TABLE OF CONTENT
The author discusses new strategies in business which he says are brought about by what he calls platform competition. The strategies are used in defeating competitors who have well established grounds in the business. He identifies an emergence of a new strategy in action which he calls “ platform theory”. He, however, does not understand why the new theory is unable to explain the rise of some players who have recently entered the market and have successfully outdone the powerful platforms that had existed before them ( Fernando & Jacqueline, 2012). The author points out the key elements of the platform theory.
The first element he brings out is the ability to attract users. He notes that the success of the platform theory is brought about the extent of network connection to externalities. The rationale for the success of newcomers is viewed as the ability to build the installed base as quickly as possible once they enter the market. To do this, platform companies should use subsidies to give incentives to users, differentiate their products through technology and enter the industry as early as possible.
The other key element in this theory is the attraction of complementors of their businesses in order for them to attract the users in those already installed platforms with large basis. They achieve this goal by sponsoring their complementors. Leaving competing platforms behind is the other important element in order to outdo rival platforms.
The author points out the lessons that are learned from successful platform dethrones. The first is to find distinctive and the under deserved segment for users. The second thing is to leverage the existing platforms; taking advantage multiple platforms used by companies. The other lesson is differentiation by producing a superior product than competitors. The strategies that are related to above include the vertical integration, product penetration, market development strategy, new product development and innovation.
These strategies can receive criticism from various angles. The first is on the durability of the author’s strategies. Viewed from this angle, the platform theory can be seen as a short term strategy only. It is not future focused. Other long term strategies that newcomers in an industry can be used for example growth strategies and stability strategies. A company can also use other strategies like strategic planning. Strategic planning is one of the long term goals which is future and assumption based. A strategy like this is usually tested and refined through knowledge research and experience.
The platform theory discussed by the author is a theory that has not been tested and may lead a company into troubles in the future. The integration theory is another long term theory that can be utilized by a company which is new in the market (Draft, 2011). This strategy allows a firm to company to gain control over distributors, suppliers or even the competitors.
This is unlike the platform theory that attempts to attract complimentors who may not cooperate and where a lot of resources may used in training and sponsoring them. Apart from the strategy discussed by the author, there are other modes that are more intense in nature where there is stiff competition from the rivals. These are strategies like market penetration, market development and innovation. These strategies area alternatives to leaving competing platforms discussed by the author (Ireland, Hoskisson & Hitt, 2008).
References
Fernando, S., & Kirtley, J. (2012, January 1). Dethroning an Established Platform [free… – MIT Sloan Management Review | Facebook. Retrieved November 7, 2014, from https://www.facebook.com/MITSloanManagementReview/posts/10151029649096066?st ream_ref=5
Ireland, R., Hoskisson, R. & Hitt, M. (2008). Understanding business strategy : concepts and cases. Mason, OH: South-Western Cengage.
Daft, R. (2011). Understanding management. Mason, OH: South-Western Cengage Learning. Retrieved November 7, 2014, from http://books.google.co.ke/books?id=xWxmFNMKXhEC&pg=PA160&dq=strategies in actionforcompanies&hl=en&sa=X&ei=S9hcVLykC4iUuAT3hYDoAw&ved=0CD0Q6 q=strategies in action for companies&f=fals