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Date Submitted: 01/15/2012 04:47 AM
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The power of intermediaries like Google, Amazon, and Blu-ray is rapidly growing. Be prepared.
What’s Your Google Strategy?
by Andrei Hagiu and David B. Yoffie
Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 What’s Your Google Strategy? 9 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
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This document is authorized for use only in Global MBA S1 SEP11 by IE Business School from September 2011 to October 2013.
What’s Your Google Strategy?
The Idea in Brief
Multisided platforms (think intermediaries like Amazon or eBay that connect interdependent groups of customers) can lower your transaction costs and increase customer reach. But, as Toys “R” Us learned when it teamed up with Amazon, choosing the wrong MSP can lead to stiffer competition and loss of control over customers. To select the right MSP for your business, consider three crucial decisions: • Should you use an existing MSP or build your own platform? • Should your company partner with one MSP or many? For instance, many companies advertise on both Google and Yahoo! • Which MSP features should you adopt— or reject—to maintain competitive advantage? Target preserved its brand by selectively using Amazon’s orderfulfillment services on its own Web site.
The Idea in Practice
A closer look at the three decisions: USE AN EXISTING MSP—OR BUILD YOUR OWN? An existing MSP may use its power against you to capture more value for itself. Watch out for these moves: • Imposing price increases once the MSP becomes successful. After the PC market tipped to Windows, Microsoft raised its license price to OEMs. • Vertically integrating into players’ businesses. Google has been bundling more applications into its core offerings. • Weakening your relationship with your customers. Retailing...