Red Oceans of Competition – Margins & Share

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Strategies to increase Competitiveness of Sri Lankan Business

- How Competitive are we?

- The Future –Irreversible trajectory

- Creating ‘New’ market spaces

- What we need to do!

Ravi Fernando July 2013

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RAF SEPT 2009

STRATEGY

“ “Strategy is about setting yourself apart from the competition. It’s not just a matter of being better at what you do it’s a matter of being different at what you do”

Michael Porter Michael Porter “Rethinking the Future”

“Strategy is being different in a relevant way” © Ravi Fernando (2013)

Adjustment to the GCI scores by sustainability indicators

GCI 2012 – 2013 GCI 2012 – 2013 Sustainability adjusted GCI

Country/Economy Rank Score Score

Switzerland 1 5.72 6.85

Germany 6 5.48 6.14

United States 7 5.47 5.31

United Kingdom 8 5.45 5.82

Japan 10 5.40 5.76

Korea Republic 19 5.12 4.89

Australia 20 5.12 5.46

Malaysia 25 5.06 5.14

China 29 4.83 4.44

India 59 4.32 3.73

Sri Lanka 68 +10 = 78 4.19 3.96

Venezuela 126 3.46 3.28

The World’s economic growth and resource utilization is unprecedented !

Source: IMF, Standard Chartered Research

308,285

133,676

62,346

32,06122,856

20,000

60,000

100,000

140,000

180,000

220,000

260,000

300,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

World GDP (Nominal)

Nominal world GDP since 1990 USD billions

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“Our Economy operates by stealing the future, selling it in the present and calling it GDP” – Paul Hawken

The planet is in crisis!

Global demand -earth’s resources exceed regenerative capacity by 30%

By 2030 Two planets are needed to meet the demand

Source: Living Planet Report 2008

April 21, 2023 RAF Copyright July 2008

Plan B – Branson & Zeitz (Polman,Tata & Robinson)“Business is integral to society, but it has created most of the negative environmental challenges of the century…The B Team will catalyze a shift away from the existing short –term, unsustainable mind set towards the long term interest of people , the planet and the wider economy’. Tackling these three challenges is a starting point for a ‘Plan B’ to form. Jochen Zeitz –Chairman PUMA June 2013

President Barak Obama Inauguration speech - 21st January 2013 We will respond to the

threat of climate change ,knowing that failure to do so would betray our children and future generations

The Climate Change Action Plan June 2013

34 Nations have a strategy

USA -National strategic initiative‘We want to become the strongest competitor & most influential player to invest in Sustainable prosperity – Mark Mykleby

Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, crippling drought and more powerful storms.

RAF SEPT 2009

‘‘Consumers are ever greener, and their support for sustainable products and services is growing worldwide. ……..becoming eco-friendly will soon be a necessary cost of doing business!!’ ’ --Nidumolu, R, Prahalad. C.K and Rangaswami . M.R (2009),

Why Sustainability is now the key driver of innovation? HBR September 2009

‘Most executives know how they respond to the challenge of sustainability will profoundly affect the competitiveness and perhaps even survival of their organizations’

-Lubin.D.A and Esty.D.C (2010) The Sustainability Imperative

HBR May 2010

Blue Oceans of Opportunity! Creating new market spaces!

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• Creating new and uncontested market spaces to make the competition irrelevant

Blue Ocean strategy

• Developing an “offering” and Positioning & Differentiating it to meet a need not met ‘in that way’ before!

Blue Ocean StrategyThe Opportunity of ‘Non

Customers’

• The automobile industry ‘Current users/market 10-12% • Non users – 90% + in Tier 2&3

• Nokia –BB-Apple-Samsung

•Tata Nano

• Phones as Cameras• 1Bn Tourists – 2Bn to go!

Creating a ‘new’ and ‘uncontested’ Market

space Leader Followers

• Launched in 1997 in Japan

• 2013 Best global green brand –Interbrand

Honda Accord Hybrid 

Ford C-Max Hybrid

BMW ActiveHybrid 3 04/21/23 12Ravi Fernando(c) RAF Copyright April 2013 Cambridge

Mst.

