CHAPTER 4. Standards Battles and Design Dominance

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "CHAPTER 4. Standards Battles and Design Dominance"

Transcription

1 CHAPTER 4 Standards Battles and Design Dominance SYNOPSIS OF CHAPTER The focus of this chapter is on identifying the reasons why most industries adopt a dominant design and why a particular firms technology is adopted as the dominant design. The key factors driving industries to adopt a dominant design include increasing returns to adoption, path dependency and government regulation. The role of network externalities in the pressure to adopt a dominant design is also explored. Network externalities often arise when compatibility, complementary goods and investments in training are important to customers. The chapter then investigates why some firms learn faster than others. Prior learning and absorptive capacity are found to be large contributors to the variance in learning rates between firms. To answer the question concerning why one firms technology is adopted as the dominant design and not others the chapter explores 1) the nature of value creation in technology based products and 2) the specific actions a firm can take to encourage the adoption of its technology as the dominant design. Value is created in two ways. The first way a technology creates value is in the functionality it provides the customer and is referred to as its standalone value. The second way a technology creates value is through the network externalities associated with the technology. Technologies accepted as the dominant design deliver the greatest total value, standalone plus network externalities. This, in part, explains why it is not always the superior product that is adopted as the dominant design. Firms can sponsor their technology with the goal of gaining a controlling share of market and locking out potential competitors and they can enter early in an effort to become so entrenched that potential competitors may not be able to gain a foothold in the industry. The chapter concludes by considering how the level of market share at which consumer network externality benefits are attained drive the adoption of single or multiple dominant designs in an industry. LEARNING OBJECTIVES 1. Explain why a dominant design emerges and why it is not always the most technological superior design that becomes dominant. 2. Identify the primary sources of increasing returns and network externalities. 3. Argue both sides of the statement A winner-take-all markets are good for consumers. 4. Be able to employ a multidimensional model for assessing the value of a technology to buyers.

2 CHAPTER OUTLINE I. Overview II. A. Why do industries experience pressure to select a dominant design? Market forces (e.g. increasing returns to adoption, the importance of complementary products, etc.) and government regulatory action are the two primary sources of pressure to select a dominant design. B. Why do some technologies become dominant designs and others do not? Generally, one design is selected over another because the total value it offers customers (standalone value plus network externality value) is greater than the total value offered by other technologies. The chapter explores consider the multiple dimensions of value that will shape which technology design s rise to dominance. Why Dominant Designs are Selected A. Why do many markets coalesce around a single dominant design rather than supporting a variety of technological options? There are many factors that drive a market to coalesce around a dominant design. These factors often result in a self-reinforcing process that continues to increase a technology s dominance even if it is inferior to competing technologies. These factors include: 1. Learning affects the improvement rate of a technology. Greater use of the technology leads to greater knowledge accumulation. Greater knowledge accumulation enables the improvement of the technology. 2. Network externalities that result when there are increasing returns to adoption (i.e. a technology becomes more valuable to customers as more and more customers adopt the technology). 3. Complementary product creation often occurs at a faster rate as adoption becomes more widespread. B. Learning Effects evidence shows that the more a technology is used the more developed, effective and efficient it becomes. Learning effects have been demonstrated in a wide variety of industries including automobiles, ships, semiconductors, pharmaceuticals, and even heart surgery techniques. C. Learning curves represent the cumulative impact of learning on production costs and productivity. Organizational learning scholars typically model the learning curve as a function of cumulative output: performance increases, or cost decreases, with the number of units of production. The learning curve is formulated as y = ax -b, where y is the number of direct labor hours required to produce the xth unit, a is the number of direct labor hours required to produce the first unit, x is the cumulative number of units produced, and b is the learning rate.

3 D. Organizations learn at very different rates. Firms learn at different rates because their levels of prior learning and absorptive capacity differ. Learning rates also differ with the nature of the task and firm strategy. 1. Absorptive Capacity refers to the phenomenon whereby as individuals or firms learn, they also increase their future ability to learn. For example, the development of a new technology requires experimentation. Experimentation helps build a knowledge base that allows the individual or firm to identify what alternatives are most likely to be successful in the future. Firms that do not invest in technology development may not develop the absorptive capacity need to recognize or develop a new technology in the future. 2. Absorptive capacity also has effects at the industry level. As the number of firms learning about a technology increases and/or the number of firms creating complementary technologies increases the more effective and efficient the original technology will become. E. Network Externalities, or positive consumption externalities affect the adoption of a dominant design because a user s benefit from using a good increases as the installed base increases (e.g. railroads, telecommunications, communities of practice, computer platforms). For example, many people choose a computer that uses the Windows operating system and an Intel microprocessor because the Wintel platform has the largest installed base, thus maximizing the number of people with which the user s files will be compatible. 1. Network externalities arise when compatibility (e.g. exchanging computer files) and the availability of complementary goods (e.g. movies for a VCR; film for cameras) are important and when investments in training are high (e.g Qwerty). 2. For example, as Windows installed base increased developers became more likely to expend their efforts on developing products compatible with Windows rather than the MAC. Thus a virtuous cycle (at least from Microsoft s perspective) begins. An increasing installed base attracts complementary goods developers and the availability of complementary goods increases the installed base, and so on. F. Path dependency often characterizes technology trajectories with increasing returns to adoption. Path dependency means that small historical events may have a large effect on the form of the technology adopted as the dominant design. For example, 1. early entrants and their technology may become so entrenched that subsequent, superior technologies, may be unable to gain a foothold in the market. 2. sponsorship by a large powerful firm can help a technology gain a controlling share of the market, locking out alternative and potentially superior technologies.

