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204

Strategy

How Platforms Change Competition

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G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. (2016). Strategy. In G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. Platform Revolution: How Networked Markets Are Transforming the Economy--and How to Make Them Work for You. W. W. Norton Company, pp. 204-228

208

Thus, when a firm can erect barriers to entry, it can keep competitors out, and entrants with substitute products cannot storm the castle. When a firm can subjugate suppliers, competition among them weakens their bargaining power so the firm can keep its costs low. When a firm can subjugate buyers by keeping them relatively small, disunited, and powerless, the firm can keep its prices high.

In this model, the firm maximizes profits by avoiding ruinous competition for itself but encouraging it for everyone else in the value chain. Advantage is found in industry structures that create a protective moat—one that enables the firm to segment markets, differentiate products, control resources, avoid price wars, and defend its profit margins.

think about how this applies to global value chains of commodity production re: digital advertising companies

—p.208 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 1 year, 2 months ago

Thus, when a firm can erect barriers to entry, it can keep competitors out, and entrants with substitute products cannot storm the castle. When a firm can subjugate suppliers, competition among them weakens their bargaining power so the firm can keep its costs low. When a firm can subjugate buyers by keeping them relatively small, disunited, and powerless, the firm can keep its prices high.

In this model, the firm maximizes profits by avoiding ruinous competition for itself but encouraging it for everyone else in the value chain. Advantage is found in industry structures that create a protective moat—one that enables the firm to segment markets, differentiate products, control resources, avoid price wars, and defend its profit margins.

think about how this applies to global value chains of commodity production re: digital advertising companies

—p.208 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 1 year, 2 months ago