“Platform companies are becoming more powerful” (Herrman, 2017) headlined the New York Times in March this year, putting emphasize on a digital phenomenon that has been spreading heavily since the invention of the internet. Nowadays, platform businesses can be found on nearly every continent of the planet, no longer exclusively focussing on new media and light assets, but increasingly approaching traditional industries, such as healthcare or banking. Multi-sided platforms simplify the introduction and upscaling of businesses, wherefore especially digital platforms are suspected to change the traditional competition.
In fact, there are already clear indicators for the rising importance of multi-sided platform businesses. Among others, Coca-Cola was dominating the top five of the world’s most valuable brands in 2007 with a brand value of around $65bn. At that time, only one of the five companies was active in the platform business. However, the same ranking in 2017 was headed by Apple Inc., reporting a brand value of approximately $184bn. In this ranking four of the top five companies were actively utilizing multi-sided platforms. This development underlines the increasing importance of multi-sided platforms in today’s economy. Nevertheless, in the same period, other companies, such as Yahoo!, which have also been trying to implement platform businesses, dropped out of the ranking. Hence, some of the companies managed the utilization of multi-sided platforms better than others. Consequently, it appears to be insufficient to simply introduce the new digital phenomenon to be successful, but rather important to combine it with the right strategy. The obvious question, which is inhered by this conclusion is: What characteristics of the multi-sided platform business must strategic management consider, in order to achieve and secure the success of a platform? In the course of this literature-based review, this question will be guiding through the investigation of the key functions and particularities of multi-sided platform businesses.
Inhaltsverzeichnis (Table of Contents)
- The Significance of Multisided Platforms in Today's Economy
- Definition and Generic Functions of Multi-Sided Platforms
- Defining Multi-Sided Platforms
- The Generic Functions of Multi-Sided Platforms
- Special Characteristics of Multi-Sided Platform Businesses
- Introducing the Network Effect and the Chicken-and-Egg Problem
- How to Utilize Network Effects and Tackle the Chicken-and-Egg Problem
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This literature-based review aims to investigate the key functions and particularities of multi-sided platform businesses, answering the question: What characteristics of the multi-sided platform business must strategic management consider, in order to achieve and secure the success of a platform?
- The rise of multi-sided platforms in the modern economy
- The definition and generic functions of multi-sided platforms
- The network effect and the chicken-and-egg problem in platform businesses
- Strategic management considerations for successful multi-sided platforms
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1: The Significance of Multisided Platforms in Today's Economy: This chapter discusses the increasing importance of multi-sided platforms in today's economy, using the example of the world's most valuable brands. It highlights the shift from traditional companies to platform-based businesses and the need for strategic management to ensure success.
- Chapter 2: Definition and Generic Functions of Multi-Sided Platforms: This chapter explores different definitions of "platform" and focuses on the concept of multi-sided platforms as online-based, profit-oriented intermediaries facilitating interaction between two or more user groups. The chapter then outlines the generic functions of platforms, including market-makers, audience-makers, and demand-coordinators.
- Chapter 3: Special Characteristics of Multi-Sided Platform Businesses: This chapter delves into the unique features of multi-sided platform businesses, specifically the network effect and the chicken-and-egg problem. It explores how these factors can impact the success of platforms and outlines strategies for managing them.
Schlüsselwörter (Keywords)
Key keywords and topics include multi-sided platforms, platform businesses, strategic management, network effect, chicken-and-egg problem, digital economy, value creation, user interaction, platform functions, market-makers, audience-makers, demand-coordinators.
Frequently Asked Questions
What is a multi-sided platform?
It is an online-based intermediary that facilitates interaction between two or more distinct user groups, creating value for all sides.
What are the "Network Effects" in platform businesses?
Network effects occur when the value of a platform for one user group increases as the number of users in another group grows.
What is the "Chicken-and-Egg Problem"?
It refers to the difficulty of attracting one group of users to a platform when there are no users in the other group yet (and vice versa).
What are the generic functions of platforms?
Platforms act as market-makers, audience-makers, or demand-coordinators to facilitate transactions or interactions.
Why have some platforms like Yahoo! failed while Apple succeeded?
Success depends on strategic management correctly utilizing network effects and choosing the right business model for the digital economy.
- Quote paper
- Fabian Gartner (Author), 2017, Strategic Management of Multisided Platforms, Munich, GRIN Verlag, https://www.grin.com/document/476747
