Strategy
inputs
Part # 1
Market development.
Part # 2
Product and/or service development.
Part # 3
Diversification.
Part # 4
Low cost strategy or differentiation strategy.
Part # 5
Low cost strategy and differentiation strategy.
Part # 6
Customer innovation.
Part # 7
Strategy dilemmas.
Part # 1
Market
development
Present New
products products
Present Market
markets
Product
penetration development
New Market Diversification
markets development
Ansoff matrix.
Management’s overriding goal is to position a
company and its products where the market
opportunity is highest.
Source: https://www.mckinseyquarterly.com/Best_practice_does_not_equal_best_strategy_809
Examples of how a target market can be defined
Question Examples
Where are customers? In certain parts of the world?
In particular parts of town?
How do customers buy? Through internet, retail shop or other
distribution channels?
Who are target customers? Curious people?
When do customers buy? On weekends? In the evening?
For whom do customers buy? For themselves? For their customers?
For their girlfriend / boyfriend?
Source:
Strategy: An executive’s definition.
http://www.strategy-business.com/article/cs00002?pg=all
Early in its development, Southwest Airlines defined its
target market to include regular bus travelers - people
who wanted to get from point A to point B in the lowest-
cost, most convenient way.
Source:
Strategy: An executive’s definition.
http://www.strategy-business.com/article/cs00002?pg=all
http://www.scribd.com/doc/56785190/Customer-Needs
When you go to a foreign market, remember that you
are not trying to serve the whole market. You are
looking for the segment that values what you do.
So when you go to Spain, don’t try to compete like
existing Spanish companies.
Michael Porter
Source
Magretta, Joan: “Understanding Michael Porter: The essential guide to competition and strategy”,
location 2550.
Globalization
and localization
Source
http://www.slideshare.net/frankcalberg/globalization-and-localization/
Create new market
Low risk High risk
Many competitors High reward
Customer experience High risk
Cost savings Defensive strategy
Manage existing market
Source: http://www.business-strategy-innovation.com/wordpress/2011/05/your-innovation-portfolio-is-precious/
Part # 2
Product and/or
service
development
Present New
products products
Present
Product and/or
Market service
markets
penetration development
New Market Diversification
markets development
Does your strategy put you ahead of trends?
Source: https://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Have_you_tested_your_strategy_lately_2711
Market
growth
Question marks Stars
Poor dogs Cash cows
Market share
Boston Consulting Group model.
Low High
market share market share
Question marks Stars
Select ideas with the Growth strategy.
largest potential. Invest to stay innovative
High Invest in ideas with the and efficient.
growth largest potential.
Poor dogs Cash cows
Stop investments. Invest money generated from
Move out of business area. cash cows in ”question marks”
Low Move out of market. / new promising ideas.
growth
Adapted from the bcg matrix.
Source: Gary Hamel. http://youtu.be/djzNLCPXl4c
A company’s strategy is determined
by the types of initiatives that
management invests in.
Source
Clayton Christensen.
http://hbr.org/2010/07/how-will-you-measure-your-life/ar/pr
Source: http://www.pwc.com/en_NZ/nz/publications/pdf/demystifying-innovation-take-down-the-barriers-to-new-growth.pdf
Internal Internal
strengths weaknesses
External
Make the most Restore
oppor-
tunities of these strengths
External Defensive Survive
threats Watch competition Turn around
Company What is
purpose valuable
Strategic
Capital innovation
sweetspot
Source: http://blogs.hbr.org/govindarajan/2011/03/todays-innovative-idea-can-ris.html
„Die erste und oberste Priorität jeder Strategie und
jedes Planes muss immer das Produkt, das Produkt,
das Produkt sein und sein Umfeld, der Markt – auf
keinen Fall die Organisation. Das habe ich in meiner
langjährigen Tätigkeit gelernt.“
Source
“Nicolas G. Hayek. Im Gespräch mit Friedemann Bartu.
Ansichten eines Vollblut-unternehmers”, page 64.
Part # 3
Diversification
Present New
products products
Present Market
markets
Product
penetration development
New Market Diversification
markets development
Ansoff matrix.
Market Question marks Stars
growth
Try out ideas with Develop great concept
growth potential. further.
Poor dogs Cash cows
Fix, sell, or close Look out for new
down. “question marks” to
invest in.
Market share
Adapted from the bcg matrix.
Mr. Shigetaka Komori, CEO of Fujifilm, spent
around $9 billion on 40 companies since 2000.
He slashed costs and jobs. In one 18-month
stretch, he booked more than ¥250 billion ($3.3
billion) in restructuring costs for depreciation and
to shed superfluous distributors, development
labs, managers and researchers.
Source:
http://www.economist.com/node/21542796?fsrc=scn/tw/te/mt/thelastkodakmoment
Source: http://www.fujifilm.com/products/
Source
http://www.vijaygovindarajan.com/2006/03/strategy_as_transformation.htm
Industry
attractiveness
Competitive strength
Source
http://www.12manage.com/methods_ge_mckinsey.html of business unit
http://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Enduring_ideas_The_GE-McKinsey_nine-box_matrix_2198
What matters in a diversification strategy is whether
managers have the skills to add value to businesses
in unrelated industries - by allocating capital to
competing investments, managing their portfolios, or
cutting costs.
