Classroom Companion: Business

 Case Study 8.2 Chat Services and Competition, Cooperation, and Coopetition
 
Chapter 8 · Value Creation Models and Competitive Strategy

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the network of Telia. It is for the benefit 
of the market and the users that compa-
nies in the same business layer cooper-
ate. This is called horizontal cooperation. 
These companies also compete for the 
same customers. As explained above, 
this market behavior is called coopeti-
tion.
8.7 
 Conclusions
Based on the way in which value is created, three types of enterprises have been 
defined:
5
Value chains transforming raw material into physical products
5
Value shops solving problems for their clients
5
Value networks mediating between the stakeholders in the market
Many businesses in the digital economy are value networks. One characteristic of 
value networks in the digital economy, making them different from other value 
creation models, is that the cost of producing an additional item is zero—or that 
the marginal cost is zero. This property allows them to exploit new business models 
such as freemium where some basic products are offered for free, while money is 
charged for additional features, and multisided markets where some user groups 
Telenor
Telia
TDC
ISP
ASP
Apple
iPhone
Samsung
Galaxy
Google
Pixel
User
equipment
User
. Fig. 8.6 Competition, cooperation, and coopetition in digital markets. (Authors’ own 
figure)
8.7 · Conclusions

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are not charged for the service they receive, while other user groups must pay for 
the services.
>
The marginal cost of products produced in a value chain is always larger than zero. 
The marginal cost of products produced in several value networks, particularly in 
the digital economy, is zero.
It has also been shown how the five forces model of Porter—originally developed 
for value chains—can be modified to also apply to value networks. The model can 
then be used as a valuable tool in analyzing business strategies for value networks.
The Internet is a layered network consisting of a transport network transfer-
ring information in form of bits, processing equipment connected to the network, 
and applications running on the processors. This structure gives rise to three inde-
pendent types of stakeholders: Internet service providers, equipment manufactur-
ers, and application service providers. There is cooperation between stakeholders 
at each of these layers to provide services to the users, and no competition between 
stakeholders on different layers. Competition takes place between stakeholders on 
the same layer. However, stakeholders at the same layer may also cooperate, for 
example, to interconnect users over multiple networks, to offer complex services 
consisting of several components, and to develop and standardize new 
technologies.