Technology Strategy

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Technology Strategy
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Strategy

• Strategy is achieving an unassailable industry
  position
• Porter (1980)
• Strategy is building and leveraging unique
  resources
• Prahalad Hamel (1990)
• Strategy is simple rules for pursuing emerging
  opportunities
• Eisenhardt Sull (2000)

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Technology Strategy

• The creation of a unique and valuable position,
  involving a set of technology-related activities
  integrating technology plan and action into a
  chosen whole
• The role of technology strategy
• Technology is a resource and a potential source
  of distinctive core competence
• To manage technology as a resource and
  distinctive competence, a technology strategy
  must be developed
• The technology strategy must support the business
  strategy in developing a competitive advantage

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SWOT Analysis

• Strengths (internal)
• Weakness (internal)
• Oppprtunities (external)
• Threats (external)

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Porters Value Chain
Support activities Firm infrastructure
Support activities Human resource management
Support activities Technology development
Support activities Procurement
Support activities Inbound logistics Operation Outbound logistics Marketing and sales Service
Support activities Primary activities Primary activities Primary activities Primary activities Primary activities Margin
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Porters 5-Force Industry Analysis Framework

• Suppliers
• Sources of bargaining power
• Switching costs
• Differentiation of inputs
• Supplier concentration
• Presence of substitute inputs
• Importance of volume to suppliers
• Impact of inputs on cost or differentiation
• Threat of forward/backward integration
• Cost relative to total purchases in industry

• New entrants
• Entry barriers
• Economies of scale
• Brand identity
• Capital requirements
• Proprietary product differences
• Switching costs
• Access to distribution
• Proprietary learning curve
• Access to necessary inputs
• Low-cost product design
• Government policy
• Expected retaliation

• Industry competitors
• Factors affecting rivalry
• Industry growth
• Concentration and balance
• Fixed costs/value added
• Intermittent overcapacity
• Product differences
• Brand identity

• Substitution
• Threat determined by
• Relative price performance or substitutes
• Switching costs
• Buyer propensity to substitute

• Switching costs
• Information complexity
• Diversity of competitors
• Corporate stakes
• Exit barriers

• Buyers
• Bargaining power of buyers
• Buyer concentration
• Buyer volume
• Switching costs
• Buyer information
• Buyer profits
• Substitute products
• Pull-through

• Price-sensitivity
• Price/total purchases
• Product differences
• Brand identity
• Ability to backward-integrate
• Impact on quality/performance
• Decision makers incentives

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Generic Strategy
Overall cost leadership
Overall differentiation
overall
Focus-segmentcost leadership
Focus-segment differentiation
focus
The areas of competition
The way of creating the value
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BCGs Growth-Share Matrix
High Share Low Share
High Growth Star Question mark
Low Growth Cash cow Dog

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Strategy as the Resource-based View

• The RBV has two underlying assertions
• Capabilities will differ among firms (resource
  heterogeneity)
• These differences may be long lasting, resource
  immobility
• Resources include competencies capabilities
• Competitive advantage flows from building unique,
  valuable resources that are difficult to imitate

Mata et al 1995
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Capabilities of the Firm
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Core Competency

• Views the collective learning in an organization
  as a resource
• Three tests for identifying a core competency
• It provides potential access to a wide variety of
  markets,
• It makes significant contribution to perceived
  customer benefits
• It is difficult to imitate

What are your firms core competencies?
Prahalad and Hamel (1990)
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Capabilities

• Adapting, integrating, and reconfiguring internal
  and external organizational skills, resources,
  and functional competences to match the
  requirements of a changing environment.
• Capabilities are something that a firm does based
  on the collective knowledge that it has in its
  core competencies

Your firms capabilities?
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Value Net
Customers
Company
Complementors
Competitors
Suppliers
Source Brandenburger and Nalebuff, Coopetition
(1996)
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Nintendo and Video Game
Customers Kids, parents Toys R Us, Wal-Mart,
etc. Control supply of game cartridges
Competitors Atari, Commodore, etc. TV, books,
sports Develop cheap hardware and hit games to
start virtuous circle Move down experience
curve Bring in outside game developers and
require exclusivity
Complementors Acclaim, Electronic Arts, etc.
(game development) Sideway-integrate into
software business Limit number of titles per year
per licensee to keep developers symmetric
Nintendo
Suppliers Ricoh, Sharp, etc. (microchips) Marvel,
Disney, etc. (game characters) Use trailing-edge
technology Develop the Mario character internally