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OpenAI: Competitive Strategy And Governance

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In November 2023, OpenAI, a prominent artificial intelligence (AI) research lab, announced the unexpected removal of its co-founder and CEO, Sam Altman, which sent shockwaves through the AI industry.

The case first delves into OpenAI's journey from its inception as a non-profit organization aimed at developing artificial general intelligence (AGI) for the betterment of humanity, to its transformation into a capped-profit entity, along with the value chain and competitive dynamics of the generative AI industry. In the second section, the case documents in detail Sam Altman’s sudden dismissal. In the last section, the case concludes with a look into the broader implications for the generative AI industry, including the race for AGI, the ongoing challenges of AI development, and new developments.

The case is suitable for MBA, EMBA, and undergraduate students who are interested in competitive strategy, industry value chain, technology and innovation, entrepreneurship, corporate governance, stakeholder governance, and the AI industry. The case can be used in a core strategy course at different levels as it covers various topics.

Learning Objective:

  1. Students will be able to analyze the value chain of generative AI industry and its future evolvement. They will learn to identify key players and industry attractiveness, understand bargaining power dynamics, and recognize where and how value is created and captured within the industry.
  2. Students will be able to evaluate competitive dynamics and analyze competitive advantages or core resources of key players in the AI industry.
  3. Students will be able to examine the relationship between governance and strategy. They will explore how evolving governance models are designed to address external competitive pressures and their impact on strategy formulation, implementation, and organizational survival.
  4. Students will be able to assess the implications of mission shifts or drifts on a start-up’s strategic trajectory, particularly in response to environmental and competitive pressures.
  5. Students will be able to understand the complexities of stakeholder governance, with a focus on the role of employees as critical resources in the AI industry. 

Year of Publication: 2024
Ref. No.: 24/788C
Discipline: Social Enterprises & Ethics, Strategy & General Management
Industry: Software & Services
Country: United States of America
Company: OpenAI
Languages: English
Pages of Text: 13