Why Strategic Technology Management Matters? 2011. 09. 01.
Prof. Euiho Suh Dept. of Industrial & Management Engineering
POSMIT Lab. (POSTECH Strategic Management of Information and
Technology)
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Why strategy matters? 2 New Paradigm: God helps those who have
strategies, not those who just work hard without strategies! Old
Paradigm: God helps those who help themselves!
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CLASSIC COKE vs. NEW COKE 3 vs.
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ASIANA AIR vs. KOREAN AIR 4 We are young, too !
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STARBUCKS SYNDROME 5
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The VCR Battle (VHS vs. Betamax) 6 SONY: Betamax,
1974Panasonic: VHS, 1976 95% of the VCR market, 1988 SONY: The
biggest loser of standards war?
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UP-SELL & CROSS-SELL 7
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QWERTY TYPEWRITER 8
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1800s Underwood TYPEWRITER 9
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10 APPLE has good quality with a higher level of technology Due
to its closed platform, less technical support is provided IBM
makes better profits in its own way, relying on the compatibilities
with other providers of software and hardware (e.g. Microsoft
Windows) Even though APPLEs technology is better than IBMs, IBM
beats APPLE because of their high compatibilities PC - Apple vs.
IBM Open PlatformClosed Platform VS.
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11 Game - Atari vs. Nintendo Atari release the first successful
video game console to use plug-in cartridges instead of having one
or more games built in Because Atari accept Low quality games as
well high quality games, they make the customers who played the
poor games unsatisfied with their products Nintendo controls who
could and could not manufacture video games for their system to
assure only quality games were in their library The self-regulated
scarcity and licenses in this way insured that video game market
remained profitable, and achieved remarkable success VS. High
quality games Low quality games
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12 Game Console - Playstation vs. Wii When it comes to
graphics, the Playstation 3 is going to win hands down; its
processing power is far superior to that of the Nintendo Wii The
advantages (e.g. gesture based control, everyone can do, less
expensive, family friendly) of Wii lead to a success in game market
VS.
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13 MP3 player - Zune vs. Ipod Ipod and Zune provide the Music
Management Software, iTunes and Zune player, respectively Zune
player only support the songs which are purchased by Zune market
while iTunes can support any songs Even though Zunes spec is better
than Ipods, Ipod shows a big advantage in compatibility and
convenience, thus give a successful fight against Zune VS.
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14 Beverage - Coca vs. Pepsi Pepsi Cola is a much sweeter
beverage than Coca cola The popularity of Coke's brand image
misleads people to think Coca-Cola itself tastes better, even
though it really doesn't taste very different from Pepsi
First-mover Advantage VS.
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15 Upon their release in the early 80's Microsoft Excel and
Lotus 1-2-3 offered similar products measured by both quality and
efficiency Lotus only focuses on OS/2 while MS Excel can be
compatible with Window As Window become more and more popular, MS
Excel beats Lotus 1-2-3, even though there are not so many
differences between them Spreadsheet - Lotus 1-2-3 vs. Excel
VS.
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Change the rule of competition! Good Taste Milk, GT
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0) About The competitive domain, Milk Industry Divided into
White milk, Functional milk, Processed Milk White milk : a fresh
milk that is not added any ingredients or taste. Functional milk :
a milk that is strengthened or removed specific ingredients.
Processed milk : a milk that is processed to add some taste or
fragrance.
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0) About the competitive domain Michael Porters 5 force model
The degree of existing rivalry : Seoul Milk as s traditional market
dominator (market leader) Maeil milk as a competitor that competes
with Namyang to get 2 nd market position. (ESL) Many other
competitors, like Yunsei, Denmark. The degree of potential entrants
: The high entrance barrier. Agriculture departments of
Universities as a potential entrants. Bargaining power of
suppliers. : Suppliers demand for 20% increase of raw milk price.
=> 13% increase since Sep. 2004
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0) About the competitive domain Michael Porters 5 force model
Bargaining power of buyer : 21.7% rise in the consumer price index
(107 -> 130.2) => increase the price => 10 % reduction in
consumption The change of Customers needs/wants to processed or
functional milk because of Well-being movement The industry
changing to Customer-driven industries from Capacity-driven
industries. Threat of Substitutes : The growth of functional milk
and processed milk markets. White milks loosing its market.
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0) About the competitive domain Trends of milk market before GT
The State of white milk market : Decrease in White milks growth
ratio. White milk market on the matured stage of the S-Curve Rule
of competition : Brand image as Rule of competition in White milk
market. ex) Brand power of Seoul : Processed milk in whole milk
market ex) Banana milk, Strawberry milk, Chocolate milk, Green tea
milk, peanut milk
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0) About the competitive domain Namyangs Decision Pros. And
Cons. I.White milk Pros : Stable market. (school,..) Low Cost. Cons
: Strong competitors. Customers needs/wants. I.Functional &
Processed milk Pros : High quality. High price. Well-being trend.
