Lecture 7 Flashcards
Competitors & Competition Analysis
- Direct
- Indirect
- Future
- Type of analysis used to prepare for the future
- What are the critical success factors for the industry/market?
- What are our strategic options?
Strategy development
strategy creates a strategic threat that combines all the fibers of the organization. Strategy reflects: the values, mission, visions and goals.
Business analysis (used most and in the past)
Most of the leading companies, when evaluating the strategic decisions they made, benchmark and compare the company to their competitors.
> Making a strategy to compete with its competitors
> All about outcompeting
Business analysis (used by few)
Identifying, developing and designing strategies that are based on identifying opportunities and creating something radical new products or services or new markets, which do not exist at the moment.
Two types of oceans:
- Red ocean
- Blue ocean
Red oceans
An existing market with fierce competition
- Represent all industries in existence today
- Compete in existing market space
- Beat the competition
- Exploit existing demand
- Value creation or addition
Blue oceans
A business approach that seeks to create a new market space. Companies that identified, developed and designed strategies that are based on identifying opportunities and creating something radical new products or services or new markets, which do not exist at the moment.
- Represent all industries NOT in existence today
- Create uncontested market space
- Make competition irrelevant
- Create and capture new demand
- Value innovation
The Strategy Canvas: How to achieve Blue Ocean?
- Provides current state of play: factors on which the industry competes.
- Value curve shows how your offering compares to your competitors: as seen by the consumer
X-as: called value elements of customers
Y-as: relative level of the offering for each competitor
Why Blue Ocean Strategy?
- Untapped Market Potential (new and uncontested market spaces, fewer competitors, higher profit and potential growth)
- Differentiation (emphasizes value innovation, avoid “me-too” player)
- Reduced competition (competition irrelevant by creating a new market space)
- Higher profit margins (less price = higher profit margins)
Why Red Ocean Strategy?
- Intense Competition
- Commoditization
- Market-share focus
- Incremental innovation (focus on improving existing products or services)
- Customer Retention
- Limited Growth
- Price Sensitivity
- Narrower Profit Margins
- Resource allocations
Corporate-level Strategic Review
Step 1: designing strategy
Step 2: strategy development
Performing SWOT analysis’s
Four action framework
To discover how the value curve lies, look at the status of the following questions:
- Which factors should be eliminated?
- Which factors should be reduced?
- Which factors should be raised?
- Which factors should be created?
Three Tiers of non-customers
- Current industry
- Soon to be (tier1): non-customers who are on the edge of your market waiting to enter.
- Refusing (tier2): non-customers who consciously choose against your market
- Unexplored (tier3): non-customers who are in market distant from yours.
How to implement Blue Ocean Strategy?
- Understand the BOS framework
- Identify Current State
- Define your BO
- Conduct market research
- Develop value innovation
- Create BOS Canvas
- Align the organization
- Allocate resources
- Pilot Test and Refine
- Scale up
- Continuous monitoring and adaptation
- Celebrate successes
- Manage risk and challenges
- Foster a culture of innovation
- Communicate progress
