Proposal

1
Proposal

• Group 4 Rong Liu and Ruth Chapman

2
Review

• Assigned article IS Redraws Competitive
  Boundaries published in HBR. We are interested
  in two points .
• 1. Original article dealt with different level
  using of IOS. We extend this idea to the
  ownership and investment in Electronic Networks.
• 2. Had examples from various industries
  especially in airlines industry.

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Ownership of IOS

• It is important because it affects the level of
  network-specific investments, which in turn
  determine the profitability and in some cases the
  viability of these networks.

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Salient Concept

• The degree to which network participants are
  indispensable in making network assets productive
  base on the perspective of t he definition of an
  electronic network as a set of participants and a
  portfolio of assets.

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Some Results

• If one or more assets are essential to all
  network participants, then all the assets should
  be owned together.
• Participants that are indispensable to an asset
  essential to all participants should own all
  network assets.
• The most important point, in the absence of an
  indispensable participant, and as long as the
  cooperation of at least two participants is
  necessary to create value, sole ownership is
  never the best form of ownership for an IOS
  system.

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Thought

• This latter results implies that as the leading
  network participants become more dispensable, we
  should see an evolution towards forms of joint
  ownership.

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Our focus

• Airline industry, innovate field.
• Evaluate the appropriation of value by the IOS
  ownership from deploying systems in travel
  agencies.
• These benefits beyond fees from
  travel agent should be seen in the vendor
  airlines market share between cities and in the
  overall performance of the airline at an industry
  level.

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Value Appropriation

• Appropriability refers to the innovators ability
  to appropriate the benefits of an innovation for
  itself in other words, this refers to the
  firms ability to sustain the benefits.

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Co-specialized Assets

• Co-specialized assets are groups of at least
  valuable assets that are more valuable together
  than they would be separately.

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Outlook of direction

• The final paper analysis will view the challenge
  of attaining and sustaining an advantage from
  technology using theories of resource-based
  competition.
• Also, focus on a firms ability to capture
  benefits from investing in IOS to achieve
  critical mass in highly competitive markets.

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Development of IOS in Airline History

• SABRE Was the first CRS for the airlines -
  American Airlines
• IBM offered a packaged system called PARS to any
  airline
• In 1990, World Wide Web became prevalent prior
  to that, only the airlines and the travel
  agencies made airline reservations.

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Cont.

• Civil Aeronautics Board and Dept. of
  Transportation made rules to attempt to eliminate
  screen bias (results in increased sales by CRS
  host airline due to its flights being listed
  first).
• Examine other factors that result in favoritism
  towards CSR vendors

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Basic Hypothesis

• CRS system is positively related to airline
  performance. Our whole final results should
  support it.

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Research based on

• Find suitable model to analyze airline
  performance as a function of IOS ownership.
• At least choose two models to compare performance
  results.
• Find certain major airlines
• Collect data for a 5-10 years to run the model

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Variables

• Independent variables
• such as number of travel agencies using a
  particular CRS vendors system,
• number of departing flights booked,
• the difference of air miles booked between years
• Dependent variables
• such as market share
• Profits

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• Want to make sure studies do not just show
  correlation of CSR use with results, but also
  demonstrate causality.
• Just because a company is profitable and invests
  in IOS doesnt mean that the profits were caused
  by use of IOS.
• Be wary of reverse causality where the profits
  predetermine the investment in IOS instead of the
  other way around.

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Any suggestion???

• Any Question?