8/13/2019 9.Strategy and Technology (1)

1/23

Prepared for class discussion

By

Prof. S.Suryanarayanan

STRATEGY AND TECHNOLOGY

8/13/2019 9.Strategy and Technology (1)

2/23

8/13/2019 9.Strategy and Technology (1)

3/23

Technical Standards and (ormat )ars

standards are a set of technical specifications that

producers adhere to when making the product or a

component of it.

(ormat wars

*ne standard will come to dominate a market.

+any ,attles in high-tech industries are companies

competing to set standard.

Product differentiation and competitie adantage are ,ased

on a technical standard.

8/13/2019 9.Strategy and Technology (1)

4/23

Technical Standards for Personal omputers

8/13/2019 9.Strategy and Technology (1)

5/23

Benefits of Standards

uarantee compati,ility ,etween products / compliments

&educe consumer confusion

&educe production costs

&educe risks associated with supplying complementary

products

Standards lead to low-cost and differentiation adantages

for companies.

8/13/2019 9.Strategy and Technology (1)

6/23

0 )ays Standards 1merge$

2. (irms lo,,y goernment to mandate industry

standard- pu,lic domain.

3. Standards often set ,y cooperation among

firms4forums.

5. Standards often selected ,y market demand.

6etwork effects

Positie feed,ack loop

7ockout

8/13/2019 9.Strategy and Technology (1)

7/23

Positie (eed,ack in 8& +arket

8/13/2019 9.Strategy and Technology (1)

8/23

8/13/2019 9.Strategy and Technology (1)

9/23

ost Structures in High-Tech Industries

8/13/2019 9.Strategy and Technology (1)

10/23

7aw of ;iminishing &eturnsTo produce more of a good: a company hires more la,or inestsin more plant4machinery additional resources are not asproductie increasing marginal costs.#

Strategic Significance of High-Tech ost Structure

(i

8/13/2019 9.Strategy and Technology (1)

11/23

Impact of Imitation on (irst +oer Profits

8/13/2019 9.Strategy and Technology (1)

12/23

(irst-+oer %dantages (irst to deelop4pioneer reolutionary products can lead

to enduring competitie adantage.

5 key %dantages$

*pportunity to e

8/13/2019 9.Strategy and Technology (1)

13/23

(irst-+oer ;isadantages

2. Pioneering cost- deelop technology / distri,ution

channels / educate customer

0. Prone to mistakes- uncertainties in new market

5. &isk ,uilding wrong resources / capa,ilities-

mass-market may differ from the needs of early

adopters

=. +ay inest in inferior4o,solete technology- if underlying

technology adancing rapidly

8/13/2019 9.Strategy and Technology (1)

14/23

1oint enture- deelop4marketinnoation with other companies

0. 7icense innoation- let them deelop the market

hoosing strategy$

;oes company hae complementary assets to

e

8/13/2019 9.Strategy and Technology (1)

15/23

Strategies forProfiting from Innoation

8/13/2019 9.Strategy and Technology (1)

16/23

Technological Paradigm Shifts

6ew technologies emerge that$

&eolutioni'e structure of industry

;ramatically alter nature of competition

&e@uires firms adopt new strategies

+ore likely to occur with$

6atural limits to technology- esta,lished technology

is mature / approaching natural limit

6ew disruptie technology- entered marketplace

and taking root in niches poorly sered ,y firms

using esta,lished technology

8/13/2019 9.Strategy and Technology (1)

17/23

Technology S-ure

8/13/2019 9.Strategy and Technology (1)

18/23

1sta,lished andSuccessor Technologies

8/13/2019 9.Strategy and Technology (1)

19/23

Swarm ofSuccessor Technologies

8/13/2019 9.Strategy and Technology (1)

20/23

;isruptie Technology

new technology that gets its start away from

mainstream of market and inades main market as

functionality improes...#

&eolutioni'es industry structure / competition

auses technological paradigm shift

Often causes decline of established companies

because they listen to customers who say theydo not want it.

8/13/2019 9.Strategy and Technology (1)

21/23

Implications of Paradigm Shifts-1sta,lished ompanies

9nowledge a,out how disruptie technologies canreolutioni'e markets is alua,le asset.

Important for esta,lished firms to inest in newlyemerging technologies that may ,ecome disruptie.

ommerciali'ation may re@uire different alue chain /

cost structure.

Chances of success in developing &

commercializing disruptive technology will beenhanced if it is placed in its own organization.

8/13/2019 9.Strategy and Technology (1)

22/23

Implications of Paradigm Shifts- 6ew 1ntrants

%dantages$

6o pressure to continue out-of-date ,usiness . 6o worry a,out esta,lished customer ,ase:

distri,ution channels: or suppliers.

hallenges: onstrained ,y lack of capital 6eed to manage organi'ational pro,lems from rapid

growth (ind way to take technology from small niche to the

mass-market o it alone or partner with esta,lished company

8/13/2019 9.Strategy and Technology (1)

23/23

The guy with the competitie adantage is the

one with the ,est technology.# - )alter )riston

% ,usinessAs fle