4 G. Coalitions have proven to be an effective strategy for firms trying to affect the selection of a dominant design. 1. For example, in the early 1980 s Sony & Philips worked together to develop and bring to market the CD (replacing vinyl LP s). Recently, the stranglehold these two firms have on the market has been attacked by another consortium formed to develop and market the DVD. This consortium includes Hitachi, JVC, Matsushita, Mitsubishi, Pioneer, Seagram's Universal Music Group, Time Warner, and others. The goal of this group was to replace the CD standard with a DVD standard. Sony & Philips continued to work together and have responded by introducing a high-fidelity CD that is backwards compatible. This has enabled them to continue to control the royalties for the new disks and players. H. Government Regulation in addition to the market forces that encourage the adoption of a dominant design sometimes government regulation plays a role in the selection of a dominant design. Governments are most likely to intervene when there is a societal or consumer welfare benefit to having compatible technologies. This has often been the case for the utilities, telecommunications and television industries. For example, 1. in 1953 the FCC approved the National Television Systems Committee color standard in television broadcasting to ensure that individuals with monochrome television sets would be able to receive the color television programs broadcast by networks. 2. in 1998, the European Union adopted a single wireless telephone standard to avoid the proliferation of incompatible standards and to facilitate exchange both within and across national borders. I. The most superior products do not necessarily win. When all of the above forces are at work, the result can be a natural monopoly (though some alternatives may survive in niche markets) and winner-take-all markets. 1. The winning firm enjoys high returns and is well positioned to affect the development trajectory of the technology thereby further enhancing its dominant position in the industry. 2. Losing firms, not only have to play catch up after they adopt the dominant design they also lose the capital, learning and brand equity invested in their original technology. J. The influence of a dominant design can be far reaching. Dominant designs affect knowledge accumulation after their adoption primarily because firms have a tendency to build on their existing knowledge base rather than build new ones. This means that a dominant design will influence the technological discontinuity that will replace it. K. Are winner-take-all markets good for consumers? This is a complex question, made more complicated by traditional economics emphasis on the advantages of competitive markets. What makes this a complex question is the issue of

5 III increasing returns (of course the antitrust suits brought against Microsoft are a good example to use here). To answer this question the benefits accrued by customers when a larger portion of the market adopts the same technology (scurve) must be compared with the corresponding monopoly (exponentially increasing) costs (e.g. higher prices, less product variety, flatter technology improvement trajectory, etc.) Multiple Dimensions of Value A. So if technological superior products don t always win, what determines which technology and which firm wins? The company that wins usually is able to effectively manage the multiple dimensions that comprise total customer value. Customers compare the value of two or more competing technologies based on each technologies standalone and network externality value. B. Standalone Value Chan Kim and Renee Mauborgne developed the Buyer Utility Map to help managers determine what aspects of a new technology will be valued by potential customers (e.g. the functions it enables the customer to perform, its aesthetic qualities, its ease of use, etc.). They recommend considering six utility levers and the six stages of a buyers experience cycle (purchase, delivery, use, supplements, maintenance, and disposal) in order to fully understand a new technologies standalone value to a customer. Of course, each benefit has to be considered in light of its cost. For example, a new online ordering system alters the value proposition offered to the customer by simplifying the purchasing process (i.e. a change in a single cell) while the Honda Insight hybrid-electric vehicle offered customers greater benefits in the use and maintenance stages of the buyers experience cycle (i.e. change in multiple cells). C. Network Externality Value is a function of the size of the installed base and the availability of complementary goods. 1. The value of the Windows operating system, for example is due to the ability of the system to make it easy for consumers to use the computer (standalone value) plus two sources of network externality value: 1) its large installed base which translates into a large number of computers with which the user can easily interact, and 2) the availability of compatible software developed for Windows as its installed base increased. 2. An incumbent technology may thwart the adoption of a new technologically superior technology because the total value (standalone + network externalities) it offers is higher (NeXT computers are a good example to use here). 3. In order for a new technology to compete on only standalone value, that value must exceed the total value offered by the incumbent technology or the new technology must be compatible with the incumbent s installed base and complementary goods (Sony & Philips new SuperAudio CD is a good example of the compatibility effect).

6 D. All of the above has been based on the consumer s reliance on objective information. But consumer choice is also affected by subjective information (i.e. perceptions of value). So each value component has a corresponding perceived or anticipated value component that can be considerably different from the actual value. E. Firms can take advantage of consumer reliance on perceptions by creating a large mindshare through heavy advertising that makes the installed base appear larger than it actually is and/or make the availability of complementary goods appear greater than they actually are (Sega and Nintendo s battle for dominance in the 16-bit video game console market is a great example to use here). F. Another tactic firms use to capitalize on consumer reliance on perceptions is preadvertising. Preadvertising markets vaporware (a product that is not yet on the market and may not even exist) in an attempt to persuade customers to wait for the new product instead of buying a competitor s product that is already available (here again the game console industry is a good example to use with your students). G. Competing for Design Dominance in Markets with Network Externalities_Do network externalities create pressure for a dominant design or a few dominant designs? How large of an installed base is necessary before most of the network externality benefits are captured? The answers to these questions can be demonstrated to your students by examining the graphs in transparency seven. 1. Consider the rate at which value increases with the size of the installed base, and how large of an installed base is necessary before most of the network externality benefits are achieved. These graphs are usually characterized by a threshold level of adoption below which the externality benefits are very low and above which the benefits increase significantly. This type of graph shifts up when the base level value of a technology is greater. 2. Now you can show students transparency eight that compares the effects of relative market share on two competing technologies with the same base value. This graph shows that at every point where A has less than 50% market share (and thus B has greater than 50% market share), B will yield greater overall value, making B more attractive to customers and vice versa. However, when one technology offers greater standalone value the indifference point is shifted in its favor. 3. What is the competitive landscape like when customers attain their desired level of network externality benefits at low levels of market share? The customer has a greater region of indifference between the two technologies (a good example here are video game consoles) and firms in these markets may compete very successfully with multiple dominant designs.

