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Appropriateness and Impact of Platform-Based Product Development

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Author Info

  • V. Krishnan

    ()
    (The University of Texas at Austin, Department of Management, Austin, Texas 78712)

  • Saurabh Gupta

    ()
    (i2 Technologies, 11701 Luna Road, Dallas, Texas 75234)

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    Abstract

    In their quest to manage the complexity of offering greater product variety, firms in many industries are considering platform-based product development. Product platforms, which are component and subsystem assets shared across a product-family, enable a firm to better leverage investments in product design and development. While the platform approach offers a number of benefits, it also imposes certain additional costs that have not received adequate research attention. In this paper, we use an industrial example both to illustrate some of the costs and benefits of platform-based product development and to motivate the development of a mathematical model. The model is formulated to better understand the appropriateness of product platforms and their impact on product-planning decisions. Our results indicate that platforms are not appropriate for extreme levels of market diversity or high levels of nonplatform scale economies. Also, a firm's product positioning and introduction sequence decisions made during the product-planning phase are significantly impacted by the presence of platforms. Specifically, a platform increases the separation among products and offers a multitude of product introduction strategies. We translate our model findings into a managerial framework.

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    File URL: http://dx.doi.org/10.1287/mnsc.47.1.52.10665
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 47 (2001)
    Issue (Month): 1 (January)
    Pages: 52-68

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    Handle: RePEc:inm:ormnsc:v:47:y:2001:i:1:p:52-68

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    Related research

    Keywords: Product Development; Modular Platforms; Component Commonality; Design Reuse;

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    Cited by:
    1. Lee, Amy H.I. & Chen, Hsing Hung & Kang, He-Yau, 2011. "A model to analyze strategic products for photovoltaic silicon thin-film solar cell power industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(2), pages 1271-1283, February.
    2. Arghya Ghosh & Hodaka Morita, 2008. "An economic analysis of platform sharing," NBER Chapters, in: Organizational Innovation and Firm Performance, pages 164-186 National Bureau of Economic Research, Inc.
    3. Israelsen, Poul & Jørgensen, Brian, 2011. "Decentralizing decision making in modularization strategies: Overcoming barriers from dysfunctional accounting systems," International Journal of Production Economics, Elsevier, vol. 131(2), pages 453-462, June.
    4. Halman, J.I.M., 2001. "Platform driven development of product families: Linking theory with practice," Eindhoven Center for Innovation Studies (ECIS) working paper series 01.06, Eindhoven Center for Innovation Studies (ECIS).
    5. Qian, Li, 2011. "Product price and performance level in one market or two separated markets under various cost structures and functions," International Journal of Production Economics, Elsevier, vol. 131(2), pages 505-518, June.
    6. Thyssen, Jesper & Israelsen, Poul & Jørgensen, Brian, 2005. "Activity Based Costing as a method for assessing the economics of modularization - a case study and beyond," Management Accounting Research Group Working Papers M-2005-04, University of Aarhus, Aarhus School of Business, Department of Business Studies.
    7. Johnson, Michael D. & Kirchain, Randolph E., 2009. "Quantifying the effects of product family decisions on material selection: A process-based costing approach," International Journal of Production Economics, Elsevier, vol. 120(2), pages 653-668, August.
    8. Lacourbe, Paul, 2012. "A model of product line design and introduction sequence with reservation utility," European Journal of Operational Research, Elsevier, vol. 220(2), pages 338-348.
    9. Zhang, Xinyan & Huang, George Q., 2010. "Game-theoretic approach to simultaneous configuration of platform products and supply chains with one manufacturing firm and multiple cooperative suppliers," International Journal of Production Economics, Elsevier, vol. 124(1), pages 121-136, March.
    10. Yacine Felk & Pascal Le Masson & Benoît Weil & Patrick Cogez, 2010. "Advanced R&D for prepositioning strategies: the economics of platform shift in high technological velocity environments," Post-Print hal-00696978, HAL.

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