Strategic Analysis Module 2: Disrupting Industries and Platform Dynamics

Cirque Du Soleil disrupted the established industry by offering a lower class alternative to traditional circus experiences.

Platforms tend to drive down willingness to accept (WTA) as they facilitate exchange between groups.

Same-side network effects occur when more users on a platform increase the value of the platform for users on the other side of the market.

Strong network effects decrease willingness to accept (WTA) and make it more difficult for smaller firms to compete.

If the cost of having both products is high, willingness to accept (WTA) is increased.

Disney's corporate strategy is focused on creating competitive advantage in a single market.

A diversified firm engaging in joint production of two goods will always benefit from economies of scope.

Good reasons to diversify include managerial hubris and empire building.

Horizontal integration involves producing different products or services that share resources and capabilities.

Economies of scope always result in higher average prices.

Sharing knowledge is a bad reason to diversify.

Adjacencies are growth opportunities that tear down existing competencies.

Insourcing can be more beneficial when there is a possibility of hold-up in market relationships.

Diseconomies of scope occur when a company diversifies into unrelated businesses.

Revenue synergies are harder to estimate than cost synergies.

Vertical integration involves combining different stages of production within a single firm.

Outsourcing can lead to higher incentives for performance due to market relationships.

The winner's curse refers to the phenomenon of the acquired firm's stock dropping after an acquisition.

Economies of scale refer to the reduction of costs by producing multiple related products.

A company can achieve economies of scope by sharing knowledge across its businesses.

Product bundling is an example of economies of scale.

Diseconomies of scope can sometimes occur due to increased costs.

Canon copier and printers are an example of market power in economies of scope.

Economies of scope can be achieved by purchasing from a supplier network.

Firms can increase their buyer power by increasing the number of substitutes.

The 'Better off' test is used to determine if a company should vertically integrate.

Managerial hubris is a type of market efficiency.

The 'Winner's curse' refers to the tendency for firms to overbid in auctions.

Economies of scope refer to cost savings from producing at a larger scale.

Vertical integration involves operating in multiple industries.