Business Ecosystems Flashcards
Explain Porters 5 forces
used to analyse the business environment, more specifically the profitability of entering or staying in a market.
The relative strength of each of these forces (high, moderate or low) will determine the profit potential of the industry.
Rivalry amongst competitors - existing competition and its intensity.
Threat of new entrants - increases competition, assess barriers to entry.
Threat of substitutes - Across industries (e.g rail vs bus vs private car)
Power of buyers - can force price cuts and/or quality improvements
Power of suppliers - can charge higher prices affecting profit margins.
Porters 3 generic strategies
Broad/Narrow Target & High/Low Cost.
Porter suggests three generic strategies can companies can implement to generate superior competitive performance.
Low Cost / Broad Target - Cost Leadership : Same quality as competitors at lower prices.
Low Cost / Narrow Target - Cost and Focus : as above plus concentrating only on a small part of the market.
High Cost / Broad Target - Differentiation
High Cost / Narrow Target - Differentiation and Focus.
Key Characteristics of a Business Ecosystem
Mutuality - Working together to achieve more than they could alone. Formally or informally shared ideals, standards or goals.
Orchestration - The coordination needed to make things happen.
Formally - Rules
Informally - Culture
Outline and explain the concept of value.
4 step prcess
Defining value - what does the company want to achieve and who are they creating value for?
Creating Value - This is the innovation phase.
Delivering Value - Getting the product / service to the customer, this can include the method of sale (internet, brick & mortar) and the delivery process (Courier).
Capturing residual value - The surplus in revenue after costs can be used for further innovation or distributed as dividends.
Explain Mendelows Matrix
Power/Interest
Used to identify common characteristics of stakeholders in order to prioritize how to deal with each group.
Low Power / Low Interest - Minimal Effort - those that are not our customers and not interested in our business.
High Power / Low Interest - Keep Satisfied - government.
Low Power / High Interest - Keep Informed - junior /mid-level employees, suppliers.
High Power / High Interest - Key Players - Customers, key shareholders.
Explain the 4 ecosystem Archetypes
HN
LP
ST
WP
Complexity
high: barriers to entry are high and threat of new entrants is low.
Low: Barriers to entry are low and threat of new entrants is high.
Orchestration
Tight: Orchestrators have the ability to influence behaviour or actions across the entire ecosystem.
Loose: No individual participant has significant influence across the eco system.
High complexity
Hornets Nest - Loose orchestration
Lions Pride - Tight Orchestration
Low Complexity
Shark Tank - Loose Orchestration
Wolf Pack - Tight Orchestration
