Principal Investigator Henry Weil
This research focuses on important links between technology strategy and overall corporate strategy. This experience of many technology-based industries suggests the existence of powerful long-term dynamics that lead to "commoditization" of products and services. These industries exhibit recurring cycles in investment, capacity utilization, prices, margins, and return on capital. The objectives of ICRMOT supported research are first to more clearly define the dynamics of commoditization, and then to identify leverage points whereby a corporation could mitigate the effects of commoditization on its business performance. A generic market model was developed using the System Dynamics methodology. It has been used to analyze the behavior of a cross-section of service and product markets at different stages of maturity, liberalization, and internationalization. These markets include air transportation, telecommunication services, and refined petroleum products. A series of simulation experiments is exploring such questions as: How do technological trends and innovations impact the dynamics of commoditization? How does commoditization change the incentives for investments in new capacity and technologies? How does commoditization alter the character of markets and their cycles? How should a corporation adjust its technology and business strategies to the stages of commoditization? And what are the optimal pricing and capacity investment policies at under various market conditions? A close working relationship with several ICRMOT Members is adding substantially to the quality and value of the research. The findings are applicable to a wide range of technology-based products and services. The model-based approach can facilitate the transfer of strategic insights across markets and products, and thus accelerate learning within a global technology network.