Optimizations
- Assembly Lines
- first assembly lines in Chicago slaughterhouses
- Henry Ford applied the concept to building cars
- Division of Labor
- Model T has a revolutionary production process
Brand Specialization
- Red Bull is just marketing and sales company
- Production and Bottling done by Rauch
- Distribution done by Logwin
- allowing for great specialization
- Make Or Buy → outsourcing
Production Theory
Transformation of goods (old school)
[ inputs ] ⇒ [ outputs ]
- e.g. baking many cakes
- all ingredients + workhours + machine hours
- = x amount of cakes
- Optimization
- maximum cakes for the same ingredients
- same cakes with less ingredients
Value Chain (newer)
- a lot of costs
- Direct Costs
- logistics, operations, marketing, aftersales
- Indirect Costs
- sourcing
- Research and Development
- Human Resources
- Infra (IT, Vehicles, Buildings)
- Direct Costs
- all costs should be covered by Producer Rent
Pipeline vs Platform
- Pipeline by example Netflix
- buying movies from e.g. Disney
- producing movie by yourself → still costs money
- products are sold
- selling is done via monthly subscriptions
- Platform by example Youtube
- movies are supplied by users
- movies (product) is free for youtube
- producers (users) need to have incentive
- ad revenue / publicity for merch sales
- two-sided market
- customer and producer
- platform is middleman
- often employ Vendor Lockin
Smartphone
- the phone is a clear pipeline product
- what is one the phone (apps and service) form a platform
- the real value is not in selling the phone, but selling services via the phone
- the phone (hardware) does not need to change, the software is also part of the value
- The Winner Takes It All when it comes to platforms → app stores
- Vendor Lockin beneficial here
- Network Effect can become extreme here
Digital vs Physical Platforms
- physical
- shopping malls have a physical growth limit
- digital
- almost infinite apps on a phone