Technology & Strategy. GEST-D-484 Manuel Hensmans

Technology & Strategy. GEST-D-484 Manuel Hensmans Technology & Strategy GEST-D-484 Manuel Hensmans 1 Group 1 (Marcin D, Arnaud L, Magali D) Pedestrian Detection & Car Brakes (safety - Volvo) Group 2 (Kannan R, Miguel vd B) Solar panels / Company? Group

More information

Changing industry dynamics. Rudy Provoost Senior Vice President Royal Philips Electronics CEO Global Sales and Services Philips Consumer Electronics

Changing industry dynamics. Rudy Provoost Senior Vice President Royal Philips Electronics CEO Global Sales and Services Philips Consumer Electronics Changing industry dynamics Rudy Provoost Senior Vice President Royal Philips Electronics CEO Global Sales and Services Philips Consumer Electronics Changing industry dynamics Trends Threats Opportunities

More information

Analyzing an Industry s Structure. Game-1303 Intro to Game Dev Sara R. Farr

Analyzing an Industry s Structure. Game-1303 Intro to Game Dev Sara R. Farr Analyzing an Industry s Structure Game-1303 Intro to Game Dev Sara R. Farr Game Industry Segments Some of the Game Industry Segments are: Console (Hardware or Software) PC Handheld Mobile Casual Online

More information

Florida 4-H Consumer Choices 2010-11 Study Topics. Student Guide. Video Game Systems. Introduction and Background

Florida 4-H Consumer Choices 2010-11 Study Topics. Student Guide. Video Game Systems. Introduction and Background Florida 4-H Consumer Choices 2010-11 Study Topics Student Guide Video Game Systems Introduction and Background Buying a video game system is a big decision that can cost hundreds of dollars, so it is important

More information

Customer Focus and the Marketing Mix

Customer Focus and the Marketing Mix Customer Focus and the Marketing Mix Having a customer focus Quite simply, a business that has a customer focus is one which takes the time and trouble to understand and address customer needs. A customer

More information

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives Monopoly, Oligopoly, and Monopolistic Competition Chapter 8 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1. Distinguish among three types

More information

Chapter 6 Competitive Markets

Chapter 6 Competitive Markets Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a

More information

Structure of this Session. Videogames & Embedded Systems. The Microchip. Other Early Games. Intel 4004. The Microprocesor

Structure of this Session. Videogames & Embedded Systems. The Microchip. Other Early Games. Intel 4004. The Microprocesor Structure of this Session Videogames & Embedded Systems 1. Microprocessors and their applications 2. Video games, as example application I202, Fall 2003 Session 4 1 2 Other Early Games Mostly text based

More information

Competitive Strategy in Game Consoles

Competitive Strategy in Game Consoles Competitive Strategy in Game Consoles Jay Conrod, Klimka Szwaykowska; Mar 7, 2007 The interactive entertainment industry has grown remarkably quickly in recent years. Since 2001, the market has been dominated

More information

Gredler / Moravska / Wegendt. Case 17. Microsoft X-Box Live!

Gredler / Moravska / Wegendt. Case 17. Microsoft X-Box Live! Gredler / Moravska / Wegendt Case 17 Microsoft X-Box Live! 1 A. Basic facts Table of Content 1. Microsoft 2. Video Gaming Indurstry 3. Competitors + 5 year life cycle 4. Xbox (Xbox 360 + Xbox Live!) B.

More information

/gfkmir Downloaded from De Gruyter Online at 09/27/ :22:09PM via free access

/gfkmir Downloaded from De Gruyter Online at 09/27/ :22:09PM via free access OPEN doi 10.2478 / gfkmir-2014-0023 New Theories / Vol. 5, No. 1, 2013, pp. 24 30 / GfK MIR 25 Demystifying Disruption: On the Hazard of Being Replaced by New Technology Ashish Sood and Gerard J. Tellis

More information

Chapter 7: Market Structures Section 1

Chapter 7: Market Structures Section 1 Chapter 7: Market Structures Section 1 Key Terms perfect competition: a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices commodity:

More information

LED Signage Market. Part 1: The Current and Future State of the Market. LED Video Market Size and Growth

LED Signage Market. Part 1: The Current and Future State of the Market. LED Video Market Size and Growth LED Signage Market Part 1: The Current and Future State of the Market LED Video Market Size and Growth The growing demand for more advanced, brighter, and eco-friendly lighting has greatly impacted all

More information

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Oligopoly and Monopolistic Competition Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Outline 14.1 Market Structures 14.2 Cartels 14.3 Noncooperative Oligopoly

More information

Economics Chapter 7 Review

Economics Chapter 7 Review Name: Class: Date: ID: A Economics Chapter 7 Review Matching a. perfect competition e. imperfect competition b. efficiency f. price and output c. start-up costs g. technological barrier d. commodity h.

