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Master's Thesis Master’s Thesis Submitted to: Reykjavik University School of Business International Business Applying Reconstructuralist Models in the Cloud IaaS Market A Case Study of GreenQloud Nicola Anne Storgaard 080284-5439 Supervisor Vishnu Menon Ramachandran Reykjavik, May 22st 2014 Declaration of Work integrity This work has not previously been accepted in substance for any degree and is not being currently submitted in candidature of any degree. This thesis is the result of my own investigations, except where otherwise stated. Other sources are acknowledged by giving explicit references. A bibliography is appended. By signing the present document I confirm and agree that I have read RU’s ethics code of conduct and fully understand the consequences of violating these rules in regard of my thesis. Reykjavik, May 22st 2014 080284-5439 i Reykjavik University, May 22nd 2014 Abstract This thesis is a case study on a green cloud IaaS provider, which is competing in an increasingly competitive environment. Blue ocean strategy, which is also termed reconstructuralist strategy, and the five forces model, are explored and applied to three separate groups of customers, to go beyond accepted market boundaries, in the search for uncontested market space. Further efforts to locate a strategy within the accepted market boundaries concentrates around a unique value driver, which the case company possesses, with their green model. The research includes the identification of the competitive factors in the cloud IaaS market, as well as survey data identifying the importance of the factors, which are competed on in the market. The aim of this research is to find uncontested market space for the case company, as well as researching the need for a further improvement of their green value. Keywords: Blue ocean strategy, Porter’s Five Forces, IaaS, Cloud, Value innovation, Green ii Reykjavik University, May 22nd 2014 Preface The past few months have been a challenging, yet interesting journey. I started my thesis while still at home with my newborn, having to juggle life as a mom and as a student during the first month and a half. My family has been incredibly understanding and supportive, giving me the time I needed to write. I would like to take this opportunity to thank my fiancée and my two kids for supporting me the whole way, understanding the need for my absence during many weekends. I would also like to thank GreenQloud for allowing me to use them as a case study, and for allowing me to access their customer base for the primary data gathering. iii Reykjavik University, May 22nd 2014 Table of Contents Part I: Introduction ..................................................................................................... 1 1.1 Background ................................................................................................................. 1 1.2 Problem statement ...................................................................................................... 2 1.3 Research Objective ..................................................................................................... 3 1. 3.1 Research Questions ..................................................................................................... 3 1.3.2 Significance .................................................................................................................. 4 Part II Theoretical Background ............................................................................... 5 2.1 Strategy ....................................................................................................................... 5 2.1.2 Strategic Management .................................................................................................. 6 2.3 Porters Five Forces model ........................................................................................... 9 2.3.1 Threat of entry ............................................................................................................ 10 2.3.2 The Power of Suppliers .............................................................................................. 11 2.3.3 The Power of Buyers .................................................................................................. 11 2.3.4 Threat of substitutes ................................................................................................... 12 2.5 Blue Ocean strategy .................................................................................................. 12 2.5.1 Value Innovation Theory ........................................................................................... 14 2.5.2 Framework’s of the Blue Ocean Strategy .................................................................. 16 2.5.3 Three tiers of non-customers ...................................................................................... 19 2.5.4 Creating Blue Oceans Through Disruptive Innovation .............................................. 20 2.5.5 First mover advantage ................................................................................................ 21 2.5.6 Revisiting the Blue Ocean Strategy ........................................................................... 22 2.6 Customer Value and Green Business ........................................................................ 22 2.6.1 The Green Consumer ................................................................................................. 23 2.7 The Customer Value Concept ................................................................................... 24 2.7.1 Economic value .......................................................................................................... 24 2.7.2 Social value ................................................................................................................ 24 2.7.3 Hedonic value ............................................................................................................ 25 2.7.4 Altruistic value ........................................................................................................... 25 2.7.5 Second stream of influences ....................................................................................... 25 2.8 Green Marketing as a differentiation strategy .......................................................... 27 2.8.1 Green Marketing Mix ................................................................................................. 28 2.8.2 The Green Marketing Strategy Matrix ....................................................................... 28 2.9 Conclusion of the Theoretical background ............................................................... 30 2.9.1 Integrated Framework ................................................................................................ 31 Part III: Company Overview ................................................................................. 32 3.1 Background ............................................................................................................... 32 3.1.1 Core competencies ..................................................................................................... 34 3.1.2 Product overview ....................................................................................................... 34 Part IV: Methodology ............................................................................................. 36 4.1 Research Purpose ...................................................................................................... 36 4.2 Research Approach ................................................................................................... 36 4.2.1 Research philosophy .................................................................................................. 36 iv Reykjavik University, May 22nd 2014 4.2.2 Type of Study ............................................................................................................. 37 4.2.3 Data Collection Method ............................................................................................. 38 4.3 Research Design ........................................................................................................ 39 4.3.1. Procedures ................................................................................................................. 39 4.4 Data Analysis ............................................................................................................ 40 4.5 Limitations ................................................................................................................ 40 Part V: The Cloud IaaS Market Overview ............................................................ 41 5.1 Layers of the cloud .................................................................................................... 41 5.2 Overview of the cloud market ................................................................................... 41 5.2.3 Hybrid Cloud .............................................................................................................. 44 5.3 Barriers and motivators to cloud adoption ............................................................... 45 5.2.4 VPC ............................................................................................................................ 46 5.2.6 Mature and Emerging Cloud Markets ........................................................................ 46 5.3 Competitor overview ................................................................................................
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