REDHAT: Identifying Competitive Advantage and Revenue Streams

Key Issues o Definition of “industry” o Definition of “product” o Source of revenues o Liability of newness and small size o Rivalry vs. commensalistic co-existance

Financial Highlights

Aug 1999 Sept $20 $150 RHAT Stock Price

External Analysis o Opportunities: o Threats:

General Environmental Forces o Social o Political o Technological o Global o Legal o Economic o NET EFFECT?

Threat of Substitute Products Threat of New Entrants Competitive Environment Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Bargaining Power of Suppliers

Internal Analysis o Strengths: o Weaknesses:

Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Where is Revenue Stream? Where is Revenue Stream?

Market for Fragmented “Product” Programmer- Customers Mainstream Customers

Market for Fragmented “Product” Programmer- Customers Mainstream Customers

Market Maker Programmer- Customers Mainstream Customers REDHAT

Network Centrality as Advantage Programmer- Customers Mainstream Customers REDHAT Debian Applications Vendors

Mission and Goals o Mission/vision: o Define industry, values, customers, etc. o Overall strategic approach o Goals: o Financial o Strategic

Breadth of Competitive Scope Source of Competitive Advantage BroadTargetMarket NarrowTargetMarket Cost CostLeadershipCostLeadership Different. Focused Different. Focused Low Cost Uniqueness

Strategic Recommendations o Do XX o Value chain activity ‘a’ o Value chain activity ‘b’ o Result: Eliminates vulnerability to SWOT o Do YY o Value chain activity ‘a’ o Value chain activity ‘c’ o Result: Establishes differentiated competence and revenue stream