The document discusses Michael Porter's generic strategies model which identifies three strategies for gaining competitive advantage - cost leadership, differentiation, and focus. It provides details and examples of each strategy. Cost leadership involves producing standardized products on a large scale at low cost. Differentiation focuses on making the product unique through features, quality, design or service. Focus involves targeting a narrow market segment and achieving either cost advantage or differentiation within that segment. The risks of each strategy are also outlined. The document then provides examples of Dell's successful implementation of virtual integration and targeting of customer segments to achieve cost leadership.
Professor Michael Porter suggested three general positioning strategies to achieve competitive advantage :
Low Cost Leadership Strategy
Differentiation Strategy
Focus Strategy
The Generic Competitive Strategy (GCS) is a methodology designed to provide companies with a strategic plan to compete .The GCS is useful when a company is looking to gain an advantage over a competitor
Professor Michael Porter suggested three general positioning strategies to achieve competitive advantage :
Low Cost Leadership Strategy
Differentiation Strategy
Focus Strategy
The Generic Competitive Strategy (GCS) is a methodology designed to provide companies with a strategic plan to compete .The GCS is useful when a company is looking to gain an advantage over a competitor
The “Blue Ocean” approach is a strategic tool that helps innovation strategists’ asses current and desired future strategic states whereas..Red Ocean is a current state.
Slide no:2
Mr. Porter is a specialist in industrial economics and business strategy. An associate professor of business ad- ministration at the Harvard Business School, he has created a course there entitled "Industry and Competitive Analysis."
He sits on the boards of three companies and consults on strategy matters, and he has written many articles for economics journals and published two books. One of them, Interbrand Choice, Strategy and Bi- lateral Market Power (Harvard University Press, 1976) is an out-growth of his doctorate, for which he won the coveted Wells prize awarded by the Harvard economics department.
Core competency- A topic in Strategic ManagementArjitSharma19
While preparing this presentation i learned that core competency can be applied to any individual also here i take an example of the local brand from Lucknow "Tundey Kababi" - a famous non-veg food restaurant on which all the three conditions of core competency applied successfully
Core competency is a concept in management theory introduced by, C. K. PRAHALAD and GARY HAMEL.
It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace“
Core competency are the skills, characteristics, and assets that set your company apart from competitors.
They are the fuel for innovation and the roots of competitive advantage.
The engine for new business development, underlying component of a company’s competitive advantage created from the coordination, integration and harmonization of diverse skills and multiple streams of technologies.
The “Blue Ocean” approach is a strategic tool that helps innovation strategists’ asses current and desired future strategic states whereas..Red Ocean is a current state.
Slide no:2
Mr. Porter is a specialist in industrial economics and business strategy. An associate professor of business ad- ministration at the Harvard Business School, he has created a course there entitled "Industry and Competitive Analysis."
He sits on the boards of three companies and consults on strategy matters, and he has written many articles for economics journals and published two books. One of them, Interbrand Choice, Strategy and Bi- lateral Market Power (Harvard University Press, 1976) is an out-growth of his doctorate, for which he won the coveted Wells prize awarded by the Harvard economics department.
Core competency- A topic in Strategic ManagementArjitSharma19
While preparing this presentation i learned that core competency can be applied to any individual also here i take an example of the local brand from Lucknow "Tundey Kababi" - a famous non-veg food restaurant on which all the three conditions of core competency applied successfully
Core competency is a concept in management theory introduced by, C. K. PRAHALAD and GARY HAMEL.
It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace“
Core competency are the skills, characteristics, and assets that set your company apart from competitors.
They are the fuel for innovation and the roots of competitive advantage.
The engine for new business development, underlying component of a company’s competitive advantage created from the coordination, integration and harmonization of diverse skills and multiple streams of technologies.
1 Chapter 7. Supporting Business Strategy through Funct.docxaryan532920
1
Chapter 7. Supporting Business Strategy through Functional Strategies
In 2015, India’s packaged fruits drink market was valued at Rs. 11 billion (~US$200 million).
