New Product Development And Business Ecosystem

Question 3

The concept of ecosystem is considered to be one of the interesting factors from the last few consecutive years in terms of a better strategy for the competitive environment. The concept of the ecosystem is now entering not only in some of the technology sectors but also has achieved the position in the different established sectors. The different popular business has suggested that the ecosystem can be considered as an alternative or better substitute in terms of competitive analysis. It is proposed in the journal researched by the author "Jacobides et al.2018” that the approach ecosystem is now replacing the traditional method of market or the integrated supply-chain. It is identified by the authors that the concept of an ecosystem is basically divided into three parts like the business ecosystem stream that mainly focused on the firms and the environment in which it operates. The innovation ecosystem-stream is one that mostly focused on the new proposition or the innovation within the business. The other one which is "Platform ecosystem" is the one that considers how the actors are actually performing and organized around the platform (Hugos, 2018).

The researcher considers the ecosystem as the community of organization those results in impacting the enterprise values in terms of the supply and the customer chain. According to the research done by “Teece, 2007" the ecosystem represents a type of environment in which the firm first monitors and reacts which helps in improving its dynamic capabilities. It also helps in creating a sustainable environment over the competitors in the market (Adner, 2017). The concept of ecosystem basically intends to create a link between the core-products, components and complementary that is available for that product or services in the market. It is useful in adding an accurate amount of value to the customers. The primary difference between the ecosystem and supply chain is that in supply-chain the buying firm has the hierarchical control which means that it does not own the supplier but determine what actually is supplied and at what cost. But the ecosystem is considered to be more modular in comparison to the traditional supply chain. The economics of different organizations is also improved through the application of the ecosystem in business. It helps in making trade more effective and approachable for the business when they operate in the global environment (Bendul et al. 2017).

The ecosystem as analyzed by the researcher “(Cennamo & Santalo, 2013)" in the research can be seen as the type of "semi-regulated marketplaces" that put an impact on the role of entrepreneurs under the direction imposed by the sponsor. It enables secure transactions among the different groups of users who are using the services. The essential characteristics that can be noticed by the implementation of the ecosystem are that it helps in coordination of the organization which is interrelated to each other and having a significant amount of autonomy. The technology-modularity basically allows the implementation of independent components which can be produced by different producer and in it, the limited coordination is required. Most of the sectors like "IT", "Telecommunication" suggested that the ecosystem is considered to be a better solution for the inter-firm coordination and it is more distinct to the application of supply chain or any other market-based interfaces (Gosse et al. 2020). The ecosystem is more approachable as compared to the traditional supply chain is because the final customer can easily choose among the different forms of components that are supplied from each of the participants. For example the user can decide which application needs to by the user who owns an android phone. It also enables them to decide from which provider they eager to buy (Spigel, 2017).

The factors which differentiate the ecosystem from the market-based arrangement are the group of end customers can choose from the group of a producer who all are bound or follow certain standards and adhering to it. The ecosystem also allows the complementors or producer to choose from the set of menu or options that can be treated similarly. The customers are even allowed to affiliate with only one particular group of the platform like what is happening in the case of apps. The application of generic compliments does not raise any issues of economic-organization like what happens in the traditional market. The ecosystem provides support to the consumer in buying items separately in the market and thus combines on their own as a comparison to the traditional supply chain. There are some firms that allow modular technologies by regulating ecosystems and it brings a high amount of profit to them. The question which are arises in the research is that why there is some organization who perform inter-organization collaboration using the concept of ecosystems rather than including traditional supply chain or alliances. There are some firms that engage with creating different types of the ecosystem whereas others are choosing to rely on the markets and become system integrators and often become integrated providers (Veile et al. 2019).

