open ai

Question 1

technological

Answer 1

advabacemnets in ai hardware
computational power access
rapid ai innovation
“ ai boom”

Question 2

socio cultural

Answer 2

ethical ai demands
public perception
privacy expectations
increase in demand for computational resources

Question 3

political / legal

Answer 3

ai satefy regulations
data usage restriticons
NYT lawsuit–> New York Times sued them for taking data without conscent
also was sued by elon musk bc they breached the benefits all of humnaiity statement
copyright infringement issues
data from public sources could cause issues

Question 4

economic

Answer 4

funding competition
investor expectations

Question 5

five forces

Answer 5

supplier
- high
- hardware dependency (nvidias GPU)
- cloud services dependence (microsoft azure)
- hard to get the chips
- hardware providers like google, Nvidia made the gpu and TPU

subtitues
- low level, no comparable technologies outside of the ai domain
- gpu are dofferienated and difficult to replace, the market is also very concentrated

threat of new entrants (moderate)
- high barriers to entry like capital requirements of needing a large investment to start off
- established competitors like microsoft google who are big tech companies
- need to have knowledge about the tech
- easy access to distrubtion channels

buyers
- high
- growing alternatives like anthropic , google bard
- limited differentiation
- low switching costs

rivarly
- high number of competitors (deep mind, gemini, microsoft, meta) who have deep investments
- some of the competitors have created ecosystems like google can be linked to google docs so creates switching costs
- moderate product differentiation (most competitors offer similiar funct9onailites )
- low switching costs which creates price competition
- technological advbacemnts (competition for ai model superiority)

Question 6

key success factors

Answer 6

• strategic partnerships to get the funding necessary
• good technology
• talent acquisition and retention –> need to have people who are very knowledgeable in the field
• financial resources
• innovation
• compliance with regulations

Question 7

strengths

Answer 7

innovation and tehcnologcual leadership
strategic partnerships–> Microsoft
talent pool–> top talent
global recognition
adapdabiltu–> they keep adapting their model to become better
first mover advantage

Question 8

weaknesses

Answer 8

governance instability (their organizational structure is not good, fights over chips, employees wanted to leave because of what happened with Altman )
dependence on external infrastructure (depdnece on suppliers)
high costs and over reliance on their partnership
limited financial resources compared to competition
highoperation costs
maybe their mission statement bc they keep having to live up to it

Question 9

opportunties

Answer 9

ai expansion into new domains
partnerships
vertical integration to create the gpu chips themselves (backward integration)
pursuing artificial general intellergance

Question 10

threats

Answer 10

intensifying compeittion–> Claude 4 might surpass chat
regulatory challenges
ethical concerns–> ai might surpass human intelligence and pose risks
resource limitations
chip shortage (there was a shortage of GPU chips)
Nvidia was moving more downstream

Question 11

human resources

Answer 11

open ai mission attracted top talent in the ai field
Ilya sutksever (ex google researcher), he turned down other places to work at open ai
sam altman

Question 12

financial resources

Answer 12

capital investment from founders and investors (1 bn)
usd 13 bn investment from Microsoft
revenue streams from premium services
partnerships also need funding

began as non profit

Question 13

organizational resources

Answer 13

flexible organizational design
they restructured from non profit tp a hybrid structure to raise more capital
limited capability to generate financial resources
couldnt make deicisons resulting sam altman

Question 14

reputation resources

Answer 14

open ai foundational commitment to developing ai for the common good has enhanced its reputation
top talent wanted to come and work for ai

Question 15

physical

Answer 15

infrastructure for large scale ai training through its partnership with microsoft

Question 16

technological resources

Answer 16

chat gpt- innovate applications
advanced ai models and algorhtiksm
azure ai for Microsoft

Question 17

competitive advantages

Answer 17

nonprofit mission : built open ai reputation as an ethical leader in the field
application: chat gpt became a massive success
first mover: develop and deploy tech well before most companies
strategic partnerships: gives open ai access to the infrastructure it needs for large scale training

Question 18

competitive position

Answer 18

holds compteiieve avdnatges in the market but may lose them to due potential threats

