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changing business strategically > business ecosystems > Flashcards

business ecosystems Flashcards

1
Q

business ecosystem

A

a set of actors whose products and services jointly create value by offering a solution for customer job to be done

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2
Q

companies that are part of a business ecosystem should pay attention to:

A

the management of their relationships with their ecosystem partners

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3
Q

risks of business ecosystems

A

initiative risks
integration risks
interdependence risks

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4
Q

initiative risks

A

internal challenges to innovate in an innovation project

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5
Q

initiative risks emerge from

A

from a company’s internal processes or from its relationships with external partners, such as suppliers

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6
Q

integration risks

A

availability of an integrated solution for customers

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7
Q

integration risk question

A

will there be a meaningful offering to customers that bundles the focal company’s innovation with complementary products?

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8
Q

interdependence risks

A

availability of complementary products

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9
Q

question of interdependence risk

A

will there be adequate complementary products to the focal company’s innovation?

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10
Q

assessing interdependence risk

A

based on the probabilities of estimated delays caused by complementary innovators

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11
Q

causes of delays by complementary innovators

A

internal development challanges
regulatory delays
incentive problems
financial difficulties
leadership crises

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12
Q

for a company to create value in an ecosystem the following needs to be in place:

A

its suppliers need to be able to provide necessary inputs reliably
its complementors need to be able to develop complementary products needed by the customers

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13
Q

importance of interdependence risk

A

particularly important to manage because relationships with complementors and suppliers can severely affect value creation

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14
Q

effect of innovation challenges of suppliers

A

innovation challenges of suppliers can enhance value creation through the development of vrin knowledge with its suppliers and vrin relational assets with its supplier in response to cooperation to find a solution

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15
Q

effects of innovation challenges with complementors

A

Innovation challenges of complementors reduce value creation, as customer demand can decrease due to unavailability of complementary products

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16
Q

governance of ecosystem transactions

A

Governance form of transactions affects a firm’s ability to generate a coordinated response to changing technology and market conditions

17
Q

two factors affecting the type of governance

A

adaptability of coordination
cost of coordination

18
Q

adaptability of coordination

A

how easily can a firm influence the activities within its ecosystem to generate a coordinated response to changing technology and market conditions

19
Q

factors affecting the adaptability of coordination

A

ability and willingness of interdependent parties to adopt their activities and undertake non-contractable investments during periods of change
stronger coordination forms allow better adaptability because they give coordinating parties more authority in responding to changing conditions

20
Q

cost of coordination

A

How costly is it for a firm to influence the activities within its ecosystem to generate a coordinated response to changing technology and market conditions?

21
Q

factors affecting the cost of coordination

A

the intensity of incentives reflecting the extent to which parties are compensated for their contributions toward firm performance and the bureaucratic costs associated with governance and decision-making

22
Q

forms of governance

A

market (low costs, low adaptability)
alliance (low to medium costs, medium to high adaptability)
hierarchy (high cost, high adaptability)

23
Q

market governance

A

simple buy-sell transactions (arm’s length buy-sell transactions)

24
Q

characteristics of market governance

A

low costs of coordination (market forces (price system) takes care of coordination)
low adaptability (lack of control over market forces makes coordination difficult)

25
Q

hierarchy governance

A

carrying out transactions internally (internal r&d or acquiring complementors)

26
Q

characteristics of hierarchy governance

A

high cost of coordination (inertia causes inefficient coordination)
high adaptability of coordination (authority is a powerful management tool (superior communication channels, coordination routines, and allocation of decision rights)

27
Q

drivers of high costs of coordination of hierarchy governance

A

impairment of incentives (difficulties mimicking high-powered incentives of the market)
absence of disciplinary forces (additional bureaucratic costs from procurement practices that favor internal units and general politicking underlying firms’ operating and investment decisions)

28
Q

alliance governance

A

contractual collaboration agreement between a focal firm and its complementors

29
Q

characteristics alliance governance

A

medium cost of coordination (alliances encourage cooperation by aligning incentives)
medium to high adaptability of coordination (communication channels and coordination routines)

30
Q

alliance scope

A

the extent of activities that partners jointly carry out through the alliance as compared to their total set of activities

31
Q

effect of alliance scope:

A

greater alliance scope–>higher organizational adaptability and greater incentive alignment –> greater potential value from investing early in new technology –> greater likelihood for firm to invest in new technology

32
Q

transaction cost theory

A

the boundaries of firms are determined by assigning transactions to governance structures in a way that minimizes exchange hazards associated with each transaction

33
Q

exchange hazards

A

are the possibility that a transaction partner will request a better contract than originally negotiated

34
Q

drivers of exchange hazards (leverage)

A

existence of specialized assets (lead to outsourcing)
technological uncertainty (difficulty specifying the conditions of the exchange transaction)

35
Q

which factor determines the level of protection against exchange hazards?

A

the adaptability of coordination

36
Q

optimal governance form when exchange hazards are low

A

market because it is the least costly

37
Q

optimal governance form when exchange hazards are moderate

A

alliance because it provides more protection than markets and is less costly than hierarchy

38
Q

optimal governance form when exchange hazards are high

A

hierarchy, provides the best protection (everything is internal)

39
Q

alliances with complementors

A

firms that coordinate with complementors through alliances are more likely to make risky investment in new technologies

changing business strategically (6 decks)

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