Corporate Management and Entrepreneurship

• Transaction platforms: Eases the transaction betwen different types of individuals, which would otherwise probably wouldn't have found each other. (Uber, Amazon Marketplace, Google, Ricardo) -> Multisided platform
• Innovation platforms: Are built on technological components, whih are used as basis for developing innovative solutions by third-party service providers. (iPhone, API) -> innovation ecosystems
• Integrated platforms: Is a technology, product or service that is both a transaction and an innovation platform. e.g. Apple, Windows

Complementary products

• Traditionally the demand for a product goes up as the price of it decreases. A downward-sloping demand curve shows the demand of a product as the price fot it gets cheaper when selling greater quantities
• On the other hand the supply curve is an upwards-sloping curve, since more suppliers will appear when a higher price can be achieved for a product and the quantity of sold products rises.
• The demand and supply curve intersect at a point called market equilibrium. In this point the demanded quantities of a product and the quantities that are supplied meet. If the price is higher than the equilibrium, the price will naturally decline and if it is below the equilibrium the price will naturally rise. The equilibrium can only be achieved at one price, since the demand curve is downward-sloping and the supply curve is upwards-sloping
• Complements are goods that can be used with another good. They are also called paired goods.
• The classical example for a paired good and to explain how complements shift curves is ground beef for hamburger patties and hamburger buns. If a shop decides to offer the ground beef at a discounted price the demand for hamburger buns will rise naturally as well.
• Two products are complements if a drop in the price of one puches out the demand vurve for the other
• When a platform is opened upt to allow outside contributions, its owners realize an important benefit: Demand for the owner's product rises as others contribute complementary goods. Then these complements are digital, many of them will be free, perfect and instant.
• Platform owners often have to curate contributions from outsider to maintain standards like e.g. apps ont eh iPhone

• Digital platforms are also spreading into industries like transportaion, lodging, shopping etc. that deal in physical goods and services. They are called O2O, online-to-offline, platforms
• Due to perishable inventory, these platforms may have marginal costs, but also capacity constraints. This makes O2O different from fre, perfect and instant economics of pure information goods.
• Examples are Lyft, Uber, Airbnb, etc.
• O2O-Platforms are mainly helping with the quick arrangement of transactions by offering access to a wide network of potential cutomers

• Before 1970s
  • Focus on optimizing the utilization of prodction capacities
  • Market-side activities = Efficient service distribution to customers
  • Until then no marketing was necessary
• From 1970's
  • Demand excess disappeared -> Market saturation
  • Changing markets
  • "Byer markets" (better position on the buyers' side)
  • Learning about customers bacame increasingly important
  • From then on marketing was necessary
• Development of a new corporate task
  • Own management function
  • Goal: Alignment of all corporate activities with market requirements
  • Much more than just expanding sales or traditional sales departments
  • It's about much more than "advertising" or pure "sales promotion"!
• Basically two types of customers / business interactions:
  • B2C = Business-to-Consumer (private costumers)
  • B2B = Business-to-Business (Business customers)

• Marketing i the
  • alignment of all business activities with market requirements
  • planning, organization, implementation and control (management aspect)
  • of all activities with the intention of achieving qualitative and/or quantitative targets (decision aspect)
  • through selection and establishment, maintenance and referencing, expansion, and intensificaiton or restoration or exclusion of business relationships (relationship aspect)
  • with relevant target groups in each case in sales, procurement, production, the environment and the media (stakeholder aspect)

• To achieve competitive advantages
• Relevant characteristics of products/services for competitive advantages:
  • ... must be relevant (expacially for puchase decision)
  • ... must be perceived
  • ... must be defensible
  • ... must be efficient

Realization of competitive advantages through better alignment of corporate activities with market requirements takes place in an interlocking process of four diferent elements:

• Task:
  • Target-oriented sourcing, structuring and evaluation of all information required for the subsequent derivation of marketing decisions
  • Definition of "TARGET" position vs. "ACTUAL" positionof own product/services
• Analyses Perspecives:
  • A: (Potential) Customers
  • B: Competition
  • Own Resources/Capabilities
  • Objective: To define own positioning
    • Results of the customer, competition and resource analysis form the basis
    • Allows mulidimensional comparisons of perceptions/preferences of the customers or customer segments

