Material Economybased
on global economies of scale leading to global integration of production,
distribution, and processing
Physical Distribution and Processing- expense
of acquiring, processing, and distributing material objects favors the
large. Harder to 'bypass' or 'copy/substitute' hence consumers willing
to pay more. They need comm. technologies.
Examples- eg. Blockbuster Video as distributor
of (physical) cassettes which can't be easily duplicated. Power as distributor
gives power over competitors and content providers. Eg. Telecommunication
Infrastructure, Airline Manufacturing as expensive and complicated.
Informational Economy based on smaller
scale entities that can adapt to rapid change. Hard to make money because
very competitive. They need comm. technologies.
Information Content/Services change quickly- change
favors the smaller and quicker. Easier to 'bypass' or 'copy/substitute'
expensive services (filters). Over time, more and more competitors and
automation drive prices down.
Examples- Web page design, online services (including
'telephone companies' leasing the physical lines of large physical telco
operators like AT&T and Baby Bells. Eventually content providers without
good distributors struggle to emerge and make enough money.
'Economies of Scale'
Vertical Integration- suppliers and distributors coordinated
in one company / or Top-down within firm
Horizontal Integration- competitors coordinated / or
Integration between specialities within firm
External Integration- Integration with entities
outside of firm.
Global Integration- Integration of different sites
around the world (resources, manufacturing, research, marketing, financial
components, sales, alliances, etc.) as part of a relatively unified strategy.
Economies of Scale- Cost to produce 'one more' item
goes down with each item produced.
Dis-Economies of Scale - Cost to produce 'one more'
item goes up with each item produced (often associated with costs associated
with lacking flexibility, etc.)