Technology Strategy

Strategy Strategy is achieving an unassailable industry position Porter (1980) Strategy is building and leveraging unique resources Prahalad & Hamel (1990) Strategy is simple rules for pursuing emerging opportunities Eisenhardt & Sull (2000)

Technology Strategy The creation of a unique and valuable position, involving a set of technology-related activities; integrating technology plan and action into a chosen whole The role of technology strategy: Technology is a resource and a potential source of distinctive core competence To manage technology as a resource and distinctive competence, a technology strategy must be developed The technology strategy must support the business strategy in developing a competitive advantage

SWOT Analysis Strengths (internal) Weakness (internal) Oppprtunities (external) Threats (external)

Porter’s Value Chain Support activities Primary activities Margin Firm infrastructure Human resource management Technology development Procurement Inbound logistics Operation Outbound logistics Marketing and sales Service Primary activities Margin

Porter’s 5-Force Industry Analysis Framework Suppliers Sources of bargaining power: Switching costs Differentiation of inputs Supplier concentration Presence of substitute inputs Importance of volume to suppliers Impact of inputs on cost or differentiation Threat of forward/backward integration Cost relative to total purchases in industry New entrants Entry barriers: Economies of scale Brand identity Capital requirements Proprietary product differences Switching costs Access to distribution Proprietary learning curve Access to necessary inputs Low-cost product design Government policy Expected retaliation Industry competitors Factors affecting rivalry: Industry growth Concentration and balance Fixed costs/value added Intermittent overcapacity Product differences Brand identity Substitution Threat determined by: Relative price performance or substitutes Switching costs Buyer propensity to substitute Switching costs Information complexity Diversity of competitors Corporate stakes Exit barriers Buyers Bargaining power of buyers: Buyer concentration Buyer volume Switching costs Buyer information Buyer profits Substitute products Pull-through Price-sensitivity Price/total purchases Product differences Brand identity Ability to backward-integrate Impact on quality/performance Decision makers’ incentives

Generic Strategy Overall cost leadership Overall differentiation Focus-segment cost leadership Focus-segment differentiation focus The areas of competition The way of creating the value

BCG’s Growth-Share Matrix High Share Low Share High Growth Star Question mark Low Growth Cash cow Dog $

Strategy as the Resource-based View The RBV has two underlying assertions Capabilities will differ among firms (resource heterogeneity) These differences may be long lasting, resource immobility Resources include competencies & capabilities Competitive advantage flows from building unique, valuable resources that are difficult to imitate Mata et al 1995

Capabilities of the Firm Value Propositions What we can offer Capabilities What we can do Resources Things we have

Core Competency Views the collective learning in an organization as a resource Three tests for identifying a core competency: It provides potential access to a wide variety of markets, It makes significant contribution to perceived customer benefits It is difficult to imitate What are your firm’s core competencies? Prahalad and Hamel (1990)

Capabilities Adapting, integrating, and reconfiguring internal and external organizational skills, resources, and functional competences to match the requirements of a changing environment. Capabilities are something that a firm does based on the collective knowledge that it has in its core competencies Your firm’s capabilities?

Value Net Customers Competitors Company Complementors Suppliers Source: Brandenburger and Nalebuff, Coopetition (1996)

Nintendo and Video Game Customers Kids, parents Toys “R” Us, Wal-Mart, etc. Control supply of game cartridges Competitors Atari, Commodore, etc. TV, books, sports Develop cheap hardware and hit games to start virtuous circle Move down experience curve Bring in outside game developers and require exclusivity Complementors Acclaim, Electronic Arts, etc. (game development) Sideway-integrate into software business Limit number of titles per year per licensee to keep developers symmetric Nintendo Suppliers Ricoh, Sharp, etc. (microchips) Marvel, Disney, etc. (game characters) Use trailing-edge technology Develop the Mario character internally