Chapter 1 Flashcards
The Ecosystems of Organisations (38 cards)
What is a Wolf Pack ecosystem?
Characterised by low complexity and high levels of orchestration.
New entrants can easily enter but the ecosystem itself is complicated. Key to success is collaboration.
What is a Hornet’s Nest ecosystem?
Characterised by high complexity and low orchestration.
New entrants will find it difficult to enter the ecosystem but competitors need to find their own way to capture value, ideally in a way that’s different from their competitors. Known as fragmented competition. As there’s high barriers to entry there’s often a limited number of competitors who tend to be large.
What is a Lion’s Pride ecosystem?
Characterised by high complexity and high orchestration.
Participants are seen to be more secure. The high levels of orchestration means the orchestrator will facilitate, monitor and remunerate participants’ actions within the ecosystem.
“Winner takes all” usually one major player at a time.
What is a shark tank ecosystem?
Characterised by low complexity and low orchestration.
Participants have to create value themselves through innovation and must capture value directly. Innovation can be anything which separates organisations from the competition.
What are the 4 types of ecosystem?
- Hornet’s Nest
- Lion’s Pride
- Shark Tank
- Wolf Pack
What are the two factors used to create a type of ecosystem?
- Complexity
- Orchestration
What is high complexity defined by?
A highly complex ecosystem could be when there’s a vast range of participants that requite a sophisticated central orchestrator.
Undertaking complex activities.
Obstacles that restrict entry into the environment.
What is low complexity in an ecosystem defined by?
Participants roles being easily replaced
What is tight orchestration?
When the orchestrator is able to influence the behaviours and actions of participants across the entire ecosystem.
What is loose orchestration?
When there’s no central orchestrator so participants act more independently.
What are Porter’s Five Forces?
- Competitive rivalry
- New entrants
- Buyer power
- Supplier power
- Substitutes
How can Porter’s Five Forces be used?
To understand how profitable an industry is and to understand the forces impacting the industry profitability.
If the forces are high the industry profitability is low. If the forces are low, the industry profitability is high.
Competitive rivalry
The force will be high and the industry less profitable when:
There are a lot of competitors
There’s little difference between the products
Competitors are strong
There are exist barriers to the market
New entrants
The force will be high and the industry less profitable when:
New companies can easily enter the market
New companies are likely to or intend to enter the market
It’s harder to enter the market when there are significant barriers to entry:
- High costs of entry
- Patents
- Customer contracts in place
- Cost advantages
- Strong brands
Buyer Power
The force will be high and the industry less profitable when:
Customers are large and provide a large proportion of company profits
Customers can switch between competitors easily
Supplier Power
The force will be high and the industry less profitable when:
There are few alternative suppliers
Cost of changing suppliers is high
Substitutes
The force will be high and the industry less profitable when:
Substitutes are easily available. Substitutes are products to which a customer can easily switch and still have their needs met. Needs can be met by different types of product.
That is a participant in a business ecosystem?
The organisations or individuals within the environment
What is a Business Ecosystem?
‘An ecosystem is a complex web of interdependent enterprises and relationships aimed to create and allocate business value. Ecosystems are broad by nature, spanning multiple geographies and industries, including public and private institutions and consumers.’
A network of companies, competitors, products and stakeholders, such as suppliers and customers. They work together in a way that makes the greater than their individual elements.
That is an interaction in a business ecosystem?
The services or products that are exchanged amongst the participants in the environment.
What three main elements separate an ecosystem from a traditional market?
- Mutuality
- Orchestration
- Value creation
What are the main benefits of being part of an ecosystem?
- Creating more value for customers
- Raising barriers to entry for potential new competitors
- Reducing production costs
- Reaching new customers
Participants.
The key questions regarding the role, value and reach of a participant
What is the participant’s role? - Exact role the participant is carrying out in the ecosystem with regards to their own business
What is their key value proportion?
- The capacity and value the participant provides
What is the participant’s reach?
- Whether the participant is able to scale up its operations.
Jump with the sharks
A shark tank is highly competitive and competitors need to continue to innovate to keep ahead of new entrants.
