Chap 4

Blue Ocean Strategy defines good strategy:

1. Focus 2. Divergence 3. Compelling Tagline

Product Leadership

- Excellence in technology and product development - Most advanced, highest quality product offering in the industry

Operational Excellence

- Focus on efficiency of operations and processes - Lower cost operations lead to lower prices for customers

Making SWOT Analysis Productive: Collaborate with other Functional Areas:

- Information generated from the SWOT analysis can be shared across functional areas. - SWOT analysis can generate communication between managers of different functions, creating an environment for creativity and innovation.

Customer Intimacy

- Understand customers better than the competition - Develop long-term customer relationships

The SWOT Matrix

1. A four-cell array used to categorize information at the conclusion of a SWOT analysis 2. Should be based on customer perceptions, not the perceptions of the manager or firm 3. Elements with the highest total ratings should have the greatest influence in developing the strategy. 4. Focus on competitive advantages by matching strengths with opportunities

SWOT Analysis

1. A widely used framework for organizing and utilizing the pieces of data and information gained from the situation analysis 2. Encompasses both internal and external environments 3. One of the most effective tools in the analysis of environmental data and information

Four major directions for strategic efforts

1. Aggressive 2. Diversification 3. Turnaround 4. Defensive

Four Actions Framework

1. Eliminated 2. Reduced 3. Raised 4. Created

Principles of Blue Ocean Strategy

1. Firms develop strategic focus by developing a strategy that stands apart from the competition. 2. Firms can visually identify their strategic focus through the use of the strategy canvas. 3. Firms can use the Four Actions Framework to reorient their strategic focus away from the competition.

Strategy Canvas

1. Identifies factors that the industry currently competes on and what customers receive from existing product offerings (captured by the horizontal axis) 2. Identifies the offering level received by buyers for each factor (captured by the vertical axis) 3. Identifies a company's relative performance across its industry's factors of competition (captured by the value curve)

Major Benefits of SWOT

1. Simplicity 2. Lower Costs 3. Flexibility 4. Integration and Synthesis 5. Collaboration

Making SWOT Analysis Productive: Examine Issues from the Customers' Perspective

1. What do customers (and noncustomers): --believe about us as a company? --think of our product quality, customer service, price, --overall value, convenience, and promotional messages in comparison to competitors? 2. What is the relative importance of these issues as customers see them?

Making SWOT Analysis Productive: Look for Causes, Not Characteristics

Causes for each issue in a SWOT analysis can often be found in the firm's and competitors' resources.

Opportunities and Threats

Conditions or changes in the customer environment Conditions or changes in the competitive environment Conditions or changes in the external environment

Continuous Objectives

Current objectives are similar to objectives set in the previous planning period. Objectives that are only slightly modified over time do not need new strategies, increased effort, or better implementation to be achieved.

Making SWOT Analysis Productive: Separate Internal Issues from External Issues

Failure to understand the difference between internal and external issues is a major reason for a poorly conducted SWOT analysis.

Compelling Tagline

Good strategy can be summarized in a clear-cut statement that delivers a clear, compelling message to customers.

Divergence

Good strategy differs from other competitors in the market (the value curve is unique from competitors).

Focus

Good strategy does not diffuse the company's efforts across all key factors of competition (the value curve clearly shows focus in the strategy).

What Makes Good Strategy?

Good strategy is about matching the firm's strengths to the available opportunities.

Which factors should be raised well above the industry's standard?

Has the industry forced customers to make compromises?

Which factors should be reduced well below the industry's standard?

Have products been over designed in a race to beat competition?

Making SWOT Analysis Productive: Search Extensively for Competitors

Information on competitors is an important aspect of a SWOT analysis. All four types of competition are important.

Making SWOT Analysis Productive: Stay focused

It is a mistake to complete one generic SWOT analysis for the entire organization. SWOT analysis really means SWOT analyses.

Strengths and Weaknesses

Presence or absence of scale and cost economies Presence or absence of financial or human resources Presence or absence of functional skills Presence or absence of intellectual, legal or reputational resources

Discontinuous Objectives

Significantly elevate the level of performance on a given outcome factor Typically require new strategies to achieve higher performance Often a part of applying for the Malcolm Baldrige National Quality Award

Marketing Objectives

Specific, quantitative benchmarks used to measure progress toward the achievement of marketing goals Attainability Continuity Time frame Assignment of responsibility

Marketing Goals

Statements of broad, desired accomplishments Attainability Consistency Comprehensiveness Intangibility

Which factors that the industry takes for granted should be eliminated?

These factors may no longer have value for buyers.

Which factors should be created that the industry has never offered?

What are the potential new sources of value for buyers?

Achieving goals and objectives depends on:

creating capabilities by matching strengths with market opportunities

Capabilities or competitive advantages that do not translate into specific benefits for customers are:

of little use to a firm

Competitive advantages refer to real

differences between competing firms.

Competitive advantages can arise from

internal and external sources

Weaknesses that cannot be converted become:

limitations which must be minimized if obvious or meaningful to customers or other stakeholders.

Competitive advantages can also be based more on

perception than reality

Weaknesses can be converted into strengths with:

strategic investment. Threats can be converted into opportunities with the right resources.

The assessment of strengths and weakness must look beyond:

the firm's resources and product offerings to examine processes that meet customers' needs. This entails offering solutions to customers' problems, rather than specific products.