More information

Chapter 7 Monopoly, Oligopoly and Strategy

Chapter 7 Monopoly, Oligopoly and Strategy Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are

More information

Mayumi Sampei Beom Seok Chang Fukumi Watanabe Ashley Kim Elisa Yoshigoe Yoon Young Joo

Mayumi Sampei Beom Seok Chang Fukumi Watanabe Ashley Kim Elisa Yoshigoe Yoon Young Joo VS Mayumi Sampei Beom Seok Chang Fukumi Watanabe Ashley Kim Elisa Yoshigoe Yoon Young Joo What is SONY? Japanese multinational conglomerate coorporation founded in 1946, Tokyo,Japan to produce tape recorder.

More information

Competitive Strategy: Week 13. Innovation

Competitive Strategy: Week 13. Innovation Competitive Strategy: Week 13 Innovation Simon Board Eco380, Competitive Strategy 1 The Origins of Competitive Advantage So far, in this course, we have talked about... How firms can exploit their competitive

More information

CHAPTER 6 MARKET STRUCTURE

CHAPTER 6 MARKET STRUCTURE CHAPTER 6 MARKET STRUCTURE CHAPTER SUMMARY This chapter presents an economic analysis of market structure. It starts with perfect competition as a benchmark. Potential barriers to entry, that might limit

More information

Strategic Management of Technological Innovation

Strategic Management of Technological Innovation Strategic Management of Technological Innovation Fourth Edition Melissa A. Schilling New York University Me Graw Hill McGraw-Hill Irwin Contents Chapter 1 Introduction 1 The Importance of Technological

More information

Achieving high performance in the media and entertainment industries through application outsourcing

Achieving high performance in the media and entertainment industries through application outsourcing Achieving high performance in the media and entertainment industries through application outsourcing Companies operating in today s global commerce rely on business application systems to energize supply

More information

Weiyong Zhang Operations and Management Science Department Carlson School of Management University of Minnesota wzhang@csom.umn.

Weiyong Zhang Operations and Management Science Department Carlson School of Management University of Minnesota wzhang@csom.umn. Harnessing Network Externalities for Better E-Commerce: A Review of Winners, Losers and Microsoft: Competition and Antitrust in High Technology (by Stanley Liebowitz and Stephen Margolis, Oakland, CA:

More information

e-book Platform Competition in the Presence of Two-Sided Network Externalities

e-book Platform Competition in the Presence of Two-Sided Network Externalities 2012 45th Hawaii International Conference on System Sciences e-book Platform Competition in the Presence of Two-Sided Network Externalities Yabing Jiang Graduate School of Business Administration Fordham

More information

Digital Disruption: e-tailing in the Automotive Aftermarket. March 2014

Digital Disruption: e-tailing in the Automotive Aftermarket. March 2014 Digital Disruption: e-tailing in the Automotive Aftermarket March 2014 AASA Thought Leadership: AASA exclusive update and summary of the groundbreaking 2013 report by AASA and Booz & Co., e-tailing: Supplier

More information

Moving Mountains. Erik Berggren Senior Director of Customer Results & Global Research. Keith Messick Senior Manager, Customer Results

Moving Mountains. Erik Berggren Senior Director of Customer Results & Global Research. Keith Messick Senior Manager, Customer Results Moving Mountains by: Erik Berggren Senior Director of Customer Results & Global Research Keith Messick Senior Manager, Customer Results Executive Summary: Most companies place priority on strategy over

More information

Analysis of Competitive Edge College Advisors Google Adwords Campaign 6/23/15 Carter Jensen

Analysis of Competitive Edge College Advisors Google Adwords Campaign 6/23/15 Carter Jensen Analysis of Competitive Edge College Advisors Google Adwords Campaign 6/23/15 Carter Jensen I. Introduction Competitive Edge College Advisors (CECA) would like to maximize revenue per click by developing

More information

Monopoly. Examples: Microsoft and Windows, DeBeers and diamonds, your local natural gas company.

Monopoly. Examples: Microsoft and Windows, DeBeers and diamonds, your local natural gas company. Monopoly A monopoly is a firm who is the sole seller of its product, and where there are no close substitutes. An unregulated monopoly has market power and can influence prices. Examples: Microsoft and

More information

Monopolies: Is Apple Computer Inc. a Monopoly? A Study of ipod Hardware Market Share in the MP3 Player Market

Monopolies: Is Apple Computer Inc. a Monopoly? A Study of ipod Hardware Market Share in the MP3 Player Market Federico Iossa 12CC Extended Essay 000168-044 Monopolies: Is Apple Computer Inc. a Monopoly? A Study of ipod Hardware Market Share in the MP3 Player Market Introduction There are many factors and circumstances

More information

In-House Executive Search

In-House Executive Search In-House Executive Search Changing The Senior Leadership Recruiting Game In-house Executive Search Will it be a game changer in executive search? Explore why companies are building internal capability

More information

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.)

