By Jarkko Vesa
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Extra resources for Mobile services in the networked economy
One could, of course, claim just the opposite — by relying on external suppliers, the firm can reach both economies of scale and flexibility. Strategic Costs of Integration In his analysis of vertical integration, Porter also identifies several strategic costs of integration. One such cost is the cost of overcoming mobility barriers to compete in the upstream or downstream of the value chain (1980, p. 309). Porter acknowledges the role of the maturity of technology in the industry by stating that vertical integration occurs most frequently in industries in which “the technology is well known”(p.
However, in the highly open and interrelated world we are living in, it is not enough to analyze this kind of changes just within the boundaries of one firm. This is exactly what this book is trying to achieve: to raise the level of analysis from the level of a single firm to network/industry analysis or even higher. But let us look first how researchers’ views of the boundaries of a firm have evolved over time. This will help us to understand the changes currently taking place in the mobile industry, once we start to analyze the differences between various geographical markets and try to recognize certain patterns in the way the industry itself and the companies within it have defined their roles in the business.
Mitchell and Singh (1996) call the forces creating this kind of situation “environmental shocks,” which can be described as “sudden and substantial changes in technology or market segmentation” (p. 174). This definition appears to apply well to the current transformation of the mobile industry — or how would you describe, for instance, the ongoing shift of focus from voice-centric to multimedia services, the technological transition towards IP-based infrastructure, or the collapse of the values of the UMTS licenses?