Business Strategy Mapping the landscape – to your by wanghonghx

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									Mapping the landscape – to
your advantage!

         Term 3, 2003
          Paul Kerin




                             1
In search of value…
   Five Forces: industry-centric approach to
    identifying value opportunities

   Identifies opportunities, but doesn’t prescribe
    how to realise them

   PARTS and Value-Net frameworks
    complement the five forces: help identify
    value opportunities – and how to realise them
    – from a firm-centric perspective
                                                      2
        Defining the game of
        business: PARTS
   Any game can be defined along 5 dimensions:

       Players: who is playing – or may play – the game?
       Added value: a player’s unique contribution to the “size of the pie”
       Rules: mutually agreed or imposed principles as to how the game
        must be played
       Tactics: actions taken to influence the perceptions / behaviours of
        other players
       Scope: the boundaries within which the game is played

   Key question: how can we change – or use – the PARTS to
    our advantage? (today, we’ll focus largely on P, A and T)
                                                                               3
   Players – Value Net

                            Customers




Competitor                    Company                                   Complementors
s



                              Supplier
                              s

             Source: Brandenberger and Nalebuff, “Co-opetition”, 1996
                                                                                        4
    Players – Value Net vs Five Forces

               Customers          Five Forces




Competitor     Company      Complementors
s
 Rivalry
 New entry                     6th force?

 Substitutes
               Supplier
               s


                                                5
Players: complementor examples -
         demand-side

     Hardware and software

     Cars and auto loans

     Intel and ProShare




                                   6
    Players: complementors vs
    competitors – demand-side

   A player is your complementor if customers
    value your product more when they have the
    other player’s product available than when
    they have your product alone

   A player is your competitor if customers
    value your product less when they have the
    other player’s product available than when
    they have your product alone
                                                 7
    Players: complementors vs
    competitors – supply-side

   A player is your complementor if it is more
    attractive for a supplier to provide resources
    to you when it’s also supplying the other
    player than when it’s supplying you alone

   A player is your competitor if it’s less
    attractive for a supplier to provide resources
    to you when it’s also supplying the other
    player than when it’s supplying you alone
                                                     8
Players: complementor examples –
         supply-side
   Compaq & Dell
    compete with each other for the latest Intel
    chip
    complement each other in defraying Intel’s
    R&D costs
   Qantas & Delta
    compete with each other for landing slots
    and gates
    complement each other in defraying
    Boeing’s R&D costs
                                                   9
Players: multiple roles
   Competitive threat or complementary
    opportunity?

       Movie theatres & video rentals

       Traditional and internet booksellers

       ATM machines

                                               10
    Players: multiple roles –
             making markets

   Lygon Street (Italian restaurants)

   Chinatown (Chinese restaurants)

   Broadway (theatre, music and dance)

   Silicon Valley (technology ventures – supply-side)

Complementors in making the market
 Competitors in dividing the market
                                                         11
Players: friends or foes?
         Friends
Customers, Suppliers, Complementors

         Foes
       Competitors



                                      12
Players: the competitive mindset
   The bias:
       Customers and suppliers have to choose between
        opportunities with us and with others
       We’re taught to think in terms of constraints,
        trade-offs, substitution

   To correct the bias:
    Think complementor as well as
    competitor

                                                     13
Added value: from creation to
            division

   Objectives?
       Maximise size of pie?
       Maximise proportion of pie I get?
       Maximise size of my piece of pie?

   Need to be aware of the relative power
    of others in the game – relative added
    values
                                             14
Added value: recap

   What you get is based on your relative
    added value
   Added value = total value with you
                      less
                 total value without you
   It is what you bring to others


                                             15
Added value vs what do you get?

   Egocentric vs. Allocentric

   Added values and BATNAs

   Examples: cost sharing and a
    bankruptcy problem from the Talmud


                                         16
Allocentrism
   Added value
       Put yourself in the shoes of others to assess your
        added value
   Rules
       Put yourself in the shoes of others to anticipate
        reactions (attempts to change the game) in
        response to your actions
   Tactics/perceptions
       Put yourself in the shoes of others to see how
        they see the game – and use tactics to change
        their perceptions
                                                             17
Tactics: perception games

   Texas shoot-out
       One side states price
       Other side says buy or sell
       Shooter or Shootee?

   Different valuations


                                      18
Tactics: Texas shoot-out
   If you know the other side’s value, go
    first




   If you are uncertain, it’s better to go
    second
                                              19
Tactics: irrationality
   Profits are not the only objective…
    Pride, jealousy, fairness matter

   If ignore these, you can both lose

   Even if you think others are misguided, don’t
    impose your rationality on them

              Allocentrism
                                                    20
Changing the game
   From mapping the landscape to shaping
    it!
   The five levers – PARTS
   We’ll examine these more closely in the
    Bitter Competition case…



                                          21

								
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