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates the

More information

Problems on Perfect Competition & Monopoly

Problems on Perfect Competition & Monopoly Problems on Perfect Competition & Monopoly 1. True and False questions. Indicate whether each of the following statements is true or false and why. (a) In long-run equilibrium, every firm in a perfectly

More information

Multiplayer Platform Game Group 19

Multiplayer Platform Game Group 19 Multiplayer Platform Game Group 19 Martin Pettersson Misael Berrios Salas Christoffer Ekeroth Oskar Kvist Project Overview Document The aim of this project is to create a multiplayer platform game. Traditionally,

More information

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES Monopolistic Competition Market Structure Perfect Competition Pure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on

More information

in the Kingdom Where Content Rules, Telemarketing is

in the Kingdom Where Content Rules, Telemarketing is in the Kingdom Where Content Rules, Telemarketing is the Royal Chariot 1555 Pony Express Hwy, Home, KS 66438 (800) 882-0803 ronen@bluevalley.net www.bluevalleytelemarketing.com Content marketing is one

More information

Foreclosure, Entry, and Competition in Platform Markets with Cloud

Foreclosure, Entry, and Competition in Platform Markets with Cloud Foreclosure, Entry, and Competition in Platform Markets with Cloud Mark J. Tremblay Department of Economics Michigan State University E-mail: trembl22@msu.edu August 27, 2015 Abstract Platforms in two-sided

More information

MGT524: E-COMMERCE STRATEGY COURSE OVERVIEW

MGT524: E-COMMERCE STRATEGY COURSE OVERVIEW MGT524: E-COMMERCE STRATEGY COURSE OVERVIEW Professor: V. Brian Viard Assistant: Diane Whitbread Room 306C in 55 Hillhouse Room 004 in 55 Hillhouse Telephone: 432-5542 Telephone: 432-5690 Email: brian.viard@yale.edu

More information

Porter s 5 forces model

Porter s 5 forces model Porter Competitive Model? Porter s 5 forces model What is it? q A model to help understand the competitive environment in which a company operates. What are the 5 forces? q Intra-Industry Competition q

More information

BA 500 STRAT: The Micro-Economics Foundations of Competition and Strategy MBA. Fall 2014

BA 500 STRAT: The Micro-Economics Foundations of Competition and Strategy MBA. Fall 2014 1 BA 500 STRAT: The Micro-Economics Foundations of Competition and Strategy MBA Fall 2014 Professor: Charles W.L.Hill Cell: 206-819-5480 E-mail:chill@uw.edu Twitter: @charles_chill Office Hours: Tuesday

More information

Figure 1: Forces driving competition in the life insurance market in Poland, 2014

Figure 1: Forces driving competition in the life insurance market in Poland, 2014 FIVE FORCES ANALYSIS The life insurance market will be analyzed taking insurance companies as players. The key buyers will be taken as consumers (both individual as well as corporate), and ict manufacturers,

More information

Competitive Environment - Five Forces

Competitive Environment - Five Forces Competitive Environment - Five Forces The nature of industry competition and profits Every market or industry is different. Take any selection of industries and you should be able to find differences between

More information

Supplement Unit 1. Demand, Supply, and Adjustments to Dynamic Change

Supplement Unit 1. Demand, Supply, and Adjustments to Dynamic Change 1 Supplement Unit 1. Demand, Supply, and Adjustments to Dynamic Change Introduction This supplemental highlights how markets work and their impact on the allocation of resources. This feature will investigate

More information

Case Study: (Robert M. Grant) Client: SEGA

Case Study: (Robert M. Grant) Client: SEGA Strategic Management Case Study: Rivalry in Video Games (Robert M. Grant) Client: SEGA Strategic Management MBA-Entrepreneurial Management Berlin School of Economics (FHW) Lecturer/assessor: David Palmer

More information

The Strategic Importance of Current Accounts

The Strategic Importance of Current Accounts The Strategic Importance of Current Accounts proven global expertise The Strategic Importance of Current Accounts THE STRATEGIC IMPORTANCE OF CURRENT ACCOUNTS With more than sixty-five million active personal

More information

July 2015. New Entrants: Charting the Health Industry s Risk and Regulatory Landscape Where Risk Meets Opportunity

July 2015. New Entrants: Charting the Health Industry s Risk and Regulatory Landscape Where Risk Meets Opportunity July 2015 New Entrants: Charting the Health Industry s Risk and Regulatory Landscape Where Risk Meets Opportunity The new health economy is bringing change and new entrants from diverse industries are

More information

Windows Server 2003 migration: Your three-phase action plan to reach the finish line

Windows Server 2003 migration: Your three-phase action plan to reach the finish line WHITE PAPER Windows Server 2003 migration: Your three-phase action plan to reach the finish line Table of contents Executive summary...2 Windows Server 2003 and the big migration question...3 If only migration

More information

Acquisition Integration Models: How Large Companies Successfully Integrate Startups

Acquisition Integration Models: How Large Companies Successfully Integrate Startups : How Large Companies Successfully Integrate Startups In all affairs it's a healthy thing now and then to hang a question mark on the things you have long taken for granted. Bertrand Russell Author, Mathematician,

More information

Ideas that engage, inform and inspire.

