UGBA 10 Module 5

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UGBA 10 Module 5

• Lecture 2
• November 21, 2008

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Module 5 Overview

• Strategy
• Introduction to Strategy
• More Strategy
• Game Theory
• Applying Game Theory
• International Business
• Entrepreneurship

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52 Forces Model
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Analysis for the Mac
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Customers

• Home
• Academia
• Industry

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Common Issues

• Pluses
• Simple to use
• Robust
• Switching cost from
• Great loyalty of users

• Minuses
• Lack of software
• Switching cost to
• Compatibility issues
• Price

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Home (personal)

• Pluses
• iTunes, iPhone, Apple TV
• Student use
• Brand image

• Minuses
• Relatively expensive to most home PCs

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Industry

• Pluses
• Better for some tasks (e.g., design)

• Minuses
• Not as easy to integrate into a network
• Dont want to support two OSs

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What Suggests for Strategy?

• Personal (home) market better focus than industry
• Build off image (Think different but be
  careful)
• Try to lower switching costs to Macs
• Leverage integration with iTunes, iPods, iPhones,
  Apple TV, etc.

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What Suggests for Strategy?

• Personal (home) market better focus than industry
• Build off image
• Try to lower switching costs to Macs
• Leverage integration with iTunes, iPods, iPhones,
  Apple TV, etc.

Im a PC
Im a Mac
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Complements

• Software
• Peripherals
• iTunes, etc.
• Network effects

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Chicken and Egg
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Network Effects
Mac users
Mac users
Mac users
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Government

• Government antitrust action vis-à-vis Microsoft
• Trade policy
• Sales to schools
• Protection of IP

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Tools for Thinking Strategically

• SWOT
• 52 Forces
• AURA
• Game Theory

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AURA
Consider a resource or capability
No
Yes
Not very
No
Yes
Very
FIX
Yes
No
TO NEXT SLIDE
TO NEXT SLIDE
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Yes
No
No
Yes
Fix
Yes
No
FIX
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AURAfor theiPhone
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Advantages

• Positive brand image
• iTunes
• Popular interface
• Touch screen
• Lots of free publicity

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Uniqueness

• Popular brand image ? Closer to very than not
  very
• iTunes ? Very
• Popular interface ? Very
• Touch screen ? Very (at the time)
• Free publicity ? Very

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Replicability

• Popular brand image ? Hard to do
• iTunes ? Yes no
• iTunes dominance hard to replicate
• Combining MP3 phone easy (e.g., Verizon
  Rhapsody Real)
• Popular interface ? Yes
• Touch screen ? Yes
• Free publicity ? Probably not

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Ability

• No evidence Apple hasnt the ability to exploit
  these advantages in the short run.
• Long-run ability questions
• Can Apple keep iTunes dominant?
• Can Apple maintain iPhone wow factor?
• Can Apple maintain brand image?

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Overall Apple Strategy

• Exploit convergence.
• Position itself as chic, high-end brand for
  individuals to access the digital world.

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Judo Strategy
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How Microsoft Seeks not to be Thrown

• Home versions of software lower prices, but
  less features.
• Exploit existence of low-end (i.e.,
  intended-for-home) PCs.

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Todays takeaways

• 52 Forces Analysis
• Consumers
• Complements
• Government
• AURA
• Judo strategy

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Next
GAME THEORY