Dabur held a 55% share of the market, followed by PepsiCo at 30%; up from 50% and 25%
respectively a decade back. Fewer than 20% of the people in India consume fruit juices as part
of their diet, as compared to ~40% who consumed bottled water and ~60% who consumed coffee
and soft drinks. Over the past decade, the market has grown by 15-20% annually because of the
rising health-consciousness, and is expected to sustain that growth over the coming years. The
government of India has set targets to triple the size of processed food sector, by increasing the
level of processing of perishables from 6% to 20%, and value addition from 20% to 35%, as a
way to raise farm incomes (Sharma, 2015).
Dabur has been sourcing mass-produced lychee, guava, grapes, and mango juices from
the domestic vendors, and orange, apple, and pineapple concentrates from the overseas suppliers.
To be more responsive to the consumer needs, Dabur has been buying fruits directly from
farmers since 2004, and is processing them in-house in a new plant it set-up in Siliguri, West
Bengal. It has also migrated to a flexible production system to offer fruit in a variety of
specialized forms, such as juice, sauce, puree, smoothie, paste, and ketchup.
To grow its share of the overall market and grow even faster than the market, Dabur has
used customized Research and Development to boost the share of the under-served institutional
segment in its total sales from a fourth in 2003 to a third now. Amit Burman, the then CEO of
Dabur, noted, ‘Often, products are created when our [institutional] buyers tell us about their
culinary problems, which could range from getting pre-chopped onions in bulk to mixing the
best juice and yoghurt smoothie. As we have the experience and the network, and there is ample
capacity available in the country, it is easy for us to offer solutions (Srinivas, 2003).’
More flexible operations and sourcing system, and institutionally led marketing and
research effort has also helped Dabur realize its strategic intent of becoming a leader in the
broader processed fruits market, beyond just juices and concentrates.
In the previous chapter, we learnt about the three different types of business strategies –
cost leadership, differentiation, and growth mindset (besides ‘focus’). In addition to deciding
the overall strategy for their business, executives also need to develop and align functional core
competencies. Dabur’s growth business strategy has required new competencies in supply chain,
research and development, operations, and marketing. Each function relies on different and
specific techniques and technologies to achieve the common business objectives of cost
efficiency, customer and quality ...
Infosys Insights: Driving revenue through service innovationInfosys
“Servitization” (bundling of products with services) has become an imperative in today’s economy, especially in developed markets. Product companies that do not embrace this concept are bound to face stiff competition from low-cost manufacturers in emerging markets. Key among the risks they face is the prospect of being forced out of the market in the long term. Hence, the benefits of servitization are too compelling to ignore.
* In an increasingly copy-cat economy, the new basis of competition is business model innovation.
* Unfortunately, the work of business model innovation is too often left undone, at great cost to the organization's longer term growth opportunities and its profitability. This gap is the outcome of marketing's role increasingly being defined around demand generation and brand communications in increasingly fragmented channels, roles that have required many new marketing subspecialties.
* The CMO is ideally suited to facilitate business model strategy decisions, decisions that must be made by the leadership team as a whole.
* Deploying the CMO to facilitate business model innovation will align brand and business strategy, benefiting the success of both.
Mass Portfolio Customisation and the Unique Investor - Financial SimplicityStuart Holdsworth
The attraction of mass customisation had its genesis in the fast moving consumer goods sector: now, its potential extends seamlessly to global wealth management. After all, why should consumers not be able to manage investment portfolios via their iTunes account?
Slides from a recent speech in front of 1500 people on:
- Why business model innovation is important
- What a business model is
- How to design and implement innovative business models using a design thinking approach.
Many cases illustrate how to do it in practice.