Ideas that engage, inform and inspire. branding for banks Ideas that engage, inform and inspire. time to get real Ask a bank CEO to choose between budgeting $450,000 for brand building and hiring three or four lenders, and he or she will always

More information

PROCESS MODELING & SIMULATION

PROCESS MODELING & SIMULATION PROCESS MODELING & SIMULATION March 2010 Process Modeling and Simulation is the quickest and most cost effective approach to achieve process optimization. In reality, several organizations across the globe

More information

Chapter 6 Continuous Probability Distributions

Chapter 6 Continuous Probability Distributions Continuous Probability Distributions Learning Objectives 1. Understand the difference between how probabilities are computed for discrete and continuous random variables. 2. Know how to compute probability

More information

Laura Newton Writing Sample: Windows Vista Family Discount Messaging and Landing Page

Laura Newton Writing Sample: Windows Vista Family Discount Messaging and Landing Page Laura Newton Writing Sample: Windows Vista Family Discount Messaging and Landing Page Situation: As launch date approached, the Windows Vista Launch Marketing Campaign team realized that they needed to

More information

ECON101 STUDY GUIDE 7 CHAPTER 14

ECON101 STUDY GUIDE 7 CHAPTER 14 ECON101 STUDY GUIDE 7 CHAPTER 14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An oligopoly firm is similar to a monopolistically competitive

More information

This is a licensed product of Ken Research and should not be copied

This is a licensed product of Ken Research and should not be copied 1 TABLE OF CONTENTS 1. India Video Games Industry Introduction 1.1. India Video Games Industry Value Chain 1.2. India Video Games Industry Production Process 2. India Video Games Industry Size by Revenues,

More information

Honolulu, Hawaii January 17, 2012

Honolulu, Hawaii January 17, 2012 The Opportunities and Threats From Next Generation Television A Presentation at the 34 th Annual Pacific Telecommunications Council Conference Honolulu, Hawaii January 17, 2012 Rob Frieden, Pioneers Chair

More information

Perfect Competition. We will use the second concept in here and your text, chapter 11.

Perfect Competition. We will use the second concept in here and your text, chapter 11. Perfect Competition There are two concepts of competition normally used in Economics: 1. The manner or process in which firms compete with one another for market share. 2. A description of a particular

More information

Business-Level Strategy: Creating and Sustaining Competitive Advantages

Business-Level Strategy: Creating and Sustaining Competitive Advantages Business-Level Strategy: Creating and Sustaining Competitive Advantages Chapter Five McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives After reading

More information

the strategic sport marketing Planning Process

the strategic sport marketing Planning Process 230 the strategic sport marketing Planning Process ~ Ph.D. Candidate alexandru lucian mihai (Faculty: Marketing, Academy of Economic Studies, Bucharest, Romania) E-mail: alexandru.lucian_mihai@yahoo.com

More information

Netflix. Daniel Watrous. Marketing. Northwest Nazarene University

Netflix. Daniel Watrous. Marketing. Northwest Nazarene University Running head: NETFLIX 1 Netflix Daniel Watrous Marketing Northwest Nazarene University NETFLIX 2 Netflix Entertainment content, and the ways in which consumers engage with that content, have evolved rapidly

More information

Welcome to your PC, simplifi ed.

Welcome to your PC, simplifi ed. Welcome to your PC, simplifi ed. X156048403mnl.indd 1 6/12/09 11:33:58 AM X156048403mnl.indd 2 6/12/09 11:33:59 AM Thank you for choosing Windows 7. We listened closely to what you wanted a simpler PC

More information

Whitepaper. NVIDIA Miracast Wireless Display Architecture

Whitepaper. NVIDIA Miracast Wireless Display Architecture Whitepaper NVIDIA Miracast Wireless Display Architecture 1 Table of Content Miracast Wireless Display Background... 3 NVIDIA Miracast Architecture... 4 Benefits of NVIDIA Miracast Architecture... 5 Summary...

More information

Introduction to Digital Video

Introduction to Digital Video Introduction to Digital Video Significance of the topic With the increasing accessibility of technology for everyday people, things are starting to get digitalized: digital camera, digital cable, digital

More information

Brand success in an era of Digital Darwinism

Brand success in an era of Digital Darwinism FEBRUARY 2015 Brand success in an era of Digital Darwinism Jacques Bughin Companies adept at using digital tools along the consumer decision journey are gaining a sizable lead over competitors. The Internet

More information

Optimizing Marketing Spend

Optimizing Marketing Spend Optimizing Marketing Spend with Marketing Mix Modeling Data Analytics Spreadsheet Modeling New York Boston San Francisco Hyderabad Perceptive-Analytics.com (646) 583 0001 cs@perceptive-analytics.com Executive

More information

Alexander Nikov. 11. Online Content and Media. Information Wants to Be Expensive Class Discussion. Outline

Alexander Nikov. 11. Online Content and Media. Information Wants to Be Expensive Class Discussion. Outline INFO 3435 Teaching Objectives 11. Online Content and Media Alexander Nikov Identify the major trends in the consumption of media and online content. Discuss the concept of media convergence and the challenges

More information

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates

More information

Monopolistic Markets. Monopoly Power and Added Value

Monopolistic Markets. Monopoly Power and Added Value Monopolistic Markets Monopoly Power and Added Value What is a monopoly? A monopoly is a market with a single producer. All of the substitutable products are controlled by the same player. We look at the

More information

Game Theory. Themes. 1. Introduction to Game Theory 2. Sequential Games 3. Simultaneous Games 4. Conclusion. Introduction to Game Theory

Game Theory. Themes. 1. Introduction to Game Theory 2. Sequential Games 3. Simultaneous Games 4. Conclusion. Introduction to Game Theory Game Theory Themes 1. Introduction to Game Theory 2. Sequential Games 3. Simultaneous Games 4. Conclusion Introduction to Game Theory Game theory is the branch of decision theory concerned with interdependent

More information

Masters in Engineering and Management of Technology Masters in engineering Design Introduction to Entrepreneurship and New Venture Creation

Masters in Engineering and Management of Technology Masters in engineering Design Introduction to Entrepreneurship and New Venture Creation Masters in Engineering and Management of Technology Masters in engineering Design Introduction to Entrepreneurship and New Venture Creation Rui Baptista The Structural Analysis of Industries What is Strategy?

