Counter-Picking Strategy. Reaction Windows Baits/Decision Trees Last Week’s Recap.
What Is Strategy Recap
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What is Strategy ? Recap • Creating a unique and valuable position, involving a different set of activities – Serving few needs of many customers (jiffy lube) – Serving broad needs of few customers (Wealth management) – Serving broad needs of many customers in a narrow market (Original Walmart strategy focused on small markets) • Strategy requires you – to make trade-offs in competing- – to choose what NOT to do • Strategy involves creating a FIT among company activities
Transcript of What Is Strategy Recap
What is Strategy ? Recap• Creating a unique and valuable
position, involving a different set of activities
– Serving few needs of many customers (jiffy lube)
– Serving broad needs of few customers (Wealth management)
– Serving broad needs of many customers in a narrow market (Original Walmart strategy focused on small markets)
• Strategy requires you – to make trade-offs in competing-
– to choose what NOT to do
• Strategy involves creating a FIT among company activities
Marketing Slogan vs. Strategy
• Essence of strategy is in the activities
– Choosing to perform activities differently
– Or to perform different activities than rivals.
• Otherwise, a strategy is nothing more than a marketing slogan !
Essence of Strategic Positioning
• Choose activities that are different from rivals
• Strategic position is not sustainable unless there are trade-off with other positions..–More of one thing means less of another
• Trade-off arise for three reasons– image/reputation–Different positions require different set of activities, organization structures, culture, skills
–Limits on internal coordination and control..or focus
Fit drives sustainable competitive advantage
• How activities fit together to deliver competitive advantage–Value creating activities–Mapping Activity systems
“No question asked” Return
Policy
“No question asked” Return
Policy
Computer-Aided Store
Design
Computer-Aided Store
Design
Frequent performance
Check
Frequent performance
CheckReduce
“Shrinkage”
Reduce “Shrinkage” More
Incentives
More Incentives
Improving Logistics
Wired Merchandise
Requests
Wired Merchandise
Requests
Direct Connection
With Vendors
Direct Connection
With Vendors
Building Distribution
Center(150~300 -mile radius)
Building Distribution
Center(150~300 -mile radius)
Diversification
Small town↓
Large town
It’s OwnTrucks and
Trailers
It’s OwnTrucks and
Trailers
Quick Delivery &
Using Return Trips
Quick Delivery &
Using Return Trips
Much less Inventory
Much less Inventory
Satellite Network
Satellite Network
Measuring the success of
Promotions
Measuring the success of
Promotions
MarketingOn Lowest
PricesEfficient
Store Operations
Focus on Increasing
Awareness of New stores
Focus on Increasing
Awareness of New stores
Takeover Specialty
Departments
Takeover Specialty
Departments
Bargain-Basement Acquisition
Bargain-Basement Acquisition
More Hard goods
More Hard goods
Increase in Sales per
average ft2
Increase in Sales per
average ft2
More Available
Selling Space
More Available
Selling Space
UPC at the Point of Sale
UPC at the Point of Sale
Administration
More SKUsMore SKUs
Human Resources
Management
Testing Different
Mixes
Testing Different
Mixes
Locating VPs in Same
Area
Locating VPs in Same
Area
Everyday Low
Prices
Reduce Wage
Expenses
Reduce Wage
Expenses
WalMart’s Activity System
Store merchandiseIn distribution center
Providing “Everyday Low
Prices”
Buy in volume atAttractive prices
Centralizedpurchasing
Inventorycontrol
EfficientDistribution
network
Low operatingexpenses
Central computersLinked to vendors
Hub and SpokeDistribution
network
Lease stores
$20 millionSatellite system
Computer aidedDesign for
Merchandise mix
Regional vice Presidents live inBentonville and Flown to stores
Employee Salaries
“We care aboutOur people”
“No questionsAsked” Return
Policy
Increased storeSize and increase In the number of
Store locations
ComputerizedSystem in each store
UPC at point of sale
Store managerSalary. Autonomy in Ordering stock and
Setting displays
EfficientInboundLogistics
Sources of Value (competitive advantage)
• Postioning–Brand–Regulatory–Geography
• Capabilities–products/services–Technology–Processes–Business model
tomorrow’s organization. today.
Business Model TemplateBrief Outline of Business Models / Nov 06
Alex Osterwalder / [email protected]
VALUEPROPOSITION
value proposition 1value proposition 2
…
OFFER
describing a company’s offer
VALUEPROPOSITION
TARGETCUSTOMER
value proposition 1value proposition 2
…
target customer 1target customer 2
…
CUSTOMEROFFER
describing who a company offers value to
CORECAPABILITIES
VALUEPROPOSITION
core capability 1core capability 2
…
value proposition 1value proposition 2
…
OFFERINFRASTRUCTURE
describing what capabilities are required
describing what activities are required
VALUEPROPOSITION
VALUECONFIGURATION
CORECAPABILITIES
value proposition 1value proposition 2
…
core capability 1core capability 2
…
activity 1activity 2
…
INFRASTRUCTURE OFFER
VALUEPROPOSITION
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
value proposition 1value proposition 2
…
distribution channel 1distribution channel 2
…
target customer 1target customer 2
…
CUSTOMEROFFER
describing how a company reaches its customers
TARGETCUSTOMER
REVENUESTREAM
revenue stream 1revenue stream 2
…
target customer 1target customer 2
…
FINANCE
VALUEPROPOSITION
value proposition 1value proposition 2
…
OFFER CUSTOMER
describing how a company makes money
Re-teaching an “Old dog, old tricks”: Strategic questions for an existing business
• Which of our product or services are most distinctive?
• Which of our product or services are most profitable?
• Which of our customers are the most satisfied?
• Which customers, channels, or purchase occasions are the most profitable?
• Which of our activities are the most different and effective?
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIP
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
VALUECONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
gives an overall view of a company's bundle of products and services
portrays the network of cooperative
agreements with other companies
describes the channels to communicate and
get in touch with customers
describes the arrangement of
activities and resources
explains the relationships a
company establishes with its customers
sums up the monetary consequences to run a
business model
describes the revenue streams through which
money is earned
describes the customers a company wants to offer value to
outlines the capabilities required to run a
company's business model
INFRASTRUCTURE CUSTOMER
OFFER
FINANCE
describing a company’s business model
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIP
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
VALUECONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
INFRASTRUCTURE CUSTOMEROFFER
FINANCE
a business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and
sustainable revenue streams
Template
describing the partners that leverage the business model
VALUEPROPOSITION
PARTNERNETWORK
CORECAPABILITIES
value proposition 1value proposition 2
…
core capability 1core capability 2
…
partner 1partner 2
…
INFRASTRUCTURE OFFER
VALUEPROPOSITION
COSTSTRUCTURE
cost account 1cost account 2
…
value proposition 1value proposition 2
…
FINANCEINFRASTRUCTURE OFFER
describing the costs of a business model
CORECAPABILITIES
core capability 1core capability 2
…