Cons : Unstable. (depending on trend.) High Cost. High Sugar
content Change the Rule of Competition to White Milk !!! All the
main competitors focused on Functional & Processed milk
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1) Good Taste Milk, GT Market research MaleFemale
10s20s30s40s50s10s20s30s40s50s
50.358.951.447.542.856.375.889.987.579.1 Target 20~ 30s !! Target
white milk !! Focus on better Taste !!
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1) Good Taste Milk, GT About Gook Taste Milk, GT High Price
Success : 100 million milks (200ml) sold 100 days after launching.
Why ? Good Taste !!!
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1) GT Technology About Gook Taste Milk, GT What is Good Taste ?
: From Research, true taste of raw milk, sweet taste, flavory taste
smooth taste, freshness, end taste True taste and freshness of raw
milk !! Good Taste Milk, GT A white milk with true taste and
freshness of raw milk and no crude taste without any artificially
adjusting components. How ? GT Technology !!! Bad tastes are from
bad smell
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2) GT Technology What is GT Technology? Key technology of
Namyang. The result of Product Innovation A technology that makes
the white milk with better taste than processed milk : Removing
crude and unpleasant taste and smell, & Maintaining good taste
of raw milk for long. 3 Steps of GT Technology 1.GT1- Good Taste
process 2.GT2- Nitrogen filling process 3.GT3- New milk process
Compatibility with existing values, but having Relative advantage
in taste Technology Integration & Market-Pull Innovation
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2) GT Technology Overall Process
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2) GT Technology GT1, GT2, GT3 ? GT1- Good taste Process :
Eliminating oxygen dissolved in raw milk. Eliminating bad taste and
smell components from Pasture and Feed smell. Using GC/MS and
detectors. GT2- Nitrogen filling Process : With filling Nitrogen,
Eliminating dissolved and free oxygen, bad taste, bad smell
perfectly. Maintaining the taste until drinking A Patent
application GT3- New milk Process : Finding the secret of milk
taste, and Improve the taste without artificially adjusting
components.
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2) GT Technology Namyangs Technology Management (Problem
recognition -> Technology Selection) Scanning & Forecasting
: To Catch the market needs. Using questions and customers
feedback. Catching the technological opportunity and Decision to
technology appropriation : Technological opportunity not derived by
technical feasibility but also by marketplace needs. The market
need is TASTE. Taste is the technological opportunity !! Convincing
that white milk can be competitive again.
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2) GT Technology Namyangs Technology Management (Solution
development) Developing Technology Strategy : Choosing Technology
Leadership Strategy. - Get out of competition functional &
Processed milk market. alter the rule of the competition
(->taste) Decision to In-house Development Adopting
Differentiation Strategy - Good taste but higher price. White milk
can be tasty !! Satisfying Resources and Collateral Assets :
Investment in Plant & Equipment, and R&D (more than 100
billion won.) A good R&D Center. approved as KOLAS.
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2) GT Technology Namyangs Technology Management
(Commercialization/Implementation) Diffusion : Developing new
products, Good Taste Milk, GT Adopting this technology to other
products. Whole Products to be Good taste. : Marketing with
Emphasis on its competitive advantage, Good Taste. Ex) Naming the
product as Good taste milk, GT Emphasis on the good taste in CF.
Free Sampling party. (80% answered delicious) Removing other white
milk products
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2) GT Technology Three major milk companys Decision Seoul Milk
1 st Grade Raw Milk No technology development Depending on Brand
image Namyang Market research Technology development GT Technology
Leadership Strategy Focusing on Taste Adopting to other products
Maeil Milk Technology development ESL Focusing on Health &
expiration date Depending on Brand image
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3) The Effect of GT Success in the Competitive Domain 100
million packs sold in 100 days after Launching The most sold milk
in a day. (1million packs a day)
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3) The Effect of GT Success in the Competitive Domain BCG
Matrix StarQuestion Mark Cash Cow Dog GT Milk Bulgaris 17 I,O 3.4
Milk Market Growth 10X 1X0.1X Market Share Einstein Milk
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3) The Effect of GT Change the Rule of Competition =>
Induced Change Breaking the fixed idea that White milk is not
delicious. : 80 % of participants in the sample party answered
delicious Change the rule of competition to taste of white milk
from processed milk. Disruptive technology to Processed Milk, But,
Sustaining technology to Functional Milk. : 40% increase in sales
of Calcium and vitamin Milk (2005~2006)
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3) The Effect of GT Expanding Adopting GT technology to other
Products : Improve the taste of other milk Increase the competitive
power of whole products Globalization : Pass PMO (Pasteurized Milk
Ordinance) Supply Good taste milk, GT to US army
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3) Future Challenges Protection From Imitation : Protect the
key technology and Differentiation from imitators. Developing new
technology : To make Product life longer (ESL of Maeil) Offensive
Marketing for differentiation Globaliztion To make Products more
nutrious
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3) Conclusion Success factor of Namyang Market research and get
the Market needs/wants Developing new technology, GT Diffusion
Strategy Investment, and having its own R&D Center.