From local to global: designing strategies for global expansion part I Flashcards
Define a value curve
A graphic depiction of a company’s relative performance across it’s industry’s key success factors
What are the three platforms where innovation can take place?
Product
Service
Delivery
Explain the four factor framework
Framework that asks four questions
What are the five basic dimensions that conventional strategic logic and value innovation differ?
1) Industry assumptions
2) Strategic focus
3) Customers
4) ASSETS AND CAPABILITIES
5) PRODUCT AND SERVICE OFFERINGS
Explain how conventional strategic logic and value innovation differ in regard to industry assumptions?
Industry conditions are given
vs.
Industry conditions can be shaped
Explain how conventional strategic logic and value innovation differ in regard to Strategic Focus?
A company should build competitive advantage and beat the competition
vs.
Competition is not the benchmark. A company should pursue a quantum leap in value to dominate the market
Explain how conventional strategic logic and value innovation differ in regard to Customers?
A company should retain and expand its customer base through further segmentation and customization. It should focus on the differences in what customers value
vs.
A value innovator targets the mass of buyers and willingly lets some existing customers go. It focuses on the key commonalities in what customers value
Explain how conventional strategic logic and value innovation differ in regard to Assets and Capabilities?
A company should leverage its existing assets and capabilities
vs.
A company must not be constrained by what it already has. It must ask, what would we do if we were staring anew?
Explain how conventional strategic logic and value innovation differ in regard to Product and Service Offerings?
An industry’s traditional boundaries determine the products and services a company offers. The goal is to maximise the value of offerings.
vs.
A value innovator thinks in terms of the total solution customers seek, even if that takes the company beyond its industry’s traditional offerings.
Explain who’s in the bottom of the pyramid and the visual presentation of it
How’s the market potential in the bottom of the pyramid?
Given its vast size tier 4 represents a multitrillion dollar market
AND
bottom of the pyramid could swell to more than 6 billion people over the next 40 years
Why have the MNCs been so slow in adressing these markets?
1) Most MNC are based in developed countries – Greater familiarity with tier 1
2) Most MNCs have dismissed the bottom of the pyramide because they judge the market based on products/services appropriate for developed countries
3) It’s a tough market space
What makes the bottom of the pyramid a tough market space?
- Most Tier 4 people live in rural villages, or urban slums and shanty towns
- Are hard to reach via conventional distribution, credit, and communications
- They have little or no formal education
- Often do not hold legal title or deed to their assets
- Quality and quantity of products and services available in Tier 4 is generally low
Why is this market space according to Prahalad more suitable to MNCs than local entrepreneurs and organisations?
- Resources –> Few local entrepreneurs have the managerial or technological resources to create the commercial infrastructure
- Leverage –> MNCs, with their unique global knowledge base, have an advantage that is not easily accessible to local entrepreneurs
- Bridging –> MNCs are best positioned to unite the range of actors required to develop the Tier 4 market
- Transfer –> Innovations for the bottom can be adapted for use in the resource- and energy-intensive markets of the developed world (testing ground)
What are the strategic necessities/imperatives for bottom of the pyramid markets?
Awareness
Affordability
Availability
Acceptability
