Essay prompt:
· Analyze how the increasing intensity of information technology investments, the digitization of business, and the big shifts in the U.S. economy have affected the competitive dynamics of Courier industry – FedEx.
For background on how the increasing intensity of information technology investments, the digitization of business, and the big shifts in the U.S. economy have affected competitive dynamics, please do the below readings. I have attached the articles.
· Hagel, J., Brown, J.S., and Davison, L. “The Big Shift: Measuring the Forces of Change,” Harvard Business Review (87:7-8), Jul-Aug 2009, pp 86-90.
· McAfee, A., and Brynjolfsson, E. “Investing in the IT that makes a competitive difference,” Harvard Business Review (86:7-8), Jul-Aug 2008, pp. 98-107.
· Govindrajan, V. & Srivastava, A. (2016). “Strategy When Creative Destruction Accelerates.” Tuck School of Business Working Paper No. 2836135, Available at SSRN:
https://ssrn.com/abstract=2836135Links to an external site.
Writing criteria:
1. How well does the essay build on course concepts covered in the reading above.
2. How well does the essay build on facts and evidence of the Courier industry in analyzing the essay prompt.
Essay format:
· Use a maximum of one, single-sided page (no more than 600 words), single-line spacing, 1″ margins on all sides, Verdana font type, and 10-point font size.International Business
The Big Shift: Measuring the
Forces of Change
by John Hagel III, John Seely Brown, and Lang Davison
From the Magazine (July–August 2009)
Summary. Reprint: R0907Q Traditional metrics don’t capture many of the
challenges and opportunities in store for U.S. companies and the national
economy. The authors, from Deloitte, present a framework for understanding the
forces that have transformed business over…
During a steep recession, managers obsess over short-term
performance goals such as cost cutting, sales, and market share
growth. Meanwhile, economists chart data like GDP growth,
unemployment levels, and balance-of-trade shifts to gauge the
health of the overall business environment. The problem is,
focusing only on traditional metrics often masks long-term forces
of change that undercut normal sources of economic value.
“Normal” may in fact be a thing of the past: Even when the
economy heats up again, companies’ returns will remain under
pressure.
One reason traditional measures alone don’t capture the
challenges and opportunities for U.S. companies and the national
economy is that the digital infrastructure supporting the lion’s
share of industries has sustained rapid performance
improvements—especially in computing power, bandwidth, and
storage. Previous infrastructures experienced sharp bursts of
more
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innovation in underlying technologies, such as the telephone and
the internal combustion engine, and then quickly stabilized.
Today, we do not yet see any signs of stabilization, which suggests
not only that competitive intensity (which has more than doubled
in the past 40 years) will continue to build but also that the digital
infrastructure will keep boosting the potential—and necessity—
for business innovation.
To help managers in this decidedly challenging time, we present a
framework for understanding three waves of transformation in
the competitive landscape: foundations for major change; flows of
resources, such as knowledge, that allow firms to enhance
productivity; and the impacts of the foundations and flows on
companies and the economy. Combined, those factors reflect
what we call the Big Shift in the global business environment.
The Shift Index
Executives can use the metrics here to gauge the long-
term forces shaping the business environment and
improve their …
Additionally, we have developed an index to measure the changes
that have had the biggest effect on business over the past four
decades (see the exhibit “The Shift Index”). That set of metrics
reveals a draElectronic copy available at: http://ssrn.com/abstract=2836135
Strategy When Creative Destruction Accelerates
Vijay Govindarajan
Coxe Distinguished Professor, Tuck School of Business and a Marvin Bower Fellow at Harvard
Business School
[email protected]
Anup Srivastava
Assistant Professor, Tuck School of Business, Dartmouth College,
[email protected]
Electronic copy available at: https://ssrn.com/abstract=2836135
Electronic copy available at: http://ssrn.com/abstract=2836135
1
Strategy When Creative Destruction Accelerates
Life is short. That’s never been more true for corporations today. An analysis of all 29,688 firms
that listed from 1960 through 2009, divided into 10-year cohorts, reveals that newly listed firms in
recent cohorts fail more frequently than did those in older ones (Figure 1). Creative destruction is
accelerating because there is a fundamental shift in the American economy. The pre-1970 firms
tended to be heavily invested in physical infrastructure, such as factories and inventories. Later
cohorts have relied increasingly on intangible assets, such as databases, proprietary algorithms,
and expert workers (Figure 2). This transformation is a double-edged sword. The good news is
that newer firms are more nimble. The bad news for these firms is that their days are numbered.
