End Of Competition, The: The Impact Of The Network Economy. C N A Molenaar
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Название: End Of Competition, The: The Impact Of The Network Economy
Автор: C N A Molenaar
Издательство: Ingram
Жанр: Маркетинг, PR, реклама
isbn: 9789811212338
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Primary value activities are directly related to the physical creation, sale, supply and servicing of a company’s product or service. The competition is based on the old instruments of price, product, place and promotion.
• Inbound logistics: This refers to all activities related to the receipt, storage and distribution of purchased materials and/or services that are used in the production process of the company. The supplier partnerships play an important part in the creation of value.
• Operations: This denotes to all activities that have to do with converting this input into the final product for the customer and include processing, packaging and assembly.
• Outbound logistics: These activities relate to the supply of a product and/or service to the customer and include aspects such as an organisation’s collection, storage and distribution systems.
• Marketing: This includes all activities that stimulate the buyer to enter into a transaction, which include advertising, promotion and price.
• Sales: This indicates all activities that ensure that the buyers are able to purchase the product, which include channel selection and the customer relations with these channels.
• Service: This represents all activities that are concerned with delivering service in order to increase or maintain the value of the product and/service. Examples include installation, repair, advice and delivery of parts.
The following secondary activities support the above-mentioned primary functions:
• Procurement: This refers to the function of purchasing materials and/or services that are used in the production process of the company. This therefore does not refer to the purchased inputs themselves. This includes finding suppliers and negotiating the best price.
• Human resource management: This refers to all the activities that relate to recruiting, hiring, training, developing, motivating, remunerating and retaining the staff necessary to carry out the value activities.
• Technological development: This indicates all the activities related to managing and processing information as well as protecting the knowledge base of a company.
• Firm infrastructure: This consists of the functions that allow a company to carry out its daily activities such as accounting, legal matters, administration and general management.
The margin is the difference between the total value and the costs for carrying out the value activities in a linear sequence of the value chain.
What are the New Value Activities in the Competitive Battle?
In order to determine where the value activities and margin are located in a platform (network) company, you first have to look at how the essential capitals in a platform business model (infrastructure, network and data) are related to one another. The study carried out by Choudary (2015) revealed three different types of architectural layers that were repeatedly found in all the types of platforms. Figure 2 shows the three layers of platforms.
Figure 2. Architectural layers of platforms (Choudary, 2015).
Choudary (2015) suggests that the external network of producers adds value to the network layer. In order to make this value creation possible, however, platforms require a second layer: infrastructure. This layer comprises the tools, services and rules that make interaction in a multisided market possible. This layer has little value in itself, unless users create value in the platform. All platforms use data because the information helps the platform to gear the supply to the demand. The data layer creates relevancy and matches the most relevant content, product and/or services with the appropriate users.
It’s important to first build the infrastructure in order to make interactions in the above-mentioned layer possible. As manufacturers and consumers adopt the infrastructure, an ecosystem begins to evolve. This becomes the next observable phase in the evolution of the platform. And finally, the interaction between manufacturers and consumers on the platform generates huge amounts of data. The data layer then helps to make future interactions more efficient and keeps users regularly engaged with the platform. The use of data from the data layer has a positive effect on the value perception of users in the network layer (Choudary, 2015).
What are the Sources of Value Creation?
1. The focus is shifting towards the demand side of the economy (Van Alstyne et al., 2016). This can be found on the right-hand side of the traditional value chain.
2. In a platform business model, products and/or services are not actually produced; the organisation does not organise its production processes, and as a result there is no control over the creation of value within the production process. Value is brought in by external producers, so the production process disappears as an activity from a platform company’s value chain.
3. As platforms have different groups of users on all sides, the value creation moves from left to right and from right to left. This change in the value chain is an important characteristic of a two-sided market. There is therefore no longer a value chain with value activities that take place in a linear sequence, and the consumer is no longer located at the end of these processes but forms part of the value creation within a value network.
Primary Activities and Platform Companies
The platform business model is not aimed at the physical creation, sales, supply and service of a company’s own product or service. This results in the value activities of inbound logistics, operations and outbound logistics disappearing from the value chain and the direct control of the platform company.
The owner of the platform creates value as an independent intermediary, by matching and connecting two (or more) mutually dependent parties with one another and facilitating the direct interaction between these parties (Eisenmann et al., 2006; Osterwalder and Pigneur, 2010). The aim of marketing here is no longer to bring about a transaction for a company’s product and/or service but to realise a value exchange between supply and demand.
The most important capital of a platform company for providing this value proposition consists of the following:
• an infrastructure for direct interaction (the platform);
• the presence of network effects that arise when two (or more) sides of the market have an interdependence, supply and demand, resulting in the growth of the network;
• the availability of data arising from the interaction via the platform, thereby creating matching functionalities and the relevance of the platform.
The most important value activities can thus be described as platform management, platform promotion and service provision to the network (Osterwalder and Pigneur, 2010).
Secondary Activities and Platform Companies
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