The Platform Business Model and Strategy:A Dynamic Analysis of the Value Chain and Platform Business

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Abstract

These days, it is hard to discuss innovation and the creative economy without mentioning platforms, which have become core strategy for dominating the market. An accurate understanding of platform business is a key factor in being a successful platform provider, so discussions of platform strategies need to be invigorated, value chains need to be analysed, and theoretical factors need to be seriously considered. Corporations are yearning for new innovations and worry about the absence of an efficient and sustainable growth model. First, this thesis analyses how the value chain and value stream are changed in the platform business model in order to explore value chains and value streams in the two-sided market, which has a distinct group of users on both sides. It proposes three types of platform business strategy which will serve as a frame of reference for analysing the impact of the different value chains on platform businesses. Second, this thesis indicates how a step-by-step business strategy based on the perspective of dynamic approach could be constructed. This research identifies four major stages of platform business (entry stage, growth stage, expansion stage, and maturity stage), and different core elements and strategies exist for each stage. These serve as the conceptual frameworks with which to build a platform business model.The key contributions of this research are as follows. Firstly, the main differences and features of the literature reviewed were suggested with collective action and strategic choice perspectives from different academic approaches. Secondly, this study extends the understanding of the value chain that was the critical strategic element of a corporation in the platform business. Thirdly, this research presents the core elements and strategies for each of the four major growth stages of platform business with the dynamic approach, depending on the distinctive features of the contents and platforms.

Layman's Abstract

These days, it is hard to discuss innovation and the creative economy without mentioning platforms, which have become core strategy for dominating the market. In particular, platform businesses have different types of value chain and value stream models due to the nature of the two-sided market, which changes the market paradigm. An accurate understanding of platform business is a key factor in being a successful platform provider, so discussions of platform strategies need to be invigorated, value chains need to be analysed, and theoretical factors need to be seriously considered. Corporations are yearning for new innovations and worry about the absence of an efficient and sustainable growth model. A single successful product or a successful business model might not be enough for sustainable growth; a platform business model, however, can allow for efficiency and innovation through platform participants, so this is key strategy model that companies are pursuing today.More specifically, through twenty-one multiple case studies with thirty in-depth interviews and two strong focus group interviews, this thesis examines two important gaps in platform research. First, this thesis analyses how the value chain and value stream are changed in the platform business model in order to explore value chains and value streams in the two-sided market, which has a distinct group of users on both sides. It proposes three types of platform business strategy which will serve as a frame of reference for analysing the impact of the different value chains on platform businesses. Second, this thesis indicates how a step-by-step business strategy based on the perspective of dynamic approach could be constructed. This research identifies four major stages of platform business (entry stage, growth stage, expansion stage, and maturity stage), and different core elements and strategies exist for each stage. These serve as the conceptual frameworks with which to build a platform business model.The key contributions of this research are as follows. Firstly, the main differences and features of the literature reviewed were suggested with collective action and strategic choice perspectives from different academic approaches, such as operation management, industrial economics, and business strategy. This will contribute towards a better understanding of the multifaceted phenomena of platforms; therefore, further research can be carried out to obtain more conclusive and specific information. Secondly, this study extends the understanding of the value chain that was the critical strategic element of a corporation in the platform business. More specifically, this research illustrates how various value chain changes in platforms have distinct implications for different types of platform business models. This finding will help follow-up platform business studies with the perspective of strategic approach. Thirdly, this research presents the core elements and strategies for each of the four major growth stages of platform business with the dynamic approach, which have thus far not been clearly presented in previous studies that were conducted with the more static approach, depending on the distinctive features of the contents and platforms. Especially, this research develops academic research through integrated analysis of the platform’s core academic theories; two-sided market theory, network effect, and business ecosystem, and this integrated analysis makes it possible to conduct an in-depth analysis of the life-cycle of a platform business model. Therefore, the findings of this study attempt to demonstrate to platform providers how to settle successfully in their respective markets and how to achieve sustainable growth and innovation, while reducing their rate of failure.

Keyword(s)

business ecosystem; business model; platform; strategy; two-sided market

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