Gints Turlajs presented several enterprise strategy management tools including the balanced scorecard, six sigma, blue ocean strategy, BCG matrix, SWOT analysis, and Bowman's strategy clock. He provided concise descriptions of the core features and most effective applications of each tool. He then proposed an algorithm for selecting and applying these tools that involves using Deming's cycle of plan-do-check-act. He focused particularly on explaining blue ocean strategy and how to practically apply it, including using game theory and developing new demand and supply curves through creating an uncontested market space.

1. Stratēģijas vadības rīku
izvēle un pielietojums
Junior Achievement - Young Enterprise Latvija
ekonomikas skolotāju apmācības
23. augusts, 2012, Rīga, Latvija
Gints Turlajs
MSc Econ, doktora grāda pretendents
Accounting & Consulting Institute (www.aci.lv),
Vadītājs
Epasts: gints@aci.lv, Telefons: +371 29409509

2. In short about me
• Studied economics and business management
in 4 universities: Stockholm School of
Economics in Riga, University of Southern
Denmark, University of Latvia, Riga Technical
University.
• Managing director of Accounting & Consulting
Institute (www.aci.lv).

3. In short about me
• Have worked for European Commission, SEB
banka, Latvijas Banka, Ministry of Economics,
newspaper Diena, have lead own businesses.
• Board member of Latvian Young Scientist
Association (www.ljza.lv), chairman of
economics workgroup, ex-president.
• Ex-President of Riga Ridzene Rotary club.

4. In short about me
• Have initiated founding and managed AEGEE
Riga, ESN Riga, etc.
• Co-founder of Internation Insitute of Business
Analysis Latvia chapter, member of Latvian
Economists Association, European Movement,
and many other associations.
• Auditor of Alumni Association of Stockholm
School of Economics in Riga.

5. Problem in JAL
• Students do not know how to position their
product and avoid competition.
• Hard work, and very many similar products,
for example, making soap.
• Strategy selection skills will be very useful to
them in life.

6. Enterprise strategy management tools
• Many enterprise strategy management tools
exist, used for increasing effectiveness.
• These tools are at times glorified and
mistified, however none are universal and
their application has to be correctly managed.
• New tools are constantly being created.
• An algorithm of application is needed for
correct selection and use of those tools.

7. Enterprise strategy management tools
I have developed new very brief and precise
descriptions of the methods together with
descriptions of circumstances in which they
are most effective.
This is followed by a new algorithm for the
application of these tools.
The list of the tools is non-exhaustive.

8. Core features and application of tools
Tool Core features Most effective application
Balanced A tool for determining strategic Large enterprises and institutions
scorecard objectives and measuring their with complex ethical dilemmas and
achievement accounting for the extensive influence on other
needs of stakeholders – clients, stakeholdes.
shareholders, employees,
population, etc.
Six sigma Tool for quality mangement to Best in industrial production, some
reduce defects to a critically low. believe in very wide application of the
method. Enterprises and institutions
with mass production, quality
problems.
Blue ocean Tool for determining competitive Start-ups and existing enterprises in
strategy landscape and designing products new product development.
with least existing competition. Enterprises with mature product
portfolio and competition.

9. Core features and application of tools
Tool Core features Most effective application
BCG matrix Classification of products in Large enterprises with diversified
product protfolio according to product portfolio.
their market share and growth.
SWOT Description of stregths, Wide application in all enterprises
weaknesses, opportunitites and and institutions, as well as in
threats. other situations. Useful in
situations of unceratinty.
Bowman’s Determinantion of the price and In start-ups and new product
strategy added value strategy. development in existing
clock enterprises, pricing.

10. Balanced scorecard

11. Six sigma

12. Blue ocean strategy

13. BCG matrix

14. SWOT

15. Bowman’s strategy clock

16. Algorithm for method choice

17. In short about the methods
• SWOT is a strategy tool that can be used in
almost all cases – large and small enterprises,
institutions, etc.
• Balanced Scorecard is working very well with
institutions.
• Other tools are best used for enterprises, not
institutions.

18. Use Deming cycle

19. What is blue ocean strategy?
• A popular business strategy development tool.
• Developed by W. Chan Kim & Renee
Mauborgne from INSEAD.
• The idea is of avoiding direct competition with
others by positioning the product differently.

20. Red Ocean Versus Blue Ocean Strategy
In the red ocean, differentiation costs because firms compete with the
same best-practice principle. Here, the strategic choices for firms are to
pursue either differentiation or low cost. In the reconstructionist world,
however, the strategic aim is to create new best-practice rules by breaking
the existing value-cost trade-off and thereby creating blue ocean.
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space. Create uncontested market space.
Beat the competition. Make the competition irrelevant.
Exploit existing demand. Create and capture new demand.
Make the value-cost trade-off. Break the value-cost trade-off.
Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice of activities in pursuit of differentiation and
differentiation or low cost. low cost.