Question 19

in the long run

Answer 19

leadership changes can create uncertainty which could impact both the internal morale and external reputation
open ai has been gradually shifting away from its original non profit model toward more profit driven approaches
open ai first mover avdnatge could fade and it could struggle to differeinate

Question 20

business level strategy

Answer 20

differeination through:
unique offering: chat focuses offerings acdbaced features like faster response times, priority access and plugins ‘
cutting edge tech: regular updates, voice regnotiion
monetization model: direct revenue approach
benefits to enterprises: greater flexibility, independence from ad based eco systems, ehcnaced control over ai solution s

Question 21

competitive advantage throigh innovation

Answer 21

investment in r and d
market leadership
innovate features

Question 22

corporate level strategy (horizontal diversification )

Answer 22

dall e: trasnforming the graphic design market–> can achieve synergy by attracting new user segments while retaining loyal develo[ers

sora: innovatong videgraphy throigh ai enables video generation and editing based on text prompts
- synergy bc it builds on all e image generation and complements static design from dall e with video solutions

Question 23

corporate level strategy with synergies across business tools

Answer 23

copilot and integrated tools creates synergy bc developers can use copilot for coding, fostering loyalty to open ai suite of tools

chat gpt plus now integrates third party plugins chat gpt plus
- features added: browning with internet connectivity
- code interpreter

Synergy: OpenAI integrates its conversational AI tool (ChatGPT) with specialized products like Copilot for developers. Developers using Copilot for coding tasks can also use ChatGPT for debugging, brainstorming, and project planning. This seamless integration keeps users within the OpenAI ecosystem.
Benefit: It ensures consistent user experiences, simplifies workflows, and fosters adoption of multiple tools

Synergy: ChatGPT Plus integrates third-party plugins, internet browsing, and a code interpreter, allowing users to perform diverse tasks—from retrieving real-time information to analyzing complex data—all within one platform.
Benefit: Expands the tool’s utility, encouraging users to upgrade to premium plans and rely on OpenAI tools for a variety of need

Question 24

cooperative strategy (strategic partnerships )

Answer 24

partnerships with companies like microsoft, integrating open ai models into azure

Question 25

industry analysis

Answer 25

financially demanding, fast growing and contrversoail industry
have to follow regulations
innovate quickly to keep up
companies innovate very fast in the span of weeks (google announcing their gemini 1.5 pro in one week) or months
very regulated like google had to stop gemini from generating images of people

Question 26

supply chain management

Answer 26

2 ,major suppliers gpu and gpu from Nvidia and google
GPU shortage
access tp azure and microsfots web shortage services

Question 27

operations**

Answer 27

model development
open source/ closed source
intense computational precess
gpt training cost of 4 bn

Question 28

distribution

Answer 28

open ai models are distributed through APIS and apps such as chat or DALL e
open ai distribution

Question 29

marketing and sales

Answer 29

subscription service to chat gpt plus for 20 us a month
chat users reached 100 m within 2 months of launch

Question 30

follow up

Answer 30

continuous update on chat gpt 4
intergation of new features showing commitment to customer needs

Question 31

financing

Answer 31

non profit to capped porifut structure
investors can earn up to 100 x return
us 1 bn investment from microsfokt

Question 32

human resource managemnt

Answer 32

talented individuals drive the organization foward
mission attracts top talent and favours employee retention
loyalty to leadership

Question 33

information systems management

Answer 33

partnership with MS azure gave them access to cloud storage services

Question 34

why did open ai have to switch from non profit to a hybrid model

Answer 34

really high operational costs and couldn’t just rely on donations

Question 35

why did open ai get into a partnership with Microsoft

Answer 35

got the funding needed
can integrate open ai features into Microsoft
expanding open ai
microsoft is able to get into ai

Question 36

how does ai work

Answer 36

design the structure of the model
train the model using data
then refined during an iretaed fine tuning process

Question 37

anthropic

Answer 37

the people who had established it had left open ai
has a similar mission to ope n ai
created a partnership with google cloud and amazon

Question 38

how was sam Altman fired

Answer 38

bc of the unusual governance structure it allowed the non profit board full governance rights through a simple majority vote