Battle of technology - Essay Example

Battle of technology Introduction In the current business world, technology is increasingly becoming live blood for organization (Watkins, 1998). This is especially more common in organizations that deal with electronics and electronic accessories. Consumers wish to buy products that offer them the highest level of satisfaction. For instance, in the case of movies, consumers will go for the movie technology that produces the clearest pictures as compared to others. This has resulted to battle of battle of dominance between Blu-Ray and HD-DVD. Each one of them wants to dominate the market with their video formats. This paper is a case that focuses on how Blu-Ray uses various dimensions so as to influence consumers, retailers as well as movie produces to use its technology. It also focuses on the various ways that a firm can apply to increase its overall value of technology in order to become a dominant design. This will be applied to Blu-Ray producer. This case is to be answered in two questions. Q1). In the Blu-Ray case (Chapter 4, Schilling 2010), using the multiple dimension of value framework, what factor or factors do you think influenced whether a) Consumers, b) retailers, and c) movie producers supported Blu-Ray versus HD-DVD? Technology has been advancing constantly over the last couple of years (Tsai, 2002). Firms and organizations have been battling to achieve the best technology so as to dominate the market. It is imperative to note that technology has the capability to achieve dominance for an organization (Pohle, 1990). This is important especially when there is more than one battling rival technologies. Battle of dominance has been evidenced in industries that deal with high technology products. Among them, there included those dealing with computer Operating Systems, High Definition TVs, internet browsers, modems as well as the battle between Blu-Ray and HD-DVD. For an organization to achieve dominance, it has to follow the steps in the process of dominance. Dominance occurs in five stages. Once an organization is through the stages, customers will be willing to buy its products over those of the competitor. Consumers are always willing to buy a product that gives them more satisfaction at a price that they are willing to pay. The battle between Blu-Ray versus HD-DVD can be traced back to the year 2003 and went on to the year 2008 (Schilling, 2010). It was between Sony and Toshiba who were all willing to control the next generation video format. While Sony supported the technology called Blu-Ray, Toshiba supported HD-DVD. Both companies had their own backing of companies who supported their technology. Similarly, each of them had its own value framework and factors that influenced customers, retailers and movie producers to either support Blu-Ray or HD-DVD. Using the multiple dimension of value framework, the factors that led to Blu-Ray winning the dominance battle can be discussed as follows. Blu-Ray was able to win the trust of customers because it produced players that were compatible with all movies. The companies used video games to promote the standards of their technology. Sony incorporated Blu-Ray in its PlayStation 3. On the other hand, HD-DVD was only available as Microsoft’s Xbox 360 optional add-on drive (Schilling 2010). These Blu-Ray standards were winning, and most retailers and customers as well as movie producers defected from HD-DVD to Blu-Ray DVDs. Blu-Ray won the market to the extent that Toshiba’s CEO had to concede defeat and announced that the company would not produce HD-DVD players any more. This factor by Blu-Ray can be referred to as expectation management. It is a factor whereby Sony was able to meet the expectations of its customers. Other factors that can be attributed to Sony’s win are the ability of the company to take advantage of the information available both internally and externally successfully and assimilate it (Cohen and Levinthal, 1990). The company was able to apply the external information it had to commercial ends. It is referred to as the network externality value (Thum, 1994). Such information is helpful since it enables the company to produce innovative products (Katz and Shapiro, 1986). Sony knew that consumers needed DVD players that can be compatible with any movie. Retailers would also need such players since they would sell more. They will avoid a case similar to that of Betamax where they stocked unwanted stock due to its incompatibility. It produced Blu-Ray technology that could be used even with PlayStations. Its high compatibility led customers, retailers and movie producers to believe that the new technology would not let them down. Ways a firm can try to increase the overall value of its technology, and its likelihood of becoming the dominant design? Apply this to Blu-Ray producer. A firm or an organization that wants to be successful in the future has to embrace technology. Technology is live blood for any organization in the current economic environment (Cainelli and Iacobucci, 2007). Considering the competition that exists among organizations, technological development and dominance is paramount for its future success. It will help the organization win a competitive edge over its