BU481 Lecture Notes - Lecture 5: Airbnb, Value Proposition, Fountain Pen
BU481 Lecture 5
Strategy, Strategic Analysis, Assessing Performance
What is Strategy?
• NOT operational effectiveness
o Leads to imitation and homogeneity in most cases
• Rests on unique activities
o Being different than competitors
o Combining activities in different ways creating a strategic fit
• Sustainable strategy requires trade-offs
o Ca’t e all thigs to all people
• Creating a clear strategy often dependent on leadership
o Requires constant discipline and clear communication
• Bic pen vs. fountain pen
o Bic: low cost, many distributers, mass production, economies of scale, low profit
margins
o Fancy: conveys a more high quality brand image, differentiated product, more targeted
distribution, direct selling, individually sold, full packaging, expertise in design and brand
marketing
o For bic to become fancy, can they become both? You can try but you might dilute the
brand or your proposition, and might need to change your production and marketing.
There is a trade-off
• Differentiation is not about economies of scale
• Changing the fit is difficult and there are many trade-offs
Elements of a Business Strategy (SAA)
• Goals: what does the business plan to achieve?
• Core Activities: what are the primary value-adding activities that the business intends to
perform? How does it intend to perform them?
• Product Market Focus: What are the products and/or services?
• Value proposition
Hard Goals Vs. Soft Goals
Business Strategy – Elements
• Important for alignment of goals, value prop, product market focus, and core activities
Gain a Cost Advantage
• Do a better job than rivals of performing value chain activities efficiently and cost effectively
• Revamp value chain and bypass the unnecessary
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
You can try but you might dilute the brand or your proposition, and might need to change your production and marketing. There is a trade-off: differentiation is not about economies of scale, changing the fit is difficult and there are many trade-offs. How does it intend to perform them: product market focus: what are the products and/or services, value proposition. Important for alignment of goals, value prop, product market focus, and core activities. Gain a cost advantage: do a better job than rivals of performing value chain activities efficiently and cost effectively, revamp value chain and bypass the unnecessary. Differentiation strategies: create a value for buyers, should not be easily matched or cheaply copied. Risk of a best-cost provider strategy: stuck in the middle/black hole strategy, e(cid:454). Ta(cid:396)get, cost(cid:272)o, o(cid:396) hudso(cid:374)"s ba(cid:455: between low-cost and differentiation. Strategies: differentiation, best cost/provider/hybrid/blue ocean, best-cost provider, focused cost leadership competing based on price to target a narrow market.
