Business Ecosystems

Topics: Systems ecology, Value, Ecosystem Pages: 7 (2462 words) Published: March 5, 2011
1. Definition
Business Ecosystem is a strategic planning concept originated by James F. Moore . The basic definition appears in Moore's book, The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems, published in 1996. Moore proposed the following definition: “An economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem.” Investopedia (2010) provides a simplified definition of business ecosystem; it is “the network of organizations – including suppliers, distributors, customers, competitors, government agencies and so on – involved in the delivery of a specific product or service through both competition and cooperation.” Organizations operating in this business environment interact and affect each others. The constantly evolving and symbiotic relationships established across different businesses are mutually beneficial, self-sustaining and somewhat closed. A business ecosystem is a value chain enhanced by a culture. Culture is important because different players in a business ecosystem should share the same vision as they share the same interests and the same values. This results in a long-term sustainability of the whole community. Members of a business ecosystem must be flexible and adaptable in order to survive, as in a biological ecosystem.

2. Components

The success of a business ecosystem lies in the combination of efforts from all the interconnected elements of this community. Participants in business ecosystems can be divided into three categories according to their position and strategy: Keystone Players, Dominators and Niche Players. This typology refers to the three types of behaviour among species in biological ecosystems.

Keystone players are neither the largest nor the most powerful among business ecosystem players but they are highly interconnected. They create value through core competencies like technology and brand standards. On the other hand, they share value with other business ecosystem participants. Keystone enterprises provide a predictable environment upon which other ecosystems participants build their strategies. These players also benefit from the growth of the ecosystem and, their contribution tends to foster diversity in the community.

Dominators are stakeholders who are powerful and big in size. They always try to control, take over and eliminate many enterprises through vertical integration. This will result in the elimination of diversity. Dominators minimize once they create value but maximize when they snatch value, which will eventually lead to the collapse of the entire ecosystem, including dominator enterprises. They may create business opportunities for niche players provided that they remain competitive suppliers. Dominators have enough resources to invest in their own research and development and have no incentive to share knowledge.

Niche players represent non-dominant large or small organizations which constitute the large majority of participants. They characterize the creative and rapidly increasing population in a business ecosystem. These enterprises often specialize in a market segment. Their growth depends on their ability to maintain a level of differentiation. Most of them depend on keystone enterprises and other firms’ resources to focus on market segments and ensure their differentiation. The existence of a great number of niche players results in the creation of diversity and the foundation of a healthy and prosperous business ecosystem.

3. Process
In a business ecosystem, companies have multiple relationships with external "partners". These relationships can be direct or indirect, formal or informal. These relationships link several branches of industry. The "partners" are not only companies but they pursue a common goal. There are...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Business Essay
  • Ecosystem Research Paper
  • Ecosystem Essay
  • Ecosystems Essay
  • Ecosystem Essay
  • Essay about Anthropology & Business
  • Small Business Essay
  • Ecosystem Essay

Become a StudyMode Member

Sign Up - It's Free