competitors. A firm that intends to establish a dominant design in the market should follow the right steps en route to unveiling a product in the market. For it to achieve dominance, it has to come up with a winning business idea. There are three analytical tolls that managers can use so as to know a business idea that will lead to organizational success. The first one is the buyer utility map (Kim and Mauborgne, 2000). This tools enable managers to understand what customers want and whether they will be attracted to the business idea that the organization is about to bring to the market. In the case of Blu-Ray, managers need to know whether the players can be accepted in the market. If Sony establishes players that cannot be accepted, it might lose its consumers to competitors. The other tool is the price corridor of the mass (Kim and Mauborgne, 2000). This is where a company needs to learn that it should tag on its products to attract as many customers as possible. Customers are always to spend as little money as they can and get a high quality for their money. They wish to maximize the value for their money. Therefore, a high quality product at a low price will attract many customers. Blu-Ray can produce high quality players and sell them at a relatively low price so as to unlock a substantial number of customers. The third tool that a company can use is the business model guide (Kim and Mauborgne, 2000). The main objective of majority organizations is to maximize profits. Therefore, an organization should seek to understand how it can profitably deliver is new technological idea to the market and attract more customers with its target price. Blu-Ray needs to establish how it can deliver its DVD players to the market at its targeted price so as to achieve it set objectives. The outcome of technology is influenced by two groups of factors. These factors will increase the likelihood of a technology becoming a dominant design. They affect the outcome of technology value. The two groups are firm level factors as well as environment factors (Suarez, 2004). An organizational manager needs to identify the factors that affect technology and the outcome of dominance battle in his or her organization. Firm’s level factors involve the firm’s technological superiority (Suarez, 2004). This factor can be used to refer to the ability that a firm has to establish new technology in its production processes. Blu-Ray needs to have the ability to produce quality DVD players with a high level of compatibility. On the other hand, it should produce movies that can be downloaded from the internet to avoid losing its customers to Toshiba. Compatibility is vital to win the dominance battle for Blu-Ray (Schilling, 2003). In the case of environmental factors, an organization needs to have regulation over some environment issues (Suarez, 2004). An organization operates in an environment where competitors are striving to win the competitive edge. Therefore, for an organization to survive this battle, it should be in a position to regulate the competition. Managers need to know what to do so as to regulate the competition and get its product to win the market. In addition, an organization needs to have network effects and switch costs effectively (Suarez, 2004). This will help them gather the required information on what the customers need and at what cost it should be offered to them. These factors will help Blu-Ray get a good share of the market and win the loyalty of customers, retailers as well as for movie producers. The firm also needs to understand the technological field’s characteristics (Suarez, 2004). According to Arthur (1989), technology can improve through adoption. A technology that adopts will always dominate over the others competing in the market. Technology needs to be a leader in adoption, a strategy that locks out any other technologies that may come along. Market pioneers are always ahead of the late arrivals, and they always win the market dominance battle (Kalyanaram and Gurumurthy, 1998). According to Schilling (1998), Blu-Ray can lock out any other innovations by HD-DVD by applying this strategy. Conclusion Technology dominance can give any organization a competitive edge over its competitors. Organizations are always striving to win the dominance battle to secure their future success. A number of factors can lead to an organization winning the dominance battle. However, it should follow the right steps involved in the battle and ensure that it fulfills all the required factors. Blu-Ray was able to win the dominance battle over HD-DVD because it was able to meet the requirements to win the battle. Reference List Arthur, W B, 1989, Competing Technologies, Increasing Returns, and Lock-In by Historical Events, The Economic Journal, March, pp. 116-31. Cainelli, G, and Iacobucci, D, 2007, Agglomeration, technology and business groups, Edward Elgar, Cheltenham, UK. Cohen, W M and Levinthal, D A, 1990, ‘Absorptive Capacity: A New Perspective on Learning and Innovation’, Administrative Science Quarterly, March, pp.128-152. Kalyanaram, G, and Gurumurthy, R, 1998, Market Entry Strategies: Pioneers Versus Late Arrivals, Best Practice; Vol 3, Issue 12; pp. 1-10. 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