More information

8 KEY POINTS OF BLUE OCEAN STRATEGY

8 KEY POINTS OF BLUE OCEAN STRATEGY 8 KEY POINTS OF BLUE OCEAN STRATEGY - W. Chan Kim and Renée Mauborgne www.blueoceanstrategy.com 8 KEY POINTS OF BLUE OCEAN STRATEGY The fundamentals that will jump start your strategy development process.

More information

Porters 5-forces revisited.

Porters 5-forces revisited. Porters 5-forces revisited. Although widely critized Porters 5-forces probably still is the most widely used model for industry analysis among business school students today. As many students run into

More information

How SaaS providers can use pricing to achieve their ambitions. By Tim Cochrane, Sachin Shah, Justin Murphy and Jonny Holliday

How SaaS providers can use pricing to achieve their ambitions. By Tim Cochrane, Sachin Shah, Justin Murphy and Jonny Holliday How SaaS providers can use pricing to achieve their ambitions By Tim Cochrane, Sachin Shah, Justin Murphy and Jonny Holliday Tim Cochrane is a partner with Bain & Company s Private Equity practice, based

More information

Foundation of Information Systems

Foundation of Information Systems Foundation of Information Systems Reading: Laudon & Laudon chapter 1 Additional Reading: Brien & Marakas chapter 1 COMP 5131 1 Outline Information Systems Definition, Role Functions of Information Systems

More information

Before the Federal Communications Commission Washington, D.C. 20554

Before the Federal Communications Commission Washington, D.C. 20554 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) Implementation of Section 304 of the ) Telecommunications Act of 1996 ) CS Docket No. 97-80 ) Commercial Availability

More information

Monopolistic Competition

Monopolistic Competition In this chapter, look for the answers to these questions: How is similar to perfect? How is it similar to monopoly? How do ally competitive firms choose price and? Do they earn economic profit? In what

More information

Moving Your Reverse Supply Chain Up the Value Chain:

Moving Your Reverse Supply Chain Up the Value Chain: Moving Your Reverse Supply Chain Up the Value Chain: How Effective Pricing Models in the Secondary Markets Drive Brand Growth LiquidityServices.com Table of Contents Introduction....Page 3 How It Works:

More information

Contents. Introduction

Contents. Introduction Title: International Competition and Global Standards: Business Model for Standardization as seen in Case Studies Compiled by the Study Group on Economic and Social Effects of Standardization, the Ministry

More information

Sample Project List. Consumer Electronics

Sample Project List. Consumer Electronics Sample Project List Consumer Electronics Hardware Analysis Audio, gaming, graphics systems Cell phone camera Digital camera Digital camera Evaluate over 300 patents to identify those valuable for licensing

More information

Brand Performance Programs. Proven to drive brand growth and improve return from your marketing investment

Brand Performance Programs. Proven to drive brand growth and improve return from your marketing investment Brand Performance Programs Proven to drive brand growth and improve return from your marketing investment Millward Brown s Brand Performance Programs are a best-in-class suite of in-market measurement

More information

Computer Buying Assignment -- Sample From An Earlier Semester

Computer Buying Assignment -- Sample From An Earlier Semester Computer Buying Assignment -- Sample From An Earlier Semester Use this sample for expected format, scope and depth. Note, however, that some of the assignment criteria have changed. Be certain that you

More information

MARKETING TO THE NEW CONSUMER. PART THREE Taking Advantage of New Marketing Touchpoints in the Active Evaluation Stage

MARKETING TO THE NEW CONSUMER. PART THREE Taking Advantage of New Marketing Touchpoints in the Active Evaluation Stage MARKETING TO THE NEW CONSUMER PART THREE Taking Advantage of New Marketing Touchpoints in the Active Evaluation Stage For Part Three of this series, we are in the Active Evaluation Stage of the Customer

More information

Chapter 28: Theory of the firm monopoly (1.5)

Chapter 28: Theory of the firm monopoly (1.5) Chapter 28: Theory of the firm monopoly (1.5) Assumptions of the monopoly model Barriers to entry Revenue and costs in the unit cost picture Profit maximising price and output Revenue maximising price

More information

MPEG-4. The new standard for multimedia on the Internet, powered by QuickTime. What Is MPEG-4?

MPEG-4. The new standard for multimedia on the Internet, powered by QuickTime. What Is MPEG-4? The new standard for multimedia on the Internet, powered by QuickTime. is the new worldwide standard for interactive multimedia creation, delivery, and playback for the Internet. What MPEG-1 and its delivery

More information

Brand Extension: Building Customer Loyalty

Brand Extension: Building Customer Loyalty Brand Extension: Building Customer Loyalty Brand Extension is no longer viewed as a purely revenue vs. capability decision anymore. A successful brand extension could significantly boost the brand equity.

