The Value Chain and Competitive Advantage shared vision is more than just sending a memo out saying were going to do this You need to reflect you strategy in all your operations Workers need to know what the company s vision is and what they should be doing Everyone should know who we are what game we re in and how were playing 10 9 12 value chain any industry or business will operate using the below model this is porter s vision set of primary activities inbound logistics operations outbound logistics marketing and sales service set of secondary activities support activities firm infrastructure HR Tech development procurement the secondary activities all cut across the primary activities all these activities contribute to the products and provide some value if your value to the customer isn t high enough to customers they will stop buying people don t buy a product or service they buy a BENEFIT They buy something because it OFFERS YOU SOMETHING ex you buy an alarm system for a house because it provides you with safety ex you buy a little black dress because it makes you look good primary activities anything that touches the product secondary activities do not touch the product support activities contribute to profit margin but often in a hard to measure way most processes are a combo of people processes and machine processes the firm with the best PROCESSES will win in most markets not how smart you are how well you execute using technology more to improve efficiency of our products to gain a competitive advantage competitive advantage there must be parts of the value chain that you are doing better than the competition sustainable comp advantage can keep it up Harder to achiever and harder to hold Can achieve sustainable competitive advantage in many ways you can differentiate yourself by having superior customer service amazon Nordstrom superior product quality people buy apple b c they think it s a superior product superior cache image buying something for the image Apple north face Uggs First mover advantage be the first out there iPad iPhone First mover does not always win You have to get out there first and then hold on resource control if you can get a hold of some resource you can compete Competitive advantage for apple and tiffany Apple competes by You get locked in as customers and as buyers creating new products or services enhance products or services differentiate products or services through very nice design Tiffany competes by differentiate products little teal box with white ribbon cache image 10 11 12 Information Goods Top 4 of the 40 under 40 are people who created information goods Learning objectives are important for test An information good is a collection of symbols It s not the medium it s the message content that is important for writing music ink on paper is simply a way to carry the notes It s the arrangement of the notes that are important which ISN T an info good A patent for a new machine A new edition of a travel guide Advice from a financial advisor An oil painting A web site that contains data on leading economic indicators A CD of interesting photos They are all an arrangement of symbols on some medium Patent is words on paper describing what an item does advice of financial advisor can be email phone call or newsletter etc An oil painting is a physical item Before 20th century the primary form of information good was paper Technology has decreased costs of publishing The Internet has completely changed role of publisher Its no longer a restricted technology b c everyone has access to Internet and everyone can become a publisher Publication history chart Traditional Network Layers Physical layer delivery of content Wires computers TV stores Code layer conduit control between content and delivery Protocols music film producers store hours inventory Content layer the creative stuff Books music dresses films images products Someone creates content an author and needs to get in distributed to consumers How does author get the content to the customer Traditionally there s the conduit publisher intermediary between content provider and customer Conduit can be Barnes and Noble Netflix etc Publisher plays 2 roles They have a network for distribution They also filter the quality decide if your content is good enough Barnes and Noble decides what books they ll sell if they re good enough Content vs conduit conduit has the power because the author s content doesn t go anywhere without the publisher Information is different from a physical item like a pair of shoes 1 Have high fixed costs and no marginal costs Costs to create first original but then no marginal costs For physical costs high first cost to create first pair of shoes and then more costs to create 2nd pair 3rd pair etc 2 Info Goods are infinitely replicable With a copy machine copy isn t as good as original But if you copy an MP3 file it is always the same quality doesn t change 3 Info Goods are easy to distribute Very simple to push an MP3 file out to other people YouTube millions of people can see content quickly 4 To get the value from info good you need to experience it You can t get the value from a book until you read it or from music until you ve heard it Because of this in order to get people to buy it you need to give them a piece of the experience Example movie trailers book review 5 Time dependent Can have a time component and therefore can be perishable 6 indestructable lasts over time ex can always access stuff on kindle This causes a problem If you re in business of selling an info good book movie etc its not good to have the product last forever So if you re a manufacturer you can do different things like giving you a limited amount of time to watch a show IPod you can buy a book for 2 weeks and then it goes away and if you want to finish you have to buy it again 7 Info goods are public goods Quality doesn t degrade like a car Non rival one person s consumption doesn t diminish amount available to another Non excludable can t exclude people Special Characteristics of IG When you make a copy of an MP3 and share it with a friend you have become a publisher If everyone can make a copy and distribute it for free this has implications for the pricing strategy It has led to inexpensive prices to download so people will do it rather than making their own copies This is why a lot of stuff costs 99 but still a lot people will only get free ones Metcalf s Law The value of a network
View Full Document
Unlocking...