Business and Investment Center

The duration of the Knowledge Management (KM) life cycle is a function of the availability of the technologies that enable each phase and of the nature of the information, the difficulty of archiving the information, and other external factors. For example, some business information, such as tax information, must be retained or archived indefinitely to comply with federal, state, or local law. Other information may be critical to maintaining the value of the corporation, such as knowledge of core processes in the company.

Actually each phase of the KM life cycle is associated with issues, input data, support mechanisms, and output data. The difference between the input and output data depends on the processes involved in the particular phase of the KM life cycle. For example, in the archiving process, the output data are indexed according to a standard or controlled vocabulary, whereas in the translation phase, the format of the information is converted to a more useful form.

The issues relevant to each phase in the Knowledge Management life cycle depend on the phase as well as the type of knowledge involved. For example, for highly sensitive medical, legal, or financial information, security is a key issue. In contrast, for information that will be published on the web for general consumption, verifying ownership and copyright may be primary concerns. The primary issues in the KM life cycle, each of which is relevant to different degrees at each phase of the life cycle, include:

• Economics

• Accessibility

• Intellectual property

• Information

• Infrastructure

• Management

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Generally, price wars start because somebody somewhere thinks prices in a certain market are too high. Or someone is willing to buy market share at the expense of current margins. Price wars are becoming more common because managers tend to view a price change as an easy, quick, and reversible action. When businesses don’t trust or know one another very well, the pricing battles can escalate very quickly. And whether they play out in the physical or the virtual world, price wars have a similar set of antecedents. By understanding their causes and characteristics, managers can make sensible decisions about when and how to fight a price war, when to flee one—and even when to start one.

The first step, then, is diagnosis. First, the manager called customers in the competitor’s home market to let them know that the price-cutter was offering special deals in another market. Second, he called local customers and asked them for their support, pointing out that if the smaller supplier was driven off the market, its customers would be facing a monopolist. The short-term price cuts would turn into long-term price hikes.

Good diagnoses involve analyzing four key areas in the theater of operations. They are customer issues such as price sensitivity and the customer segments that may emerge if prices change; company issues such as a business’s cost structures, capabilities, and strategic positioning; competitor issues, such as a rival’s cost structures, capabilities, and strategic positioning; and contributor issues, or the other players in the industry whose self-interest or profiles may affect the outcome of a price war.

Companies that step back and examine those four areas carefully often find that they actually have quite a few different options—including defusing the conflict, fighting it out on several fronts, or retreating. We’ll look at some of those strategies and how companies have deployed them successfully.

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