Source
https://www.mckinseyquarterly.com/Corporate_Finance/M_A/Testing_the_limits_of_diversification_2924
Part # 4
Low cost strategy
or
Differentiation
strategy
Low cost Differentiation
Broad Low cost Differentiation
target strategy strategy
Narrow
target Low cost Differentiation
(Particular
focus strategy focus strategy
customers
or markets)
Everything that is undifferentiated is going to be
delivered in ever more efficient, low-cost ways.
Source
http://blogs.hbr.org/cs/2012/02/why_porters_model_no_longer_wo.html
Low cost Differentiation
Broad Low cost Differentiation
target strategy strategy
Narrow
target Low cost Differentiation
(Particular
focus strategy focus strategy
customers
or markets)
Strategic positioning means performing
different activities from rivals’ or performing
activities in different ways.
Source:
Porter, Michael: What Is Strategy.
http://www.ipocongress.ru/download/guide/article/what_is_strategy.pdf
The distinct items are the things that have a
limited quantity, that are artisanal in nature,
and that are worth paying a premium for.
Source
http://blogs.hbr.org/cs/2012/02/why_porters_model_no_longer_wo.html
For organizations wanting to thrive in the social era,
being distinct is key to both profitability and winning.
While there has always been a market for bespoke,
differentiated items, until very recently that market
served a tiny fraction of the uber-rich.
But today, both macroeconomic forces, and
technological advances mean that customized
products aren't just for the 1 percent.
Source
http://blogs.hbr.org/cs/2012/02/why_porters_model_no_longer_wo.html
Part # 5
Low cost strategy
and
Differentiation
strategy
Differen-
tiation
strategy Differentiation
Differentiation
AND
strategy
low cost strategy
Commodity Low cost
market strategy
Low cost strategy
The simultaneous pursuit of differentiation and low cost
is what separates Blue Ocean Strategy from traditional
differentiation strategy.
In a way, Blue Ocean Strategy starts with subtraction
rather than addition. The four actions framework allows
companies to improve their cost structure through
eliminating and reducing, on the one hand, and to
provide exceptional buyer value through raising and
creating, on the other.
Source
http://ucsi-bosrc.blueoceanstrategy.com/Images/010_Pick-of-the-
week/Six%20Misconceptions%20about%20Blue%20Ocean%20StrategyJi.pdf
Source: http://blueoceanstrategy.com/abo/4_action.html
Sources
http://www.quicksprout.com/2011/01/20/my-5-favorite-but-often-ignored-marketing-tactics/
http://images.businessweek.com/ss/08/02/0225_doodles/index_01.htm
http://www.jarche.com/2010/05/heads-you-win-tails-you-lose/
Customers’ needs are rarely uni-dimensional, and,
therefore, a strategy to meet those needs won’t be
uni-dimensional either.
When a company makes choices about which
customers and needs it will serve, and when it tailors
its value chain to those choices, it is possible to be
differentiated and low cost and focused at the
same time.
Source
Magretta, Joan: “Understanding Michael Porter: The essential guide to competition and strategy”,
location 1503.
Small Large
market opportunity market opportunity
Large
Specialist Dominant
scale of
R&D business business
Small
scale of Niche Breakout
R&D business business
Source: http://www.esadecreapolisblog.com/henry-chesbrough-open-innovation-tips-for-small-business/
Depen- # 3: Factory # 4: Strategic
dence IT is currently important for IT is very important for how
running daily operations. value is created for customers.
of IT However, it is not felt that Very high top management
IT can become more involvement.
strategically relevant for
the business.
Decreasing top management
involvement.
# 1: Support # 2: Turnaround
IT has little relevance and IT will be key in creating value
simply supports some for customers.
processes. Very high top management
Little top management involvement.
involvement.
Impact of IT use
Source: McFarlan, McKenney and Pyburn, 1983.
Market Question marks Stars
growth
Try out ideas with Develop great concept
growth potential. further.
Poor dogs Cash cows
Fix, sell, or close Look out for new
down. “question marks” to
invest in.
Market share
Adapted from the bcg matrix.
Part # 6
Customer
innovation
How should companies react to
creative customers?
Active
Resist Enable
Actively restrain what Actively facilitate what
creative customers do with creative customers do with
product / service. product / service.
Discourage Encourage
Ignore what But don’t actively
creative customers do facilitate.
with product / service.
Passive
Degree of positive attitude towards customer innovation
Source
http://www.slideshare.net/IanMcCarthy/when-customers-get-clever-managerial-approaches-to-dealing-with-creative-consumers
Large organizations tend to make life
uncomfortable for activists and rabble-rousers
– however constructive they may be.
In contrast, online communities frequently
embrace those with strong anti-authoritarian
views.
Gary Hamel,
Strategy guru
Source
http://www.managementexchange.com/blog/facebook-generation-vs-fortune-500
Part # 7
Strategy
dilemmas
http://www.scribd.com/doc/72660700/Strategy-Dilemmas