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Technology Strategy

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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)

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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

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SWOT Analysis

Strengths (internal)

Weakness (internal)

Oppprtunities (external)

Threats (external)

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Porter’s Value Chain

Support activities

Firm infrastructure

Human resource management

Technology development

Procurement

Inbound logistics

Operation Outbound logistics

Marketing and sales

Service

Primary activities Margin

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Porter’s 5-Force Industry Analysis FrameworkSuppliers•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

Industry competitors•Factors affecting rivalry:•Industry growth•Concentration and balance•Fixed costs/value added•Intermittent overcapacity•Product differences•Brand identity

Buyers•Bargaining power of buyers:•Buyer concentration•Buyer volume•Switching costs•Buyer information•Buyer profits•Substitute products•Pull-through

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

Substitution•Threat determined by:•Relative price performance or substitutes•Switching costs•Buyer propensity to substitute

•Price-sensitivity•Price/total purchases•Product differences•Brand identity•Ability to backward-integrate•Impact on quality/performance•Decision makers’ incentives

•Switching costs•Information complexity•Diversity of competitors•Corporate stakes•Exit barriers

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Generic Strategy

The areas of

competition

The way of creating the value

overall

focus

Overall cost leadership

Overall differentiation

Focus-segmentcost leadership

Focus-segmentdifferentiation

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BCG’s Growth-Share Matrix

High Share Low Share

High Growth Star Question mark

Low Growth Cash cow Dog

$

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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

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ResourcesThings we have

CapabilitiesWhat we can do

Value PropositionsWhat we can offer

Capabilities of the Firm

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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

Prahalad and Hamel (1990)

What are your firm’s core competencies?

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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?

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Value Net

Customers

Company ComplementorsCompetitors

Suppliers

Source: Brandenburger and Nalebuff, Coopetition (1996)

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Nintendo and Video Game

CustomersKids, parentsToys “R” Us, Wal-Mart, etc.Control supply of game cartridges

SuppliersRicoh, Sharp, etc. (microchips)Marvel, Disney, etc. (game characters)Use trailing-edge technologyDevelop the Mario character internally

CompetitorsAtari, Commodore, etc.TV, books, sportsDevelop cheap hardware and hit games to start virtuous circleMove down experience curveBring in outside game developers and require exclusivity

ComplementorsAcclaim, Electronic Arts, etc. (game development)Sideway-integrate into software businessLimit number of titles per year per licensee to keep developers symmetric

Nintendo