More information

Management Accounting 243 Pricing Decision Analysis

Management Accounting 243 Pricing Decision Analysis Management Accounting 243 Pricing Decision Analysis The setting of a price for a product is one of the most important decisions and certainly one of the more complex. A change in price not only directly

More information

Inglés II Tema: Video Games. Elaborado por: Rosario L. de Guevara Araiza. UPIBI-IPN

Inglés II Tema: Video Games. Elaborado por: Rosario L. de Guevara Araiza. UPIBI-IPN Inglés II Tema: Video Games A video game is a game that involves interaction with a user interface to generate visual feedback on a video device. USE OF THE TERM. The term video game is used as a synonym

More information

UNLEASH POTENTIAL THROUGH EFFECTIVE SERVICE QUALITY DETERMINANTS

UNLEASH POTENTIAL THROUGH EFFECTIVE SERVICE QUALITY DETERMINANTS UNLEASH POTENTIAL THROUGH EFFECTIVE SERVICE QUALITY DETERMINANTS Viruli de Silva ABSTRACT This article is based on a recent research conducted in the Sri Lankan banking sector and it discusses how the

More information

CHAPTER 8 ECONOMICS OF STRATEGY: CREATING AND CAPTURING VALUE CHAPTER SUMMARY

CHAPTER 8 ECONOMICS OF STRATEGY: CREATING AND CAPTURING VALUE CHAPTER SUMMARY CHAPTER 8 ECONOMICS OF STRATEGY: CREATING AND CAPTURING VALUE CHAPTER SUMMARY This chapter is the first of two chapters on strategy. It concentrates on the basic ways firms can create and capture value.

More information

Fastest Route to Market

Fastest Route to Market TechTarget Best Practices Case Study Fastest Route to Market Achieving economic success and industry leadership in the battle for market share Technology marketers with high growth companies require a

More information

A primer in Entrepreneurship

A primer in Entrepreneurship Prof. Dr. Institute for Strategy and Business Economics Spring semester2008 Chapter 5: Industry and Competitor Analysis Table of Contents I. Industry Analysis II. IV. The Importance of Industry Versus

More information

Market Equilibrium and Applications

Market Equilibrium and Applications Market Equilibrium and Applications I. Market Equilibrium In the previous chapter, we discussed demand and supply, both for individual consumers and firms and for markets. In this chapter, we will combine

More information

International IPTV Consumer Readiness Study

International IPTV Consumer Readiness Study International IPTV Consumer Readiness Study Methodology The Accenture International IPTV Study is based on structured telephone interviews using a standard questionnaire and quantitative analysis methods

More information

Barco Marketing Case Analysis

Barco Marketing Case Analysis Barco Marketing Case Analysis I. Position Statement: Over the past few months, many events have led Barco Projection Systems to be confronted with an important decision: Barco needs to continue its development

More information

Millennials FACTS ABOUT MEDIA CONSUMPTION

Millennials FACTS ABOUT MEDIA CONSUMPTION Millennials A 2015 Ipsos Fact Sheet With their significant purchasing power compounded by an ability to influence success in-market, Millennials are a major part of a brand s future. Ipsos offers a wide

More information

Cisco Unified Personal Communicator

Cisco Unified Personal Communicator Data Sheet Cisco Unified Personal Communicator An integral part of the Cisco Unified Communications family of products, Cisco Unified Personal Communicator is a desktop computer application that helps

More information

Testimony of. Mr. Daniel Fawcett. Executive Vice President DIRECTV November 14, 2006

Testimony of. Mr. Daniel Fawcett. Executive Vice President DIRECTV November 14, 2006 Testimony of Mr. Daniel Fawcett Executive Vice President DIRECTV November 14, 2006 Written Testimony Daniel M. Fawcett Executive Vice President, Business and Legal Affairs and Programming Acquisition DIRECTV,

More information

1 of 14 11/5/2013 4:33 PM

1 of 14 11/5/2013 4:33 PM 1 of 14 11/5/2013 4:33 PM Market power is A characteristic of all market structures. The ability to alter the market price of a product. Most common for competitive firms. Enjoyed by all firms at high

More information

Competitive Strategy: Week 8. Entry

Competitive Strategy: Week 8. Entry Competitive Strategy: Week 8 Entry Simon Board Eco380, Competitive Strategy 1 Entry Barriers Joe Bain s definition of entry barrier Anything that allows incumbant firms to earn supranormal profits without

More information

Case study: Rayovac Corporation The Rechargeable Battery Opportunity

Case study: Rayovac Corporation The Rechargeable Battery Opportunity Case study: Rayovac Corporation The Rechargeable Battery Opportunity M A R K E T I N G E G E S T I O N E D E L L E V E N D I T E 1 9 / 1 1 / 2 0 1 0 Summary Introduction The Household Battery Market Rayovac

More information

A seller who can only sell his or her goods at the equilibrium price.

A seller who can only sell his or her goods at the equilibrium price. Chapter 8, Section 1 A Perfectly Competitive Market What are the four characteristics of a perfectly competitive market? 1. Many buyers and sellers 2. All firms sell identical goods 3. Buyers and sellers

More information

At the end of Chapter 18, you should be able to answer the following:

At the end of Chapter 18, you should be able to answer the following: 1 How to Study for Chapter 18 Pure Monopoly Chapter 18 considers the opposite of perfect competition --- pure monopoly. 1. Begin by looking over the Objectives listed below. This will tell you the main

More information

WORLD REPORT ON CHILD LABOUR

WORLD REPORT ON CHILD LABOUR WORLD REPORT ON CHILD LABOUR Paving the way to decent work for young people 2015 Executive Summary Executive summary The case for accelerated global action targeting child labour and the lack of decent

More information