That is, unless they continuously innovate.
The newer firms are grounded in novel business models, like digital services, that can be launched
and distributed quickly. This gives them an advantage over production firms. “Idea” companies
don’t require an expensive infrastructure of factories, warehouses, and suppliers to operate. They
don’t need an extensive distribution network to get their product to market. They don’t need
elaborate marketing campaigns—news of successful products spreads rapidly through blogs and
social networks. Winners emerge quickly and reap rewards disproportionately larger than the
initial investments. Uber, for example, officially launched its mobile app in select U.S. cities in
2011 and within a year’s time had expanded into Europe. Now, its market cap exceeds $60 billion.
Contrast this with the evolution of the automotive industry. Around the beginning of the 20th
century, more than 200 companies sprang up in the U.S. to produce automobiles. It took almost
half a century for the number of large domestic automakers to shrink to four. Despite the
introduction of such disruptive technologies as the assembly line, integrated supply chains, and
lean manufacturing, the consolidation took 50 years. Innovations rooted in physical assets take
time to create. Even Silicon Valley automaker Tesla not only has invested in a capital-intensive
assembly plant in California, but also is building a Gigafactory in Nevada to produce lithium
batteries and a nationwide network of Superchargers for its electric cars. Tesla and other tangible
goods firms, many ofProcess Management
Investing in the IT That Makes
a Competitive Difference
by Andrew McAfee and Erik Brynjolfsson
From the Magazine (July–August 2008)
Summary. Reprint: R0807J Investments in certain technologies do confer a
competitive edge—one that has to be constantly renewed, as rivals don’t merely
match your moves but use technology to develop more potent ones and leapfrog
over you. That’s the conclusion of…
It’s not just you. It really is getting harder to outpace the other
guys. Our recent research finds that since the middle of the 1990s,
which marked the mainstream adoption of the internet and
commercial enterprise software, competition within the U.S.
economy has accelerated to unprecedented levels. There are a
number of possible reasons for this quickening, including M&A
activity, the opening up of global markets, and companies’
continuing R&D efforts. However, we found that a central catalyst
in this shift is the massive increase in the power of IT
investments.
To better understand when and where IT confers competitive
advantage in today’s economy, we studied all publicly traded U.S.
companies in all industries from the 1960s through 2005, looking
at relevant performance indicators from each (including sales,
earnings, profitability, and market capitalization) and found some
striking patterns: Since the mid-1990s, a new competitive
more
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dynamic has emerged—greater gaps between the leaders and
laggards in an industry, more concentrated and winner-take-all
markets, and more churn among rivals in a sector. Strikingly, this
pattern closely matches the turbulent “creative destruction”
mode of capitalism that was first predicted over 60 years ago by
economist Joseph Schumpeter. This accelerated competition has
coincided with a sharp increase in the quantity and quality of IT
investments, as more organizations have moved to bolster (or
altogether replace) their existing operating models using the
internet and enterprise software. Tellingly, the changes in
competitive dynamics are most apparent in precisely those
sectors that have spent the most on information technology, even
when we controlled for other factors.
This pattern is a familiar one in markets for digitized products
like computer software and music. Those industries have long
been dominated by both a winner-take-all dynamic and high
turbulence, as each group of dominant innovators is threatened
by succeeding waves of innovation. Consider how quickly Google
supplanted Yahoo, which supplanted AltaVista and others that
created the search engine market from nothing. Or the relative
speed with
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