Assessing the Sustainability Index

Our next activity is to prepare and assess the sustainability index. This index tells us the staying power of each constituent. It contains two important measures: entry barriers and importance to the network.
When assessing entry barriers, we are concerned with understanding how susceptible a constituent group is to new members, mostly in the form of competitors. Characteristics to be considered include first mover advantages to favorable locations, technology, experience curve advantages, brand reputation, and equity. Startup costs, capital requirements, customer switching costs, access to suppliers, and distribution channels must also be considered. Additional factors include the adaptability of existing constituents
to changing market conditions, as well as exit barriers. The scoring of entry barriers is straightforward: high (5 points) when signifi cant barriers exist, thus making market entry unlikely; medium (3 points) when
a reasonable, yet not insurmountable investment is required to become an effective player; and low (1 point) when few barriers to entry exist. As mentioned, defining barriers and assigning ratings is a delicate task thatshould be performed by experienced personnel and/or with the help of outside analysts to improve the reliability of the work.
The second measure is the constituent’s level of network significance. Characteristics we want to investigate include the number and duration of direct and indirect ties with other constituents and the ability to forge successful alliances with other network members. A high (5 points) rating indicates the constituent’s criticality to the network. A medium (3 points) rating shows that the member is important, but could be replaced by another player, whereas a low (1 point) score denotes those constituents that provide little unique value. The sustainability index is calculated by dividing each constituent’s sustainability measure by the average sustainability of all constituents combined. Figure 5.9 shows a completed generic
sustainability index, used for illustrative purposes only.

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies

Similar Posts:

None Found

Filed under: Earn Profits

Like this post? Subscribe to my RSS feed and get loads more!