 for the course BUSI 102 taught by Professor X during the Spring '12 term at Universitat Pompeu Fabra.

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