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Cannibalizing for Profits: the Competition Strategies in Networked Business


Special Topic I

Cannibalizing for Profits: the Competition Strategies in Networked Business


SpeakerChih-Ting , Tu  Professor

(The Chinese University of Hong Kong)

HostChien-Wei Wu ProfessorChung-Shou Liao  Professor



LocationEngineering Building I , R901



From 2002 to 2012, over a 10-year period, Apple Inc. grew 100 times bigger to become the largest company

in the world. How can a computer company grow bigger than the largest oil company? Is such growth due to

technology, or strategy? We all know that the Internet has a long-tail effect that allows niche markets to

expand into major sectors of the economy. We also know that the connected electronic network makes

competition keener. To any network-mediated platform, technology matters. However, adopting the right

strategy can magnify a platform’s business by 10 or even 100 times. Success in the online market involves

adopting strategies to deal with pricing, market segmentation, network effects, envelopment attacks and

cannibalization. However, the network effect is a key element for all strategies in the platform business.

The new competition strategies are no longer limited to those traditionally used by conventional businesses.

Platform businesses have three major components: hardware, software, and platform. In this lecture, we

discuss how the interplay of these three components can help a company grow big, fast and strong.

A manager needs to know more than conventional economics theory. That is, in the information age,

business involves demand-side scale economies, in which the value of a product is determined by the

customer’s willingness-to-pay, not the product cost.



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