MIS 524, Assignment 31 Economies of Style Necessary and Sufficient Qualities

MIS 524, Assignment 32 Economies of STYLE The network economy has introduced a third kind of economy: style An economy of style occurs when the whole business proposition can be reengineered at will This allows the producer and customer (or producer and supplier) to have almost any relationship desired.

MIS 524, Assignment 33 Comparing Industrial and Networked Economies IT and the Internet can create “weightless” production in which N can be very small, thus obviating the need for a mass market. In addition, both transaction and coordination costs for sales and production can be dramatically decreased (sometimes close to zero).

MIS 524, Assignment 34 Comparing Industrial and Networked Economies The following can then be tailored: –Delivery time, place, style –Item instruction (how to use, etc.) –Item integration with other items –Item integration with (business) processes –(End-to-end) consulting In effect, an economy of style allows the producer to reengineer customers.

MIS 524, Assignment 35 Networked Economies Focal Firm Replicable Supplies Intelligent Supplies Customer 1Customer 2Customer 3 Customer 4 Intelligent Product Each of these implied relationships is now customizable rather than fixed. Now the focal firm has implicit control over all aspects of the model, including all aspects of the supply chain. In the extreme, the focal firm can “disappear”

MIS 524, Assignment 36 Economies of Style Required Implications Replicability of input factors Business model is relatively weightless in terms of product, process Intense Intelligence, knowledge of suppliers, buyers, employees Flexibility, agility in design, relationships Expenditure on intelligence, marketing Lots of variation in relationships Increased complexity of supply chain Potential role conflict and vagueness Increased reliance on knowledge Blurring of organizational boundaries Ratcheting up of competition

MIS 524, Assignment 37 IT and Economies of Style All functions required for economy of scope PLUS Network required to integrate along supply chain Intelligence gathering critical to develop and monitor new relationships Accounting is much more complex as new businesses develop.

MIS 524, Assignment 38 Summary EOStyle comes about by making the business model extremely flexible, not tied to specific “weighty” products and the machinery for producing, distributing, etc. But the key is integration of the value network (an extension of the value chain). Flexibility (or agility) + integration means that the firm can move around the value network (for business model purposes)

MIS 524, Assignment 39 Conclusion Thus the firm may seek profit from any junction between buyer and seller (that means any interface in the value network) The firm can be buyer, supplier, consultant, critic, broker, designer, etc.

MIS 524, Assignment 310 The Value Network and Its Opportunities “Buyer” Integration + Turning products into services + Agility from weightlessness = New or variable business model Each interface is an opportunity for profit. Economies of style allow focal firm to move around value network at will, extracting profit