strategy #6. global e-business organizational entities with strategic issues –firms –cities,...
Post on 22-Dec-2015
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Strategy #6
Global e-Business
• Organizational entities with strategic issues– Firms– Cities, states, countries– Individuals
• Four components of e-business readiness– A technological infrastructure– Access to information and communication services– Favorable government practices– Willingness of organizations to redesign business
processes to take advantage of e-business capabilities
Building e-Business Infrastructure for National Competitive Advantage• Porter’s model• Knowledge based view• Development economics and the
threat of a digital divide
Porter’s Model of National Competitive Advantage
Firm, strategy, structure, and rivalry
Factor conditions
Related and supporting industries
Demandconditions
Knowledge Based
• Knowledge is the key resource for building competitive advantage
• Country competitiveness is based on long-term capabilities
• Pre-conditions– Human capital development– Entrepreneurial activity– Rigor of competition– Alliances for knowledge creation– National and international connectivity– Management culture
Importance for Emerging Economies
• Importance of e-business for emerging economies
• The digital divide and economic inequality
• Why developed countries should care about reducing economic inequality
The Four Tigers (Finland)
• Technology leader• Independent telecommunication industry
dating back 100 years• Cell phones – Nokia 27% market share,
global presence• Industry – university alliance• Management culture - highly participative,
informal, responsive• Coffee consumption and Internet nodes
per capita
The Four Tigers (India)
• Software industry– Geographic clusters – Bangalore, Chenai,
Heyderbad– TATA, Wipro, Satyam, Infosys, some are CMM-level
5– Complementary offerings in IT enabled services– Export revenues 2002 $6.2B
• Education – IIT, IIM• Multinational alliances and large base of
Indian nationals living abroad• English speaking
The Four Tigers (Ireland)
• IT 33% of Irish exports• Government initiatives
– Low taxes– Good labor relations– Young workforce
• Culture suited to entrepreneurial IT work
The Four Tigers (Singapore)
• Leveraged geographical location• IT with specialization in logistics• Technological backbone that links
industry, government, education, and citizenry
• Investment in education
Becoming a Tiger
Positioning of Countries
Conclusion
• Importance of 5 dimensions: human capital formation, local and international connectivity, alliances for knowledge creation, management culture, government policy
• Visionary adaptation to take advantage of the country’s unique features
• Long term view
Networks
• Positive and negative feedback• Positive feedback systems
– Can result in winner take all market– S-curve shaped pattern of growth
Demand-side Economies of Scale
• Supply-side economies of scale based on production efficiencies
• Demand-side economies of scale – Based on popularity – customers value a
product because it is widely used (positive network externalities)
– Value of a network = n*(n-1)/2*β– Norm for information products
Likelihood of a Market Tipping
Low Economies of Scale
High Economies of Scale
Low Demand for Variety
Unlikely (PBX systems)
High (spreadsheet
software)
High Demand for
Variety
Low(telephone handsets)
Depends (gaming
technology)
Evolution versus Revolution
• Trade-off between performance and compatibility
• Evolutionary strategies offer a migration path– Technical obstacles– Legal obstacles
• Revolutionary strategies offer compelling performance– 10X improvement– Growing markets offer opportunities for
revolutionary products– Revolutionary strategies are high risk
Openness versus Control
• Trade-off between your share and contribution to industry value– Reward = industry value added * your share
• Full openness means all are free to make products complying with the standard
• Proprietary control relies on patents, copyrights, and trade secrets
• In between are alliances where members have privileges
Generic Network Strategies
Control Openness
CompatibilityControlled migration
(Turbo Tax)
Open migration
(Linux)
PerformancePerformance
play(Nintendo, Palm Pilot)
Discontinuity(CD audio system,
memory stick)