The Duck and the Lemonade Stand “Better a consistently applied mediocre strategy, than a series of ad hoc brilliant strategies.” In other words: A mediocre strategy well executed is better than a great strategy poorly executed. Page 1

Do you agree with this statement? Discuss having regard to ‘The Duck and the Lemonade Stand’ as a basis for your argument. Theoretical concepts must be included as part of your answer. Page 2

Identify the different groups What does the landscape look like? How does competition shape your strategy? Organisational competitiveness: Long term vs short term Examine the internal and external environment Successful strategy formulation requires the consideration of both environments. Why and How we do this? Page 3

Abell’s Framework for Defining the Business

Abell’s Framework contd. What are the current customer groups/Segments that we are serving? What needs are we meeting for these customers? What features or uses of our products are fulfilling these needs? Are there new customer groups with similar needs that are not being served? Can there be other uses of the product to fulfil other needs? Are there other technologies that need to be utilised to serve the needs of existing customers? Page 5

Abell’s Framework contd. Who? Here, the idea is to completely identify and understand customer profiles of those segments being served. Once the segments are identified, work can be done to retain the segments that are most relevant. Segments can be individual customers, business customers, geographical location, sedentary or nomadic, role in the industry, social professional category, purchasing power or level of education among others. What? In this dimension, the objective is to identify the needs of the consumer that are met by the product. This is done by identifying and characterizing the solution (the product or service) in terms of its features that it brings to the customer segments identified in the “who” category. These features may include improved effectiveness or efficiency, better risk management, greater well-being among others. How? At this stage, those means are identified and characterized through which the highlighted features are manufactured and delivered to customers. These means or technology include manufacturing techniques such as a choice of technical processes or a specific form of organization, distribution techniques such as home delivery, retailers, wholesalers, and large distribution and provision technologies such as user license, remote operation among others. Page 6

External Analysis Opportunities and Threats By studying the external environment, organisations identify what they might choose to do.

Internal Analysis Unique resources, capabilities, and competencies (required for sustainable competitive advantage) By studying the internal environment, organisations identify what they can do

The Industry Organisation (I/O) Model of Above-Average Returns Page 9

The Five Forces Model Industry Profitability The industry’s rate of return on invested capital relative to its cost of capital An industry’s profitability results from interaction among: Suppliers Buyers Competitive rivalry among organisations currently in the industry Product substitutes Potential entrants to the industry Michael Porter

The Resource-Based Model of Above-Average Returns Building competitive advantage Capability An integrated set of resources Core competence A source of competitive advantage Resources Physical, human, and organizational capital (tangible and intangible) Page 11

Why Two Models? Resource-Based Model Focuses on the environment inside the organisation Industrial Organisation (I/O) Model Focuses on the environment outside the organisation. Successful strategy formulation and implementation actions result only when the organisation appropriately uses both models. 12

The Vision What would the organisation like to achieve? A good vision is meant to stretch a company by articulating an ambitious but attainable future state. Recognises the firm’s internal and external competitive environments. 13

The Mission Mission Specifies the business or businesses in which the organisation intends to compete and the customers it intends to serve. Is more concrete than the organisation’s vision. Is more effective when it fosters strong ethical standards. Above-average returns are the results of the organisation’s efforts to achieve its vision and mission. 14

Values The values of an organisation should state: How Managers and Employees should conduct themselves How they should do business What kind of organisation they need to build to help achieve the organisation’s mission

Successful Strategy: Factors EFFECTIVE IMPLEMENTATION Long - term, simple and agreed objectives Profound understanding of the competitive environment Objective appraisal of resources

GAME THEORY

Defining the Game The Strategic Environment Who are the players? The Decision Makers What strategies are available? The Feasible Actions What are the payoffs? The Objectives “Maybe it’s not a wrong answer – Maybe it’s just a different answer”

Scenario Planning Requires you to think!!! What is going on in the organisation? You have to know your organisation What is going on in the landscape? Now, and in the future Where might both be by, say, 2020? What needs to be done now & later? Other considerations? Paul Schoemaker

Business & Scenarios Understanding the environment (scenarios) Understanding the organisation (business idea) Is this the right organisation for these future environments? NO?: Address Competencies YES?: Address Strategic Choices

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Blue Ocean Strategy Conventional Logic Blue Ocean Logic Industry Assumption Industry conditions are given Industry condition can be shaped. Strategic Focus Build competitive advantages to beat the competition. Create a quantum leap in buyer value to dominate the market. Customers Retain and expand the customer base through further segmentation and customisation. Think in terms of embracing customer differences. Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.

Blue Ocean Strategy Conventional Logic Blue Ocean Logic Assets & Capabilities Think in terms of a company’s existing assets and capabilities. Build on what it has. Think free from a company’s existing assets and capabilities. Ask, what if we start anew? Product/ Service offerings Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings. Think in terms of buyers’ solution even if that transcends the industry. Seek to solve buyers’ major bottlenecks/chief compromises in using the products/services of the industry.