Lecture Five - Digitalization Flashcards
Business Competitive Advantage - Definition
The ability of a company to offer goods or services at a better quality or lower cost than competitors.
Business Competitive Advantage - Components
Company’s resources
Structure
Supply chain network
Business Competitive Advantage - Strategic Agility
Ability to adapt to market changes and maintain competitiveness.
Business Competitive Advantage - Strategic Agility Taxonomy
Strategic Sensitivity: Ability to understand the environment tactically.
Strategic Response: Ability to react or proactively adapt to environmental changes.
Collective Capabilities: Skills and resources that enhance strategic agility, derived from human infrastructure and information resources.
Strategic Agility - Concept
Concept: The capacity of an organization to remain flexible and responsive to changing business environments.
Strategic Agility - Components
Strategic Sensitivity: Tactical awareness of market dynamics.
Strategic Response: Proactive and reactive strategies to leverage changes.
Collective Capabilities: Leveraging organizational human capital and information resources for strategic agility.
Strategic Agility - Importance
Enables organizations to survive and thrive amidst dynamic market conditions.
Types of Business Models
Freemium: Offers basic services for free while charging for premium features (e.g., LinkedIn).
Service Sales: Direct sale of services to customers (e.g., Microsoft Teams).
Subscriptions: Recurring revenue from ongoing service access (e.g., Spotify).
Retail: Selling goods to consumers online or in physical stores (e.g., Amazon).
Commissions: Revenue from facilitating transactions (e.g., eBay).
Advertising: Generating income through ad placements (e.g., Google).
Licensing: Selling rights to use proprietary content (e.g., Apple).
Freemium Model - Definition
Combines free and premium services, monetizing a small percentage of users who pay for enhanced features.
Term coined by entrepreneur Jarid Lukin.
Freemium Model - Strategy
Offer a basic service for free to attract users.
Convert a percentage to paying customers for additional features or content.
Freemium Model - Anderson’s 5%/95% Rule
Companies give away 95% of products/services for free, profiting from the 5% that pay.
Freemium Model - Critical Decision
Determining what to offer for free and what to charge for is crucial to the model’s success.
Advertising Model - Concept
Revenue generation through selling ad space within apps or platforms.
Advertising Model - Example
Google: Earns revenue from search and display advertising.
Social Media Platforms: Twitter and Instagram monetize user engagement through targeted ads.
Advertising Model - Benefits
Strengthens mobile revenue streams.
Provides free access to users while monetizing through advertisers.
Commission Model - Definition
Generates revenue by taking a commission from transactions facilitated through the platform.
Commission Model - Examples
eBay: Charges fees for listing and selling items.
Real Estate Brokers: Earn commissions on property sales.
Commission Model - Advantages
Aligns business success with transaction volume.
Encourages a large user base to drive transactions.
Fee-for-Service Model - Concept
Customers pay based on the amount of service or product usage.
Fee-for-Service Model - Examples
Telecommunications: Pay-as-you-go phone services charge only for minutes used.
Consulting Services: Clients pay for the hours or services rendered.
Fee-for-Service Model - Advantages
Flexible pricing aligned with customer needs.
Encourages efficient service use by customers.
Licensing Model - Definition
Selling rights to use proprietary content or technology to third parties.
Licensing Model - Common Use
Software Publishers: License software products to users or businesses.
Media Companies: License content for distribution or broadcast.
Licensing Model - Example
Apple licenses its operating systems to device manufacturers.
Licensing Model - Advantages
Provides a recurring revenue stream.
Expands market reach without direct sales efforts.
Subscription Model - Definition
Recurring revenue model where customers pay a regular fee for continued access to products or services.
Subscription Model - Example
Streaming Services: Spotify charges a monthly fee for ad-free music streaming.
Software as a Service (SaaS): Platforms like Adobe Creative Cloud offer subscription-based access to software.
Subscription Model - Benefits
Predictable revenue stream.
Builds long-term customer relationships.
Encourages continuous product/service improvement.
Retail Model - Definition
Selling goods directly to consumers through physical or online stores.
Retail Model - Evolution
Shift towards e-tailing with digital payment and delivery methods.
Retail Model - Example
Amazon dominates the e-commerce space with a vast product selection and efficient logistics.
Retail Model - Advantages
Direct consumer interaction and feedback.
Flexibility in product offerings and pricing strategies.
Business Environment Understand - Purpose
Staying informed and agile in a dynamic business landscape.
Business Environment Understand - Methods
Why: To learn, seek employment, and stay informed.
What: Engaging with tech and business news to grasp current trends.
How: Regularly visiting informative websites and resources.
Value of Technology in Business - Debate
Technology’s impact on business varies among researchers.
Value of Technology in Business - Views
Direct Impact: Technology drives business improvements and efficiencies.
Indirect Impact: Supports strategic alignment and business processes (Mavengere, 2013).
Skeptical View: Nicholas Carr argues technology alone doesn’t provide competitive advantages.
Value of Technology in Business - Nicholas Carr’s Thesis
ICT is an infrastructure available to all.
Advantage lies in aligning ICT with business strategies rather than in ICT itself.
Learning Activity - Leavitt’s Model (1965)
Framework for assessing organizational change impacts.
Components: People, Technology, Structure, and Tasks.
Digitalization and Business Strategy - Emerging Technologies
Blockchain & Smart Contracts: Enhancing transparency and efficiency in transactions.
Robotics & 3D Printing: Automating production and enabling customization.
Artificial Intelligence (AI): Driving data analytics and decision-making.
Cognitive & Quantum Computing: Solving complex problems beyond traditional computing capabilities.
Digitalization and Business Strategy - Digitalization Impact
Changes in business operations, roles, and offerings.
Influence on processes, KPIs, leadership, and organizational structure (Parviainen et al.).
Digitalization Wide and Deep Opportunities
Process Level: Streamlining workflows and reducing manual steps through digital tools.
Organization Level: Innovating services and eliminating outdated practices.
Business Domain Level: Shifting roles and value chains within ecosystems.
Society Level: Transforming societal structures and decision-making processes.
Goals of Digitalization
Internal Efficiency: Optimizing internal processes via digital means.
External Opportunities: Capitalizing on new business prospects.
Disruptive Change: Altering traditional business roles and creating new paradigms.
Industry Revolution and Future View - Industry 4.0 and Beyond
Permanent Adaptability: Businesses dynamically respond to market demands.
Personalized Offerings: Customizing products/services to meet individual client needs.
Efficient Post-Sales Service: Enhancing customer experience with timely support.
Rapid Development Cycles: Shortening time-to-market for products and services.
Data-Driven Insights: Leveraging analytics from diverse sources for real-time decision-making.
Pre-Digitalization Challenges:
Data-Intensive Processes: Time-consuming and complex workflows.
Information Overload: Difficulty managing vast data pools.
Data Quality Issues: Ensuring accuracy and integrity.
Unmanageable Content: Difficulty organizing and retrieving documents.
Missed Insights: Overlooking relevant information and business opportunities.
Customer Perception: Influence on brand reputation and product perception.