21. The Six Principles of Blue Ocean Strategy
Formulation Principles Risk factor each principle attenuates
Reconstruct market boundaries Search risk
Focus on the big picture, not the Planning risk
numbers Scale risk
Reach beyond existing demand Business model risk
Get the strategic sequence right
Evaluation principles Risk factor each principle attenuates
Overcome key organizational hurdles Organizational risk
Build execution into strategy Management risk

22. Strategy Canvas
High
Price Use of enological Aging Wine
Easy to drink
Low terminology quality complexity
Above-the-line Vineyard prestige
marketing and legacy Wine range

23. Decision steps

24. The question remains – how can this
best be used in practice?

25. Game theory and BOS
• Quite natural to this strategy seems a game
theoretic approach.
• The game would be within the domain of games
of strategy from the three game types (also
including games of skill and games of chance), of
multi-person cooperative or non-cooperative
type.
• However, the tough question is how to measure
the dimensions and reactions.

26. Most well known game theory
problem – prisoner’s dilemma

27. Game theory and BOS
• Unfortunately reliable information of the
nature of events in the next game period is
very limited, and the events can be very
different in different situations.
• Human behaviour is hard to predict.
• Therefore, using a single period multiplayer
game is the most fesasible option, if it can
be used at all.

28. Practical application
• Of course, the tough question is of practical
application.
• There are many nice theories in economics,
for example, with supply and demand
curves, which, however, are extremely hard
to measure in practice.
• How could we go ahead with BOS?

29. Practical application
• Unfortunately, usually the majority of
dimensions are purely qualitative and
require experts assigning grades.
• The following feasible options exist:
– A single expert assigns grades on his/her
knowledge,
– Formalised expert survey,
– Formalised cosumer survey.

30. Price estimation
• Nowadays markets for homogenous goods
are rare, each has its own brand, and
therefore has its own demand.
• For obtaining an estimate of the demand
curve, surveys can be used on prices and
quantities, however, we understand that
very many answers will be misleading.

31. Price estimation
• Another option – changing prices to
estimate changes in the amount of goods
bought, which is also very costly and can
scare off clients. In addition it can be hard to
separate different factors influencing the
amount of goods sold.
• The demand curves, difficult to estimate in
practice, also usually remain an academic
and theoretical construct.

32. Price estimation
• Usually, especially for small enterprises,
there are no resources for complex
calculations, and prices are determined
intutively – costs plus or competitor prices
minus (or plus), and these methods are
combined.
• To be more effective, we can supplement
this method with BOS

33. How BOS improves situation
• Speaking in the traditional supply and
demand curve terms used by economists,
BOS is the creation of a new supply curve,
which also creates a new demand curve.
• Therefore we move more in the direction
from perfect competition closer to
monopoly situation, can charge a higher
price and reap higher profits.

34. BOS demand and supply

35. Failures with traditional mapping –
my suggestions
• The traditional strategy canvas mapping involves
mapping competitors with the same size of bullets and
assigning them the same significance.
• However, competitors can be very different. Some large,
some very small.
• Therefore, my suggestion is to assign the mapped
competitors a different bullet size and mathematical
weight.

36. Depiction

37. Finding the least populated
segment mathematically
• After depicting the current situation in the market we should
find the best strategic placement - less populated area.
• We construct a population index. For each rounded integer
scale value we should calculate the value of the competitors
in the current node, taking into account their weight, plus 0.5
of the competitors in the two nearest nodes (+/-1), plus 0.2
of the ones in the next nearest nodes (+/-2), and 0.1 of the
ones in the following nodes(+/-3).
• Then we choose the node with the lowest possible
competitor concentration index.

38. My formula
• Formula for determining the population of the sector:
Ax = ∑KX+0.5*∑KX+/- 1+0.2*∑KX+/- 2+0.1*∑KX+/- 3
where X – field number 1 to 10,
AX – field X population,
KX – market share for competitor in segment X.
• After finding mathematically the less populated interval
we can apply business logic and maybe choose other
interval than the one mathematically less populated.

39. Decision sequence
Calculate population of
Determine the
each interval, choose the Implement decision ,
competitors, fators,
less populated, correcting observe results, analyse,
construct existing strategy
mathematical results with return to beginning.
canvas.
business logic.

40. Use Deming cycle

41. Class action
• Explain students the methods I have developed.
• Giving them an exercise in application can greatly
strengthen the knowledge.
• A hypothetical example can be used or, best of all,
apply it to student’s JAL enterprise in the
guidance of the teacher.

42. Questions and discussion is welcome!
Please do not hesitate to contact me on
gints@aci.lv
GSM: +371 29409509