Herman C. Krannert Professor of Business Administration
Ramon Casadesus-Masanell's fields of specialization are management strategy and managerial economics. He is interested in understanding interaction between organizations that compete with different business models.
Ramon Casadesus-Masanell joined the Harvard Business School faculty in 2000. He has taught the required MBA Strategy course, an elective course on Competing Business Models, and Ph.D. courses on Strategy and Game Theory. He also teaches in Executive Education programs. Casadesus-Masanell received his Ph.D. in Managerial Economics and Strategy from the Kellogg Graduate School of Management, Northwestern University. He received his BA in Economics from Universitat Autonoma de Barcelona, Spain.
Casadesus-Masanell’s fields of specialization are management strategy, managerial economics, and industrial organization. Casadesus-Masanell studies strategic interaction between organizations that operate different business models. He is also interested in the limits to contracting and the role of trust for management strategy. He has published in Management Science, the Journal of Economics & Management Strategy, the Strategic Management Journal, the Academy of Management Review, Long Range Planning, the Journal of Law & Economics, the Journal of Economic Theory, the USC Interdisciplinary Law Journal, ABANTE Studies in Business Management, and the Harvard Business Review, among others.
When One Business Model Isn't Enough
Trying to operate two business models at once often causes strategic failure. Yet LAN Airlines, a Chilean carrier, runs three models successfully. Casadesus-Masanell, of Harvard Business School, and Tarziján, of the Pontificia Universidad Católica de Chile, explore how LAN has integrated a full-service international passenger model with a premium air-cargo business model while separately operating a no-frills passenger model for domestic flights. LAN's multi-model success comes from recognizing the complementarity of its two high-end services and the distinct, or substitute, nature of its no-frills offering. LAN came to that insight by analyzing the major assets that the models share and the compatibility of the models' operational resources and capabilities. It recognized that the more the models have in common, the more likely they are to generate greater value together than apart; the less they share, the more likely they are to be best executed separately. Nevertheless, managing multiple models is a tall order. LAN has had to face greater complexity, broaden its organizational skills, increase the flexibility of its workforce, and make other investments. But by mastering three models, the company has built formidable advantages that are difficult for competitors to overcome. Its example has shown how, properly applied, the implementation of multiple business models is not a risk but rather a new tool for strategists.
As most managers know, commercial firms may benefit from participating in open source software development by selling complementary goods or services. Open source has the potential to improve value creation because it benefits from the efforts of a large community of developers. Proprietary software, on the other hand, results in superior value capture because the intellectual property remains under the control of the original developer. While the straightforward rationale for "mixed source" (a combination of the two) is appealing, what does it mean for a business model? Under what circumstances should a profit-maximizing firm adopt a mixed source business model? How should firms respond to competitors' adoption of mixed source business models? And what are the right pricing structures under mixed source compared with the proprietary business model? In this paper the researchers analyze a model where firms with modular software must decide which modules to open and which to keep proprietary. Findings can be directly applied to the design of optimal business strategies. Key concepts include:
- Firms may become more closed in response to competition from an outside open source (OS) project, and are more likely to use a proprietary business model.
- Firms are more likely to open substitute, rather than complementary, modules to existing OS projects.
- Low-quality firms are generally more prone to opening some of their technologies than firms with high-quality products.
eBay, Inc. and Amazon.com (A) and (B)
This case has been designed to explore strategic interactions among organizations with different business models. The case considers how a competitor successfully challenged the incumbent in a platform market defined by strong network effects and high switching costs. The case allows students to assess the advantages and disadvantages of eBay's platform business model in comparison to Amazon's retail business model; to evaluate business model performance when value loops of two industry players interact; to analyze how Amazon expanded its business model and overcame barriers to entry in a platform market that generates winner-take-all effects for first movers; discuss how eBay can respond to the new competitive dynamic, exploring both tactical and strategic interactions; and assess the strategic implications of eBay's 2011 acquisition of GSI Commerce