• Obtaining and interpreting all information related to the purchasing behavior of current and potential buyers
• Differentiation according to 
  • Individual purchasing behavior = Individual actors
    • Orgaizational buying behavior (B2B)
      • "Buying Center" as a perspective of the analysis of organizational buying behavior
      • Industrial goods
        • Individual organizational buyers (organizations) at the center of the analyses
        • In addition to general market cultivation, particular importance of sales staff / units
      • Procedure:
        • Goal: Systematic processing of the customers
        • Systematic recording and central data management in sales ("white book")
    • Personal buying Behavior (B2C)
      • Look at diagram
  • Aggregated buying behavior (market segements) = groups of customers
    • Aggregated demand analysis
      • Similarity of the purchasing behavior of different demanders
    • Market segments (Customer segments)
      Alignment with demand-side characteristics influencing / related to:
      • Purchasing behavior
      • Usage behavior
      • Organizational prcurement behavior

• Delimitaion of the competition
  • Prerequisite: Identification of the relevant market

1. Functional delimitation
   To what extent do customers generally perceive other services from competitors as relevant substitution options?
2. Time delimitation
   Are there substitution opportunities between customer purchase decisions, made at different times? (e.g. customers waiting for the next iPhone, before they decide to buy a new mobile phone)
3. Spatial delimitaiton
   To what extent do customers perceive competitors from other regions / country markets as relevant substitution opportunities?
   Transport: effort, time, cost -> Concrete for a construction site

For these delimitaions different tools can be used:

1. Insustry analysis with Porter's five forces: Identification of drivers/influences that apply to all competitors in an industry
2. Segment analysis (strategic group analysis)
   1. Analysis of specific market segments
   2. Identificaiot of clusters of competitors that are in similar or generalizable strategic situations
   3. Accordingly, similar competitive behavior is to be expected
3. Competitor analysis
   1. Form of competitive analysis that goes the furthest
   2. Particular Challenge: How to identify and obtain the relevant information?

Objective: As realistic and unbiased as possible analysis of the market-related strengths and weaknesses of the own company

• Relativ examination:
  • Assessment of own capabilities in comparison to competitors identified as relevant in the competitive analysis
  • Benchmarking as a suitable analysis tool
  • Systematic comparison between comanies (units) on the basis of standardized comparative variables and benchmarks

• Purpose
  • Controlling and aligning the use of marketing instruments (Step 3) with regard to defined marketing objectives
  • Longer-term validity = long-term alignment of market activities with binding framework for action
• Types:
  • A: Classic: Competitive strategies (Porter)
    Manly: Quality leadership (differentiation) vs. cost leadership
  • B: Time leadership
  • C: Relationship Management
    • Brand Management
    • Customer loyalty management

• Destination:
  • Acting at the right time in the market
    • Particularly significant for young, fast-growing markets
    • Market entry delayed by one year can result in losses of upt to 50% of the potential product volume
  • Right time for market enty / market exit
    • Rather significant for stagnating markets and products/services at the end of the life cycle
    • Delayed market exit leads to reduced profits and even losses

Pioneers vs. Followers

• Advantages of the pioneer strategy (First mover)
  • Can relatively freely shape their market without regard to competitors or existing cusomter layalties
  • Chance to establish entry barriers
  • Learning curve and experience curve advantages
• Risks/disadvantages of the pioneer strategy
  • Uncerainty of technical feasibility, estimation of market develoment, achievability of profitability
  • Necessarily high development speed which implies the danger of long-lasting image damage gue to insuffienently matured products
  • High costs
  • Explaining and introducing completeley new products to customers
• --> Followers do not have these disadvanateges, but ca build on the groundwork of the pioneers

• New Perspecitve
  • Long-term loyalty by building strong brands and increasing customer satisfaction
• Logic
  • Keeping existing customers is cheaper than gaining new ones
  • Goals:
    • Higher transaction numbers = repeated/more transactions, cross-selling
    • Higher transaction amounts = higher willingness to pay / higher average "basket values"

• Brands
  • Externally recognizable features (e.g. name, symbol design) that allow a product / service to be identified or differentiated from the competition
  • Perceptions and expectations (and associated esteem and emotinos) asscociatedwith the brand based o nprior interactions and communications
• Effects
  • For prociders: "communication platform" that enables relationship building
  • For consumers: information, trust and emotionalizatino function

Marketing Mix ("The 4 P's"):