The framework as suggested by the researcher considers the ecosystem as the essential tools in the competitive context as it provides a better mechanism of the recruitment, motivation and retains which the firm uses. The ecosystems are the group of a firm that basically deals with the super-modular or unique complementarities that can be considered to be non-generic that requires a specific structure of alignment or relationships to create value. The primary theoretical premises of the ecosystem are the presence of complementarities and the interdependencies between the group of actors. The complementarities between the actors can be defined as the stem from the fact that the functions which are performed by the offers might help to create or produce an accurate amount of user-value proposition. The interdependencies between different actors arise from the fact that the offers might be connected with the system-level architecture. The primary anchoring point of the ecosystem is that in the approach the customer is allowed to use the end-product but not the actual firm. The actual extent to which the firm is aligned through different levels of arrangement will be capable to affect the capacity to which the firm can create high value to its customer. The other crucial benefits that ecosystem is initiated is that it creates the dedicated group of partners who can easily fulfill the requirement or need of the supply or purchase what is actually offered (onlinelibrary.wiley.com, 2020).

The ecosystem unlike the supply-chain relationship that is explored by transaction-cost economics does not keep the price and quantity fix but it is kept on varying and the final user is responsible for choosing the design and other functions. Therefore the concept of the ecosystem as compare to the traditional supply chain helps the firms to get more secure final users and customers as the group. The ecosystem considered to have a better network structure and distribution as compared to the traditional supply chain and the markets. This makes the ecosystem more opposed to the integrated-supply chain. The ecosystem is analyzed to be one of the critical solutions to interdependent firms. The subsequent reduction of the frictional transaction costs is capable to lead the emergence of markets. The ecosystem only is useful if there lies the accurate existence of coordination which cannot be seen in the markets. It also requires the authority-structure for the group of central actors and resulting in producing different types of complementarities. The ecosystem is found to be different from the structure and the way it is allowing the list of coordination challenges to get resolved in the market. The ecosystem allows the group of producers to take the decision on their own related to different factors like design, price and many others. The ecosystem is turning out to be the most important question which decides what factors can be useful in driving the value of customers and how the firm can be able to capture the required values in such a technological world. It also decides how the group of actors can be able to sell the items in the market. The researcher offers a set of predictions that the ecosystem will be able to dominate the traditional supply-chain network (platformed.info, 2020). [Referred to Appendix 1]

The ecosystems add an accurate amount of values to the managers by allowing them to coordinate the list of multi-lateral dependence using the group of roles that are having similar rules. This allows the list of complementarities to understand what actually they are and how different categories of it like "generic", "Non-generic" complementarities can be able to define the importance of alignment which occurs in between them. The factor as compared to traditional supply chains or markets that affect the growth of ecosystems is the role of actors and the producer to identify the value of the customer. Thus it can be concluded that unlike the other types of governance forms the ecosystem is more capable as it allows the interdependent organization to coordinate without having full hierarchical-flat. The frequency of the concept ecosystem has shown a massive increase over the last five consecutive years as compared to the traditional supply-chain and markets.

Reference List

Book

Hugos, M.H., 2018. Essentials of supply chain management. UK: John Wiley & Sons.

Journal

• Adner, R., 2017. Ecosystem as structure: An actionable construct for strategy. Journal of management, 43(1), pp.39-58.
• Bendul, J.C., Rosca, E. and Pivovarova, D., 2017. Sustainable supply chain models for base of the pyramid. Journal of Cleaner Production, 162, pp.S107-S120.
• Gosse, J., Hoffreumon, C., van Zeebroeck, N. and Bughin, J., 2020. The Value of Platform Strategy. It's the Ecosystem. Stupid! (No. 2020-033). ULB--Universite Libre de Bruxelles.
• Spigel, B., 2017. The relational organization of entrepreneurial ecosystems. Entrepreneurship Theory and Practice, 41(1), pp.49-72.
• Veile, J.W., Kiel, D., Müller, J.M. and Voigt, K., 2019, September. Ecosystem 4.0: A Supply Chain Perspective on Business Model Innovation. In Proceedings of the XXX International Society for Professional Innovation Management (ISPIM) Innovation Conference, Florence, Italy (pp. 16-19).

Appendices

Appendix 1: Traditional supply chain v/s Integrated Ecosystem