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Digital Business Development > L11: Platform Modularity & Envelopment > Flashcards

L11: Platform Modularity & Envelopment Flashcards

1
Q

Modularity (Blank)

A
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2
Q

Explain modularity

A

decomposed elements like LEGO bricks

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3
Q

What are the 3 types of benefits in relation to modularity

A

Strategic
innovative
system

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4
Q

Strategic benefit

A

Agility
flexibility
variety
differentiation of products between customer segments

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5
Q

System benefits

A

no system reliance (LEGO)
composable architecture

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6
Q

Innovation benefits

A

innovation speed as to fewer dependencies

decoupling possible

radical innovation at component level

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7
Q

What is a module?

A

An extension to an app with new features

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8
Q

Two types of modules

A

Dependent
Independent

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9
Q

Dependent module

A

Interacts with other modules (Subway Surfer)

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10
Q

Independent module

A

Interact with platform (Google)

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11
Q

4 different forms of modularity (model)

A

2 dimensions:
Disparity in updating
User heterogonity

4 forms:
Modular in use (sell components)
Modular in use (promote apps)
Integral
Modular in production

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12
Q

Integral

A

Every couple of years, the typical smartphone user buys a new device and discards (or, hopefully, recycles) her old phone. Full replacement is needed because the phone is integral in design—even the battery is internal to the structure and cannot easily be replaced independently. By incorporating all of the components into an in-tegral package, manufacturers such as Apple can create a sleek, intricate, high-performance product without facing trade-offs that might make the phone bigger and bulkier. This integral hardware design has been key to Apple’s extraordinarily high profits.

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13
Q

Modular in use (2 types)

A

The modular smartphone concept (ongoing development and new modules developed) discussed to this point is what is called modular-in-use, be-cause it is intended that the end users personally make changes to (i.e., update) their devices.

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14
Q

Modular-in-production

A

some products are modular-in-production, meaning that a platform is designed to accommodate modules that can be swapped one for anoth-er during manufacture of the product, but it is not necessarily intended that users themselves make the swap.

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15
Q

The modularity penalty

A

The performance of a modular product can be bad ad the components are not optimized to work together

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16
Q

The integrality penalty

A

The complexity of dealing with all the component’s interactions

Can give high inventory costs due to big safety stocks, and less robust - if one thing shots down it all does

17
Q

Drawbacks of modularity

A

Increase risk of imitation
increase risk of fuzzy platform profile
increase risk of module drowning

18
Q

Platform Envelopment (blank)

A
19
Q

What is Platform Envelopment?

A

A strategy for platform providers to enter a new market by bundling it’s own platform’s functionality with that of the target’s = leveraging shared user bases and common components

20
Q

What is needed for succesful envelopment?

A

Strong network effects and overlapping userbases

21
Q

3 types of envelopment attacks

A

Complements
weak substitutes
Functional related

22
Q

3 benefits of envelopment

A

Price discrimination
Economies of scope
Opportunity of tying at an attractive price due to userbase overlap

23
Q

Provide examples of envelopment

A

Apple OS X/Adobe PDF
Facebook news feed/Twitter
Iphone/gameboy

24
Q

What is bundling

A

Selling two product together at a discounted price

25
Q

2 bundling forms

A

Mixed
Pure

26
Q

Pure bundling

A

Attacker offers core platform (A)+new platform (T’) = (AT’) where the new platform (T’) is functionality similar with the target platform (T)

27
Q

Mixed bundling

A

Attacker offers core platform (A) and enter target platform (T)’s market by offering a new platform (T’) and core+new platform (AT’)

The company is competitive on different markets

28
Q

Tying through bundling

A

The attacker seeks to capture T customers who also purchase A, by tying the purchase of A and T’ in an AT’ pure bundle

This reduced the market share of T

Example: Disney + og HULU

Digital Business Development (13 decks)

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