• Product Policy (Product)
  • All measures aimed at the design of the product / service 
  • Design of components
  • Product life cycles
    • Phase 1: Product innovations (launch phase)
    • Phase 2: Product differentiation (growth phase)
    • Phase 3: Product variation (maturity phase)
    • Phase 4: Product elimination (decline phase)
  • Components:
    • Product core
    • Packing/packaging
    • Marking
    • Service
• Pricing Policy (Price)
  • All deicions with regard to the fee to be paid by the customer for a product / service
  • Importance increases as possibilities for product differentiation become increasingly limited
  • Pricing:
    • Absolute amount of fee
    • Upper limit
    • Lower limit
    • Trade-offs: Marketing goals and strategies
  • Price Differentiation: In general the same products are offered at different prices
    • Regional price differentiation: Different countries or regions
    • Time-based price differentiation: time/seasonal conditions
    • Product line-dependent price differentiation: Differentiation of products leads to different product lines with different prices
  • Pricing systems:
    • One-dimensional prices = total price
    • Multidimensional prices = price is composed of different components
    • Price bundling = package price
    • Non-linear prices = additional to prices for individual service units, additional quantity-independen price elements
    • Discounts:
      • Volume discounts
      • Time discounts
      • Functional discounts
• Distribution Policy (Place)
  • Acquisition activities
    - Contact initiation, sales and customer retention
    - Decision on sales channels and sales organs = sales channel system
  • Distribution channels: Direct vs. indirect
    • Direct: direct customer contact, traditionally B2B
      • low number of customers and high spatial concentration
      • Goal: Closer customer relationships / differentiation via service quality
    • Idirect: independent sales intermediaries B2C
• Communication policy (Promotion)
  • Potential Instuments:
    • Sales promotion
    • Product placement
    • Sponsoring
    • Advertising

• Checking the extent to which targeted marketing goals are or have actually been achieved with the help of the specific marketing measures
• Bases on both sales-related (revenue, contribution margins) and relationship-related metrics (customer satisfaction, perception, reach, attitudes)
• Information / Communication:
  • Derivation of actin implications
  • Coordinated, problem-related bundling of information = collecting, processing and analyzing relevant data

• Alignment of all corporate activities with market requirements
• Far more than advertising / sales promotion!
• Circular/iterative process of planning and controlling marketing activities
• Learning perspective in marketing is important >>> Learning about need, preferences and behavior of stakeholders and (potential) customers
• Recent Developments:
  • Increases focus on relationships
  • Build and maintain differentiated target groups and communities
  • Online channels and media bring completely new opportunities and challenges

• Decisions, actions, transactions -> Balance of inputs vs. outcomes
  • Maximize outcomes = Effectiveness (value, intended effects, revenues)
  • Minimize inputs at fixed/certain outcomes = Efficiency (costs, time, risks)

Overlap between both approaches:

• Optimizing inputs and outcomes at once = Utility (Nützlichkeit; comlex, decision science)
• Certain aspects can be perceived as both (inputs & outcomes): e.g. time, price
• Many aspects influence each other: risks, time, costs, quality, innovation

1. Acting strategically
   • acting accordingly to a long term "plan"
   • goals oriented
   • acting according to a pre-defined plan with a defined goal in mind
   • Strategic acting is acting delibarately according to a plan
   • All this in dependency of the competitors
2. Strategy
   • A plan of actions designed to achieve a long-term or averall aim

Definition of Alfred Chandler (1962):

Strategy is the determination of the basic long-term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

• Complement to deficits in planning = some components are uncerain/ambiguous
• Combination of stability and adaptability in a complex and dynamic world
• Complexity reduction = selection what is relevant and what is not
• Communication internal & external = mission/vision statement -> identity
• Selection of relevant factors and activity options:
  • In what areas to be active (coporate strategy)?
  • How to act in these area (business area strategies)?
• Control: Permanent questioning to what extent the current strategy is still adequate (strategic controlling)

• Perception of a specific situation
• What goals should be pursued (values, self-concept, identity)?
• What resources/capabilities are available or can be developed?
• Ideas/beliefs: What actions lead to what effects?