Creating a new and uncontested market space

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13Ravi Fernando

• 1993 President Clinton ‘Fuel efficient’ cars

• Akihiro Wada –VP led team of 1,000 engineers, $1bn+R&D –G21 Project

• USA Low Oil prices in late 90’s

• GM Withdraws EV1 in 2002

• Priced at >$20,000 Strategic Pricing!

• Launched in 1997 in Japan

• 2000 in 80 countries

• 2002 Prius sold 1M cars

• …. brands follow

•2013 March -5 Mn Hybrids

•16% of Toyota sales and 40% in Japan

General Electric’s new market space

“America should get busy addressing the two biggest global challenges — clean energy and affordable health care… The leader in these fields will dominate the global economy in the decades to come..

Com

pact

Fl

uore

scen

t La

mps

Jeffrey R. ImmeltChairman and CEO

Top 50 Global ‘Green brands’ –INTERBRAND 2013

Strategic Corporate Sustainability

• Sustainability-led Differentiation

• Sustainability leadership

Framing & Positioning Governance structure One strategy Reward system Measurement Reporting

•Stakeholder engagement

“Commitment to implementing strategies for Sustainable Business which differentiates the organization, whilst impacting all stakeholders which are in its sphere of influence.” © Ravi Fernando July 2008 Greenleaf Publishing 2014

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16Ravi Fernando

RAF SEPT 2009

Nation ‘Create Market spaces’

Wine Industry Automobile Industry Electronic Industry Apparel Industry

Made in France

Made in Australia

Made in Germany

Made in Japan

Made in The England

Made in Korea

Designed in Italy

Designed in Spain

Made in The UK

Made in China

Fashion Industry

RAF SEPT 2009

Can Sri Lanka ‘create new market spaces ?

Top 10 National Geo. Eco –destinationsDubai /Costa Rica/ Laos

Eco- Tourism –small to medium destination

Sustainable Nano Materials

- Titanium & Graphite

Sustainability StrategiesWhat needs to be doneSustainably

Sector – Tourism Sustainable Nano.Mat. Graphite/ Titanium source

Sustainability- Vision Eco Tourism space Nano.Materials space

Creativity /Innovation

Strategic Differentiation

Conservation

Sustainable architecture /R&D Facility

Sustainably sourcing

Sustainably made –Mfg.Locations

Travel Logistics

Sustainable mind sets

Branding

Green is a new Blue Ocean for Business!

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Thank you!

• Future market spaces - Future market spaces - GreenGreen • Future Strategy – Future Strategy – SCSSCS• How How - - Blue Ocean Blue Ocean StrategyStrategy

April 21, 2023 RAF Copyright July 2008

Sustainability-led ‘differentiation’ in Sri Lanka

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Singapore’s new market space -A City in a Garden

• Global Hydro hub• Green Cover • Waste management –

Semakau Island  to safely dispose waste in an environment friendly way

Gardens by the Bay

From Garden city to City in a Garden

Green cover• 1986 – Green cover 35.7 % and

Population of 2.7 Million• 2012 – Green Cover

50 % and Population of 5.1 Million

Global Hydro Hub• 75 % of country water is enable

Storm water collection

NeWater

Storm water

Unilever’s ‘new market space’

Accelerating sustainable growth

• "Companies can no longer sit on the sidelines waiting for governments to take action on the huge environmental and social issues which face us. We have to see ourselves as part of the solution to these problems.”

Paul Polman

• The Unilever Sustainable Living Plan (USLP)

• It includes around 60 targets and embraces all aspects of our own operations, going beyond them to the entire lifecycle of our products. Innovation and technology will be key to achieving our goals. Equally important will be our ability to change consumer behaviour.

Requirements for Sustainability

For Sustainability to work…..

Sustainable Policy

Sustainable Consumption

Sustainable Business

/Economy

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