Strategy Analysis

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Strategy Analysis

• America Online Inc.

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• Industry Analysis Arthur Xu
• Competitive Strategy Analysis Besty Eldridge
• Corporate Strategy Analysis Elaine Fan

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Industry Analysis

• Online Service Industry

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Online Service Industry

• Customer
• Service
• Provider

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Michael E. Porters Five Force Model

• Rivalry Among Existing Firms
• Threat From New Entry
• Bargaining Power of the Buyers
• Bargaining Power of the Suppliers
• Substitute Product

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Rivalry Among Existing Firms

• Industry Concentration
• Dominating Players Are Roughly Equal in Size and
  Power
• Products Differentiation and High Switching
  Costs.

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Rivalry Among Existing Firms

• Industry Growth Is High.
• Level of Fixed Costs and Economies of Scale
• Summary Mild Competition Among Key Players

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Threat from New Entrants

• Capital Requirement
• Knowledge and Technology
• Economies of Scale.
• Access to Distribution Channel.
• Summary Barriers of Entry Are Relatively High
  and There Will Only Be A Limited Number of New
  Entries.

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MSN Is a New Entrant

• Deep-pocket Company
• Strength in Software Area

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Bargaining Power of Suppliers and Buyers

• Only A Few Big Companies Cooperatively Dominating
  This Industry
• New Entry Increased the Bargaining Power of
  Suppliers and Buyers

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Substitute Products

• New Software Such As Netscape Used for Browsing
  the Internet Was Available
• New Searching Software will Enable Customers to
  Reduce the Chaos in the Internet
• Solutions to Fix the Problem of Collecting Fees

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Substitute Products
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Conclusion

• Mild Competition Existing among the Few Industry
  Leaders
• New Entrant Has Brought Change to the Game Rules
  and Increased Both Providers and Buyers
  Bargaining Powers.
• Internet as a Substitute Product Will Make the
  Middlemans Role Shrink

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Competitive Strategy

• Definition
• Cost Leadership
• Differentiation

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AOLs Strategy - Differentiation

• Marketing
• Brand Image
• Product Variety

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Corporate Strategy

• Growth Strategy
• Stability Strategy
• Retrenchment Strategy

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AOLs Corporate Strategy

• Growth through Horizontal Integration
• Growth through Concentric Diversification

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Growth Strategy

• Strategic Alliances
• Acquisitions

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Why Growth

• Maximization of the customer subscription life
  and usage rate
• Share of Valuable Resources
• Good Fit between Company Resources and Business
  Portfolio
• Economies of Scale
• Bargaining Power over Suppliers and Customers

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Discussion