Technology Strategy
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Strategy

Strategy is achieving an unassailable industry position
 Porter (1980)
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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:
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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
SWOT Analysis
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
Strengths (internal)

Weakness (internal)

Oppprtunities (external)

Threats (external)
Porter’s Value Chain
Support
activities
Firm
infrastructure
Human resource
management
Technology
development
Procurement
Inbound
logistics
Operation
Primary activities
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Outbound
logistics
Marketing
and sales
Service
Margin
Porter’s 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
•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
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•Price-sensitivity
•Price/total purchases
•Product differences
•Brand identity
•Ability to backward-integrate
•Impact on quality/performance
•Decision makers’ incentives
Substitution
•Threat determined by:
•Relative price performance or substitutes
•Switching costs
•Buyer propensity to substitute
Generic Strategy
overall
Overall cost
leadership
focus
Focus-segment
cost leadership
Overall
differentiation
Focus-segment
differentiation
The areas of
competition
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The way of creating the value
BCG’s Growth-Share Matrix
High Growth
High Share
Low Share
Star
Question mark
$
Low Growth
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Cash cow
Dog
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
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Resources include competencies & capabilities

Competitive advantage flows from building unique, valuable
resources that are difficult to imitate
Mata et al 1995
Capabilities of the Firm
Value Propositions
What we can offer
Capabilities
What we can do
Resources
Things we have
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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 firm’s core competencies?
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Prahalad and Hamel (1990)
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 firm’s capabilities?
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Value Net
Customers
Competitors
Company
Complementors
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
Complementors
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
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
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