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Summary of Lessons LearnedCole BengfordWeizhou LinJonathan Hoelzer
Strategies in Red vs. Blue Oceans • Red vs. Blue Oceans.• Strategies as a whole in Red creating Blue Oceans.• What Strategies it mean for each of these companies
Blue From Red - 3M• 3M’s Blue Strategy• Corporate Strategy Customer satisfaction, commercial success, environmental,
social and economic values.• Continually Expand into new markets.• Ex. Post it Notes to Military Headsets
Blue From Red Cont. - dyson• Dyson’s Blue Strategy • Invent• Engineer quality improvements• Value added via quality• Quantity vs. Quality• “Quantity has a quality all its own”
Strategy isn’t always Blue• Strategy is just a large unifying and directional theme.• It’s not a complete solution but a step in to right way.• Dyson’s 5,127 prototypes• 3M’s accident in Post it notes
Environmental Analysis – FS2• What is the Business Environment? • All external influences that affect its decisions and performance
• So how do we organize all those influences? • PEST analysis• Simple yet systematic approach to identifying those factors that are likely to shape the competitive conditions within an industry
• Issues:• High costs and information overload
Political Economic
Social Technological
Industry Analysis• What is the Industry Environment?• The core of the firm’s business environment is formed by its
relationships with three sets of players: Customers, Suppliers, and Competitors
• In order to simplify the PEST Analysis for a micro-environment like an Industry Environment, we must analyze a more specific group of factors.
The Industry Environment 1. Supplies
2. Competitors3. Customers
The National/Internation
al Economy
Technology
Government and
Politics
The Natural Environ
ment
Demographic
Structure
Social Structur
e
PEST Analysis
Industry Profit• What determines the level of profit in an industry?• The value of the product to the customers• The intensity of the competition • The bargaining power of the producers relative to their suppliers
• How does the company Sprouts match up to these profit defining factors?
• Affordable• Healthy• Scenic• Fresh• Less Expensive than Whole Foods*
Industry Attractiveness
Profitability Forecasting, Positioning, & Altering Structure • To predict the future profitability of an industry, our analysis
proceeds in three stages:1. Examine how the industry’s current and recent levels of
competition and profitability 2. Identify trends and determine if new players are seeking to
enter 3. Identify how these structural changes will affect the five forces
of competition and profitability in the industry • Understanding the competitive forces that firm faces within
and industry allows managers to position the firm where competitive forces are weakest
• Altering structure of an industry and increase profitability
The Strategy Canvas – BOS2• What is a Strategy Canvas?• An analytic framework that is central to value innovation and the
creation of blue oceans• Serves two purposes:
1. Captures the current state of play in the know market space where the competition is investing
2. What customers receive from the existing competitive offerings on the market
• [yellow tail] Horizontal Axis• Above-the-line marketing, refined image in packaging, & aging quality of wine
Vertical Axis• Low and High scores on the strategy canvas• High meaning company offers buyers more; hence invests more
The Four Actions Framework
A New Value Curve
Reduce – which factors should be
well below the industry’s standard?
Create – which factors should be created
that the industry has never offered
Raise – which factors should be raised well above the industry’s
standard?
Eliminate – which of the factors that the industry takes for granted should be
eliminated?
The chart helps create blue oceans from within red oceans.
GoPro & The Eliminate-Reduce-Raise-Create Grid
Eliminate-large cameras-equipment repair
Raise-innovative qualities-versatility
Reduce-price-difficult user interface
Create-durability & waterproof-additional attachments
Eliminate-Reduce-Raise-
Create
GoPro• Developed a high-definition action
cameras, often used in extreme-action videography
• Waterproof• Small• Ease-of-use• Relatively inexpensive• Multiple uses
Three Characteristics of a Good Strategy • Focus
Every great strategy has focus, and a companies strategic profile, or value curve, should clearly show it
• Divergence Divert from keeping up with the competition; be innovative
• Compelling Tagline A good strategy has a clear-cut and compelling tagline
“The speed of a plane at the price of a car-whenever you need it” – Southwest Airlines
Reading the Value Curves• The strategy canvas enables companies to see the future in
the present. To achieve this, companies must understand how to read value curves. These factors should be considered: A Blue Ocean Strategy A Company Caught in the Red Ocean Overdelivery Without Payback An Incoherent Strategy Strategic Contradictions An Internally Driven Company
Ch. 3 BOS• Chipotle’s Red Ocean • Company differentiates itself by stepping out of the boundaries
and creating a Blue Ocean Strategy• Chipotle competes in the Fast Food Industry yet is thought of as
‘healthy’ , producing their own Blue Ocean in this market• Uses substitutes such as Organic Foods and Local Farms to
produce food vs. using unhealthier resources• Competes on price witj not only Fast Food chains but also other
Mexican Restaurants; giving them a large market share
CH.3 BOS• Chipotle & 3M• Completely different companies but both successful on creating a
Blue Ocean, expanding their Market Reach• 3M competes in a variety of markets as the same with Chipotle• Both Multi-Billion Dollar Companies • Companies separate themselves from competitors with unique
products
Ch.3 FOS• Hyundai• Multi-Billion Dollar Company• Competes on Innovation • Separates itself from competitors with reliable vehicles backed by
long term vehicle warranties• Strategic Leadership-Richard Smith• Multi-National Company• Employs Thousands Globally
FOS Cont• Hyundai and 3M• Multi-National/Billion Dollar Corporations• Compete on Innovation• Create a large market share by producing a Blue Ocean
Market(Variety of Vehicles and Variety of Adhesives, Medical Equip etc..)
• Separate themselves from Competitors by developing strong Brand Recognition and Value of Products