Information: Industry Structure and Competitive
Strategy
The Jones Center’s Project on Information, Strategy, & Economics has operated for two decades as an early warning system:
- The Project did its first study of
Business Process Outsourcing in 1992. We were among the first groups to identify the role that improved telecommunications would have in increasing the ability to transfer work and to monitor work, and one of the first groups to predict a significant increase in the outsourcing of complex components and complex business operations. We were also among the first to highlight the various components of risk, to suggest steps to mitigate those risks, and to suggest mechanisms for determining which activities simply could not be outsourced. We continue to address the design of work flows and the division of work among firms to minimize risks, and to study contract design and incentives to maximize long term performance of outsourcing relationships.
- The Project did its first study of
online sales and distribution in 1996, long before the internet was a serious concern. Unlike later, wildly enthusiastic and largely inaccurate studies, this work suggested that there were entire industries in which manufacturers would be unable to attack the traditional distribution channel through any form of online sales. Our early predictions suggested that travel agents were at risk of becoming irrelevant, with commissions slashed or large-scale bypass the most likely outcomes. The same study cautioned consumer packaged goods manufacturers not to risk offending Wal*Mart and other essential powers in the distribution channel. The failure of online automobile dealerships and pet supply stores was a predictable outcome, and one that could have been of greater use to financial markets and strategic planners. The techniques used included theoretical analysis of channel power, computer simulation and sensitivity analysis, and the valuation of strategic options.
- The Project did its first study of
online securities trading and the threat to established firms and exchanges in the
late 1980s, long before the internet or any widespread use of electronic access to alternative trading systems. The work was based upon theoretical analysis of the functioning of various market structures, field work to obtain detailed estimates of costs, profit margins, and the parameters that dictate trading strategies, and computer simulations. The work has remained surprisingly timely, both for understanding the strategies available in the industry and for addressing concerns of regulators and of investors.
|