Depend on perceptions and behaviors of thers: customers, stakeholders, shareholders, competitors, environment

• Strategic level: Strategic controlling
• Operational level: Implementation

In other words the indended vs. the realized strategy

1. In what business areas should the company be active? 
   = Heterogeneity of the activity portfolio
   1. Focus
      = Focus on specialized resources/competencies, market power
   2. Diversification
      = diversification of risks, internal finance
2. How should these areas (strategic business units) be managed?
   1. Management holding
      = financial and strategic engagement in strategic business units
   2. Finance holding
      = controlling of financial inputs and outcomes of strategic business units

1. Vertical Integration
   = Integration of upstream of downstream activities
   = to overcome high supplier or buyer power
   Indications:
   1. High concentration of suppliers or buyers
   2. High specificity of products/services
   3. High (suppliers) / low (byer) prices
2. Horizontal Integration
   = Integration of activities at the same stage of the value chain
   Objectives:
   1. Higher concentration in market segment = higher price setting power
   2. Larger size
      >>> higher profitability
3. Development of strategic resources and competencies
   = focus on core competencies
   objectives
   1. Development of unique and complementary capabilities in multiple business areas
   2. Generation and protection of competitive advanteges
4. Risk diversification
   = similar to diversification in stock portfolios
   Objectives
   1. counterbalancing different risk profiles of different business areas
   2. Internal cross-financing between different business areas -> see: growth-share matrix
5. Solely profitability considerations
   = Expected earnings (medium-term)

• Question Marks
  • High market growth, low market share, (high) investments necessary
    = Large negative cash flow
  • Strategy: exploratory positioning, aggressive market penetration
• Rising Stars
  • High market growth, high market share, high investments necessary
    = modest positive or negative cash flow
  • Strategy: price skimming (increase profitability)
• Cash Cows
  • Low market growth (mature market), high market share, no/low investments necessary
    = Large positive cash flow
  • Strategy: milking
• Poor Dogs
  • Low market growth (mature/declining market) low market share, no investments necessary
     = modest positive or negative cash flow
  • Strategy: divestment / timing exit

• PEST Analysis
  = Analysis of the
  • Political
  • Economic
  • Socio-demographic
  • Technological
    Environemnt
• Search for Mega-Trends
  = e.g. digital transformation, urbanization, aging society, water scarcity, increasing sustainabilty orientation -> Mega-Trend-Map

Used to analyze the structure of business Areas / industries where you want to seddle in. -> Attention: It is ALWAYS about the analysis of the industry/sector, not about a specific brand: e.g. Electromobility in general and not Tesla itself.

In the beginning of this analysis it was just about the rivalry among existing competitors before the other 4 points got added (Threat of new entrants, Bargaining power of byers, Bargaining power of suppliers and threat of substitute products or services)

1. Rivalry Among exisitng competitors
2. Threat of new entrants
3. Threat of substitute products or services
4. Bargaining power of Buyers
5. Bargaining power of suppliers

• The intensity of rivalry is greatest if...
  • competitors are numerous or are roughly equal in size and power
  • industry growth is slow
  • exit barriers are high
  • rivals are highly committed to the business and have aspiations for leadership
  • firms can not read each other's signals well -> It is like an implicit communication behaviour and an explicit pricing
• Price competition is most liable (verbindlich) to occur if ...
  • products/services of rivals are nearly identical and there are few switching costs for buyers
  • fixed costs are high and marginal costs are low
  • capacity must be expanded in large increments to be efficient
  • the product is perishable (verderblich) or just not storable

• A supplier group is powerful if...
  • they are more concentrated than the industry it sells to
  • they do not depend heavily on the industry for its revenues
  • industry participants face switching costs when changing suppliers
  • they offer products that are differentiated
  • there is no substitute for what the supplier group provides
  • they can credibly threaten to integrate forward into the industry

• A customer group has negotiating / leverage power if ...
  • there are few buyers, or each one purchases in volumes that are large relative to the size of a single vendor
  • the industry's products are standarized or undifferentiated
  • they face few switching costs in changing vendors
  • they can credibly threaten to integrate backward if vendors are too profitable

• Entry barriers are high if ...
  • Supply-side economies of scle = larger volumes of production lead to lower costs per unit
  • Demand-side benefits of scale = network efects (e.g. social media networks: no value if just yourself are using it, but increases the more people use it): byer's willingness to pay / perceived value for a company's product increases with the numver of other buyers
  • Customer switching costs = fixed costs buyers face when they change suppliers
  • Capital requirements
  • Incumency advantages independent of size = cost or quality advantages not available to potential rivals
  • Unequal access to distribution channels
  • Restrictive government policy
  • Expected retaliation / reaction of incumbents (Arbeitnehmer)

• The threat of a substitute is high if ...
  • it offers an attractive price-performance trade-off to the indutry's product
  • the buyer's cost of switching to the substitute is low