OVERVIEW Business model innovation is often the key to capturing .docxhoney690131
OVERVIEW: Business model innovation is often the key to capturing value from innovation within corporations. Developing and implementing new business models in practice, however, is difficult and fraught with risk. This paper discusses a systematic approach to developing new business models and identifies concrete steps to reduce the risks associated with them. It draws on literature on elements of the process as well as experience developing and implementing new business models at Goodyear.
FEATURE ARTICLE
KEYWORDS: Business model innovation; Adoption risks; Co-innovation risks; Business model canvas
Business model innovation has gained increased attention over the last five years, driven in large part by the tremendous returns generated by companies that have developed new business models--Netflix, Dell, and the Apple iTunes store are the most frequently noted examples. The term itself, however, has been only vaguely defined. Keeley and coauthors (2013), for example, characterize business model innovation by the number of attributes of a business that are changed, while Osterwalder and Pigneur (2010) define a business model in terms of a completed canvas. The vagueness of these representations makes it hard to study (or even to discuss) the process of developing a successful business model to harvest value from innovation.
The concept of the business model is actually simple: the business model is the means by which a firm creates and sustains margins or growth. The business model, defined in this way, is inherently embedded in a firm's competitive environment: the ability to create margins and growth is dependent on what competitors are doing to create margins and growth for themselves. The business model is not simply the means by which a firm creates and captures customer value. Focusing on creating customer value without regard to competitive advantage will leave a firm vulnerable to both margin erosion and anemic growth. Because the competitive environment is forever changing, business models require constant vigilance; they must be adapted and strengthened over time as the competitive environment evolves.
Business model innovation, in this context, is any innovation that creates a new market or disrupts the competitive advantage of key competitors. Business model innovation is confused in many discussions with building new capabilities (for instance, a new channel). This may or may not be business model innovation: while business model innovation may require new capabilities, new capabilities will constitute business model innovation only when they significantly disrupt the competitive dynamics of an industry. A few common examples of business model innovation make this distinction clear:
* Dell: Dell disrupted the cost structure of the personal computer industry with its build-to-order model by eliminating the costs of retail outlets, which radically reduced working capital, enabled customization of orders, and (riding Moore's law) .
Growing Revenue with Near-Zero Investment - GROWTH INNOVATIONInnomantra
Growing Revenue with Near-Zero Investment - GROWTH INNOVATION
In a tough business environment when demand
in the core market gets challenged, businesses should look at tapping adjacencies that leverage the organizations' foundational assets. Not only are these moves less risky, but they also do not call for many upfront investments.
3. Under the cost leadership strategy, the corporation produces products at large quantity for mass at a lower cost. Either firm sells its product at average price to get more profit or at below average price (at minimum profit margin) to gain market share.
4. Even without price war, as the industry is mature and price decline, a firm can produce product more economically for being more profitable at longer period of time (economy of scale). It is usually targeted broad market.
5. Firms that succeed in cost leadership often have the following internal strengths:
6. Access to the capital required making a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.
7. Skill in designing products for efficient manufacturing, for example, having a small component count to shorten the assembly process.
8. High level of expertise in manufacturing process engineering.
9.
10. For example, other firms may be able to lower their costs as well. As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage. Additionally, several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain significant market share.
13. Under this strategy, firm is targeted broad market with the unique attributes which is offer by the firm to customer likes-: features, quality, design, services etc. Price is not play a vital role in this strategy. We can make more loyal customer and charge high price on our premium offering.
