BA 569 – Fall 2008 Alex Brenner Arjang Fartash Lan Phough Thi Nguyen 1  Who: ▪ Targeted Customers  What: ▪ Product & Services  How: ▪ Business conduct ▪ Activities to perform efficiently 2  Sources of Success:  The company defines, establishes & exploits: ▪ A unique & distinctive strategic position  Sources of Business Failures:  Does not make clear & specific choices on: ▪ The three Dimensions (3D): Who, What, How 3    In 1988 Nestle’s Espresso machine (Nespresso) faced serious financial challenges Offices & Restaurant were targeted through a distributor (Sobal Inc.) Revenues took off after a new strategy:  What: Coffee capsules for Nespresso –V  Who: High-income households – R  How: Distribute by mail – O 4  In 1970 – Implemented a new strategy Growth took off – 15% annually  The New Strategy:   Who: Rural retail customers – V & R  What: Selected & trusted products – R  How: Family-like partnership of brokers – I & O 5  The rise of Xerox – from 1960 thru 1980’s Xerox invented the copier technology First mover’s advantage – I & R  Implemented a clear & concise strategy:    Who: Corporate clients – V  What: High speed/vol. copiers – V & R  How: Lease & use direct sales-force – O 6  IBM & Kodak introduced copiers w/ strategies similar to Xerox:  Who: High & medium end business customers – V  What: High speed and/or lower cost copiers – V & R  How: Direct sales force – O IBM & Kodak failed  Head-on strategies that were imprecise & unable to compete with Xerox’s V-R-I-O  7  Cannon adopted a unique strategy:  Who: Small & medium businesses & consumers – V  What: Quality copiers at competitive prices – V & R  How: Dealer network sales – O   Cannon’s strategy succeeded Cannon adopted a distinct strategy & grew its sales, and over time  I 8 Industry Dominant Competitor Traditional Competitor Strategic Innovator Securities Merrill Lynch Smith Barney, Edward Jones Dean Witter, Paine Webber Photo-copier Xerox IBM, Kodak, Ricoh Cannon Coffee General Foods (Maxwell House) Procter & Gamble, Nestle, Sara Lee Starbucks US Airlines American Delta, United, Northwest Southwest Computer IBM NCR, Control Data Microsoft 9  Compete efficiently & meet your current products / demand commitments – V  Experiment w/ new Tech & Ideas – I  Create an ambidextrous organization – I &R Cannibalize the existing strategic position to create a new one – I & R  10  Build a monitoring system – V  Prevent cultural inertia – V & R & I  Develop processes to enable experimentation – V  Be prepared to acquire new competencies – V & R  Manage the transition – V & I 11 Compete in the Context Make Transition to Mission Search for a New Strategy Manage Context & Mission 12  What does strategic positioning mean?  Who, What, How  V-R-I-O  What options exist to address disruptive competitive threats?  Dynamics of strategy and its four phases 13   Join your IBP team Each IBP team must provide the following:  Identify the Dominant & Traditional companies in your sector  Define your IBP business strategic positioning statement in terms of Who-What-How  Describe each element in terms V-R-I-O   The audience will pick the winner The winning team will receive a prize 14