Facebook) can add the pioneer’s innovation (software) to their platform and have an advantage – able to offer to a large installed base of customers and generate significant network effects very quickly. © Marc Knez 7
Companies for which the pioneer’s product/service is a direct substitute. These companies risk losing market share to the pioneer. Direct Competitors Lateral Adjacency Competitors Companies that currently compete in adjacent markets that could enter as direct competitors to the pioneer’s market, leveraging the complementary assets from their adjacent market position. De Novo Entrants Other new ventures that enter the pioneer’s market. These players may enter with some existing capabilities around the new technology, but lack complementary assets. The Pioneer’s Potential Competition Forward Integrators Backward Integrators Companies that forward integrated into the pioneer’s market with complementary assets Companies that backward integrated into the pioneer’s market with complementary assets Pioneer’s Market © Marc Knez 8
Basic PFI Analysis: New Venture Context 1. Strength of Appropriability Regime? © Marc Knez Ø Strong Legal Protection? and, or Ø Very difficult to replicate? – This condition unlikely to hold for a new venture unless significant upfront investments have been made prior to going to market. Strong? Ø Complementary Assets? Does the new venture need specialized complementary assets possessed by industry incumbents or adjacency players? Ø Bottleneck Assets Are there players in the industry value chain that possess scarce assets (bottleneck assets) that will allow them to extract significant rents from the pioneer? 2. NO 9
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- Fall '15