14. Sony is providing vaio at different vibrant colors with active design and more in-build features with personal choice
15. Firms that succeed in a differentiation strategy often have the following internal strengths:
21. Include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.
22. (Source -: http://www.umtweb.edu/umt/freebies/opsmgt/sld003.htm)Dell's Competitive AdvantageDuring the heyday of the technology boom throughout the 1990’s many companies experienced enormous success for a few years, however without creating a solid internal framework many of these companies did not survive. An exception to that business trend is Dell, which was able to address its problems associated with rapid growth, and build itself into a lasting profitable company. Dell was able to create this lasting profitability with three essential ingredients: 1. “Virtual Integration” 2. Real value customer service features 3. Tailoring Manufacturing to customer needs.In 1993 Dell reached a point where it had grown too large, without making the necessary internal improvements to stay profitable. Dell reached a “Eureka” moment in 1993 when its cash flow sank to $20 million, net income was negative $40 million, and its market share had shrunk considerably. By bringing in several seasoned managers to focus on specific aspects of the business Michael Dell hoped that Dell could become a synchronized, efficient, and profitable business again. These improvements lead to Michael Dells breakthrough concept of “virtual integration,” which goes a step further than traditional integration by connecting the right parts together in the business. From this concept three key integrations formed: 1. A symbiotic relationship between Dell and its suppliers; 2. Customers linked directly to manufacturer; and 3. End user was linked to proper customer service assistance. Each one of these measures enabled costs cuts; quicker deliver time, and a more reliable finished product. For instance, with this new symbiotic relationship with its suppliers allowed Dell to trim the number of suppliers it used from 204 to 47 in their Austin facility between 1995 and 1998. These integrations caused the number of days a PC sat in inventory from 32 days to 7 days. By customizing orders the customer received a product tailored to their desires while Dell saved money and time on manufacturing. Tailoring manufacturing to a customer's specific needs allowed Dell to integrate production schedules with sales flows, assemble all parts of the PC on site, and install the specific software that the customer requested. These manufacturing interactions sped up the final products completion time to thirty-six hours. The swiftness of the manufacturing process added value to the customer by quickening the delivery time. As well suppliers wanted to do business with Dell because there inventory levels rarely pilled up. The advantages in this chain of integrations added value to the customer’s product, while also adding value to Dell as a corporation. Dell's corporate value made it one of the best investments in the 1990’s. Dell did something else other PC companies were not doing; strategically targeting only the customers they wanted. By defining their customer as a ‘knowledgeable PC user’ Dell made their task of providing a PC easier. Their customers did not need to go to a retail store to gain knowledge about their product. This enabled the ‘Direct Model’ for purchasing PC’s to work. Dell further expanded its ability to meet customers needs by classify customers into specific categories. Customers were categorized into Relationship buyers, large businesses and institutions, and Transaction buyers, small business and home PC users. The Relational buyers made up a significantly larger portion of Dell’s business but also had different needs than Transaction buyers. Every relational buyer was assigned a representative who guided the business and institution through each stage of the buying experience. By integrating both Relational and Transaction buyers into their business system repeat purchases were quick and easy, purchasing history could be consulted, and follow up customer service was able to be more effective. Dell’s business structure of “virtual integration” allowed it to excel in an incredibly competitive industry. It's competitiveness in the industry resulted from a highly efficient business model that sought out every opportunity to work more productively without compromising the quality of their product. Production efficiency lowered cost which in turn provided Dell with larger profit margins. As Porters Five Forces demonstrates, when bargaining power of buyers is high, the potential for price battles increases. Dell combated failing into the trap of a price battle by making a PC that was a better product than the competitors, yet near their competitor’s price. There costs were able to stay competitive while delivering an exceptional product because their business kept internal costs low, thus showing the effectiveness of “virtual integration.” Like Honda, Dell was able to provide a technologically superior product at a reasonable price. As well, Dell was able to evade a price war because its customers were aware of the technological value in a Dell PC. (Source - : http://hubpages.com/hub/Dells-Competitive-Advantage)Focus Strategy -:<br />Concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. <br />A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly. <br />Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist. <br />Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well. <br />Risks<br /> Include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better. <br />Conclusion<br />The relationship between market share and profitability is U-shaped. A firm with a low market share can succeed by developing a well-focused strategy. A firm with a high market share can succeed through cost leadership or a differentiated strategy. However, a company can become “stuck in the middle” if it has neither a strong and unique offering nor cost leadership.<br />