Strategic Management of Multisided Platforms

Essay from the year 2017 in the subject Business economics - Business Management, Corporate Governance, grade: 1.3, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, language: English, abstract: "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.