Busa 6800: Strategic Management Mid-term 1. Complements – define and apply (pg. 52/53)
Complementors:
Players with whom a firm interacts but may not necessarily transact. The concept of complementors is perhaps the single most important contribution of value net analysis

Complementors typically are products or services that have possible impact on the value of a firm 's own products or services. Those who produce complements are usually referred to as complementors.

Powerful computers are of no value to a user unless there is software that runs on them. Similarly, new and better software is possible only if the hardware on which it can be run is available. This is equally true in the video game industry, where the sales of game consoles and video games complement each other. Nintendo' s success in the early 1 990s was a result of their ability to manage their relationships with their complementors. They built a security chip into the hardware and then licensed the right to develop games to outside firms. These firms paid a royalty to Nintendo for each copy of the game sold. The royalty revenue enabled Nintendo to sell game consoles at close to their cost, thereby increasing their market share, which, in turn, caused more games to be sold and more royalties to be generated.

2. Porters industry Competitiveness Analysis – Define buyers, suppliers, and rivalry (plus caveats) pg. 46-52

Potential competitors may include a supplier considering to considering forward integration.

5 Basic Competitive forces:

1. The threat of new entrants. 2. The Bargaining power of buyers 3. The bargaining power of suppliers. 4. The threat of substitute products and services. 5. The intensity of rivalry among competitors in an industry.

1. The Threat of New Entrants * Possibility that the profits may be eroded by new