Week 4

Question 1

What is a part of the traditional business model?

Answer 1

1- Raw Materials
2- Production
3- Assembly
4- Distribution

Question 2

What is ownership costs and transaction costs?

Answer 2

Ownership costs are the costs incurred by the firm by purchasing, maintaining and depreciating physical assets.

Transaction costs are costs incurred by the firm when it creates a transaction in the marketplace.

Question 3

What is economies of scale and economies of scope in simple terms?

Answer 3

Scale- Production cost of X falls as output of X rises

Scope- Production cost of X falls as output of Y rises

Question 4

What are some of the characteristics of platforms?

Answer 4

Capable of generating vast returns

Generally lower ownership and transaction costs can be achieved

Create value by controlling a linear set of transactions

Question 5

What are the factors you should consider for a platform?

Answer 5

1. Distinctiveness and size
2. Platform sides
3. Multi-homing costs

Question 6

What are the new rules of strtegy as a result of platforms?

Answer 6

1. Resource control to resource-orchestration
2. Internal optimization to external interaction
3. Customer value to ecosystem value

Question 7

What are the implications of a platform on modern business?

Answer 7

Competition becomes more dynamic and complicated in a ‘platform world’

Porter still applies, but forces behave differently and new factors arrive