STRATEGY & THE NEW

ECONOMICS OF
INFORMATION

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 INTORDUCTION

î 
  
    
Strategy is a plan, a "how," a means of
getting from here to there.
î V

 V 2 it is the quality of
message from a sender to one or more
receivers, it could be anything like size of
parameters, occurance of an events or
values or ethics & etc.
î 2 it is a study of mankind in the
ordinary business of life. It examines that part
of individual & social action which is most
closely connected with the attainment & with
the use of material requisites of well-being
 WAVE IN THE INFORMATION
REVOLUTION
î New technologies sprung new behavior
î Precipitation of structural changes
î Near-demise of encyclopedia Britannica-A
sign
î Disruption of conventional value
proposition of established business
î Absorbance of threads
î Reasons for vulnerability of Britannica
 Prominence of information
î Huge representative of cost structure
eg2 health care spends 1/3rd or $350b on cost
associated with information capturing storing
processing & etc
î Even low tech products required market
research like of Walt-marts logistics dept
î Various dependence on information
1. customers loyalty
2. employees loyalty
3. supply relationship
 G. brand identity
5. process coordination
6. switching costs etc

î information is equally emphasized as

physical activities related to products
like by; Walt-mart, American airlines, Nike

î True explosion in connectivity

 Trade of Between Reach and
Richness

î The economics of information is governed by a

basic law i.e.; trade of between reach & richness
î Reach2 means the number of people, at home or at
work, exchanging information.
î Richness2 quality of information, accuracy,
bandwidth currency, interactivity, etc.
î Richness can be formulated by three aspects of the
information itself
1, band with- the amount of information that can be
moved from sender to receiver in a given time
2, customization is degree to which the information
can be customized
3, interactivity dialogue is possible for a small
group, but to reach millions of people the message
must be a monologue
r A pervasive trade of shapes company's strategy
for e.g.2 a company's marketing mix
converse and inverse relationships
 Richness and Reach
positioning
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 Prescription by a economic
theory
î Pioneered by Ronald h.coase
î Boundaries are set by economics of
exchanging information like organizations
and markets
î Trade of business is a fundamental principle
î Emergence of open, new technological
standards like internet extranet & intranet
 Demantling value chain
structure
î Need of deconstruction
î Invasion by hi-fi, hi-tech electronic tablets
î Invatable transformation
in newspapers
r merits of unbundling
r acclimatising to the changes
 Retail banking

î Emergence of new distribution channels

î New versions and varieties in banking like
intuits quicken and Microsoft money
î Deconstruction not and unprecedented
change