Global business 2

Global business 1
Global business
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Global business 2
Global business
Introduction
There are various ways in which platforms have destroyed the traditional industries. They have
taken advantage of technological advancement to create a competitive advantage over the
traditional industries. These platforms have been a major boost to the born global firms as they
have offered them different opportunities. This paper analyses the various ways in which the
platforms have disrupted the traditional industries. It goes further to outline the various way in
which the platforms have become an opportunity for the born global firms.
How platforms disrupt the traditional industries
Platforms, as described by Charles & Thomas (2017), refers to an enabled interaction between
the producer and the consumer where business value is created. The role of the platform is to
provide a participative and open infrastructure enabling the interactions to take place. It also
creates value for all the stakeholders involved in the facilitated exchange of goods and services
where the all the needs of the users are matched. There are various forms of platforms. There are
multi-sided platforms, dual-sided platforms and also uni-sided platforms. Whereas the multi-
sided platform brings more than two sides on board to facilitate interaction, the dual-sided
platforms bring only two sides on board. Examples of a multi-sided platform include among
others uber, Xbox, Airnd and eBay.
The contemporary world has seen a tremendous advancement in technology which has
contributed to the internet’s paradigm shift from a mere online distribution channel to an avenue
of infrastructure creation and coordination mechanism. The internet is no longer viewed as a
marketplace where a firm could advantageously sell its products to millions of consumers with
relatively lower investments. One of the advantages of the platforms in comparison with

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traditional businesses is that they enjoy a margin of economies of production and distribution.
Taking uber as an example, the expansion rate of uber is less costly as compared to traditional
tax which requires the owners to employ more drivers and add additional units of taxis. The user
value creation in the platform is impacted by the network effects. The significant value of the
user value created is determined by the magnitude of the platform community. The other notable
advantage of these platforms is that they have successfully delinked values from assets. This
means that the usage of a product does not necessarily require ownership. One can use a product
which he does not own. One of the key elements of platforms is reintermediation. This aspect
eliminates the need for middlemen in the channel of interaction. The producer is connected
directly to the consumer. Additionally, the platforms have eliminated the non-scalable and
inefficient agents with the embracement of automation. Hagui and wright (2015) concluded that
in the contemporary industrial setting, a system tasks with the role of connecting two sides and
which has failed to embrace technology is in the verge of been replaced by the platform.
According to Evans and Schmalensee (2018), the platform disruptions on traditional industries is
necessitated by the consumer’s convenience in their busy lifestyle. An applicable example, in
this case, is the Amazon which on its inception commenced as an online distribution business but
later transformed into a platform connecting different users. Looking at the interaction channel
where a manufacturer sells his mass production to the wholesaler, who then sell to the retailers
and then the retailer deals with the customer is not only long and expensive but also very tedious.
The application of a platform is not only shorter and cost-effective but also enables one to reach
a wide range of consumers.

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By eliminating the middlemen, Hanninen, Smedlund & Mitronen (2017) notes that the platforms
have led to making the product cheaper as the remuneration cost run by the wholesaler as profit
for distributing the product is eliminated. The producer through the platform deals directly with
the consumer. In this case, the review system enabled by the platform allows the producer to
understand what the consumer feels about the product. This helps the producer to modify the
products in line with the needs and expectations of the consumer.
Comparing to a retail outlet, platforms gives a myriad of choices to the users. It only requires a
click of the mouse and the product is delivered at the consumer’s doorstep. The consumer does
not necessarily need to visit the shops and spend time choosing on the products they require.
That time is actually consumed by the consumer’s busy lifestyle (Damanhouri, 2017). As
opposed to traditional industries where the sales executive could solely give more information
about a product, through the review and rating system, platforms allow customers to get more
information about the product from fellow consumers. This was made possible by the element of
network effects. With reference to Amazon, it is important to note that the number of sellers is
directly proportional to the number of listed products. The more the sellers, the more the listed
products. This also translates to the number of buyers where they are directly proportional to the
number of sellers and the listed products.
Consecutively, network effects cause industry disruptions as argued by Parker, Van Alstyne and
Choudary (2016). Taking the example of Uber, they analyzed how it gives customers a smooth
experience to use a taxi. Through the platform and unlike the traditional taxis where the
passenger had to call a taxi driver and wait until he gets to them, the passenger only books a taxi
using an app and he will know his location, the timeframe for him to reach where he is and the