Strategy and business models

Question 1

Wha does porter present in his positioning model (1980)?

Answer 1

Three generic competitive strategies

1. cost leadership
2. differentiation
3. Focus
   - porter advices against being stuck in the middle

Question 2

How do you make use of the 5 forces model?

Answer 2

1. organisations should look for industries where as many forces are as weak as possible
2. organisations try to shift market forces in their favour
3. do all of this through use of model

Question 3

What is the digital impact on the five forces?

Answer 3

1. Power of buyers: increased power in terms of choice. search engines
2. threat of new entrants: easier to enter industries due to lower barriers of entry
3. power of supplier: has has decreased. however they have access to new market places (Amazon)
4. Industry rivalry: increased competition due to opportunities and possible extensions
5. Threat of substitutes: high due to a lot of alternatives, in many areas

Question 4

Why is porters five forces model important?

Answer 4

• all organisations look for competitive advantages
• need to consider:
  1. the industry
  2. the organisation
  3. the country
• central to the context they operate in and the purpose of the website

Question 5

What is a business model?

Answer 5

a framework for making money (Afuah, 2014)
- how business model describes the rational of how an organisation creates, delivers and capture value (Osterwalder 2009)

Question 6

What is the value creation NICE drivers? (Amit and Zott)

Answer 6

• argues that no one theory fully captures the value creation process
• framework identifies four interconnected drivers of value creation:
  1. novelty
  2. lock in
  3. complementarities
  4. efficiency

Question 7

What is the definition of novelty?

Answer 7

The ability to implement new and useful ideas into a market, achieve-new products/services or innovating current processes (Johansson and Mollstedt. 2006)

Question 8

What role does novelty play?

Answer 8

• social media integration
• marketplaces
• can also be seen as complementarities and for marketplaces efficiency as selection range increases

Question 9

What role does Lock-in play?

Answer 9

Loyalty needs a reason to return, Bait and hooK (IKEA beds with non-standard sizes).

• loyalty schemes
• dominant design
• personalisation
• trust
• network effects (direct and indirect)
• externalities ^

Question 10

What role does complementarities play?

Answer 10

• offer bundles (what fits with offers?)
• flights, hotels and cars
• delivery options for physical products
• collect and return stores
• connect online accounts to loyalty cards

Question 11

What role does efficiency play?

Answer 11

• concerned with reducing transaction cost
• how can product search be made easier?
• symmetric info: know as much as seller
• cost reduces, speed increased, bargain easy
• large selection range, centralised model
• easy decision making virtual assistance
• clear descriptions and product match= reduces returns
• suggested products, buying guides and eas of check out.

Question 12

Define Value

Answer 12

” What customer will pay for” (Amit and Zott 2001)