A Matrix of Various Situations
December 17, 2001
Sebastian Bednarowski
Keiko Nakazawa
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Strategies associated with each situation / Actions or activities associated with each strategy / Competencies required to implement each strategy / Structural drivers and resources / Executional drivers and resourcesStrategies for varying environments (rate and direction of change)
(page 250-263) /
· Emerging[1] / - Be an industry leader in the early stage. / - Take risks / - Willingness to pioneer and to take risks / Plant/Equipment / - Produce attractive, innovative, profitable, high quality products
- Easily to change around (convertible)
- Cell base production line
- Efficient capacity to meet customers demand / Internal Business Process / - Hire open-minded, team oriented employees with high risk tolerance
- Retain key employees.
- Grant options to employees to motivate them.
- Encourage employees to innovate new processes and fulfill new ideas by creating corporate open management style.
- Create broad or focused differentiation strategies. / - Superior ability to create executes strategies.
- Institute feel for what buyers will like
- Opportunistic strategy making
- Large capital to invest in resources, capabilities, and market recognition / Learning curve
Linkage / - A firm’s position determines how costly a strategy will be relative to competitors.
- Share manufacturing and operation processes with sister units. / Internal Business Process
Strategic Choice / - Create flexible and learning organization.
- A firm’s policy choice of new modes.
Push to perfect the technology / - Innovate product quality and develop additional attractive performance feature. / - High skill and knowledge of technology required
- Idea to develop attractive feature / Linkage /
- Share idea and knowledge with suppliers and distributors to develop attractive feature.
Adopt quickly to dominant emerging technology / - Try to monitor new emerging technologies. (Do not bet too heavily on your own technological approach.) / - Ability to gain the newest technology and to employ it to value chain activities. / Internal Business Process /- Invest on marketing research and R&D.
- Share technology and know-how within firm activities.- Well communicate with suppliers to gain technical support.
- Gain access to specialized skill
- Gain technological experience
- Gain critical materials or components / - From strategic alliances with key suppliers. / - Communication skill
- Negotiation skill
- Have attractive feature to suppliers, such as capability to purchase large lot and fast payment. / Learning curve / - Establish better communication or network with other organizations. / Internal Business Process / - Create flexible and learning organization.
- Contact lawyer, mentor, or government agencies.
- Send employees to seminar or academic institutions
Outcompete rivals on the basis of technological superiority / - Acquire or form alliances with companies that have relative or complementary technological expertise. / - Communication skill / - Integrate operation methods with related companies to share technological experience.
Capture first mover advantages
(See first mover strategy section for more information) / - Expand product selection
- Allying with the most capable suppliers.
- Pursue new customer groups and user applications.
- Improve style.
- Capture experience curve effect.
- Get well positioned in new distribution channels. / - Capability of quick response to new market.
- Ability to define new market
- Capability to produce the number of product models. / Production / - Employ flexible manufacturing system to produce wide range of models.
- Standardize parts and components across models and styles. / Internal Business Process / - Research market to determine which segments are underserved.
- Create flat organization structure for fast information flow and to react fast to the market.
Expand operations / - Entry into new geographical areas.
- Expand product lineup
- Expand consumer target
- Joint ventures / - Capacity to expand business.
- Ability to define new product lineup, customer target, distribution area, and company to joint. / Production / - Share the production process and components across the various models.
- Employ production design and manufacturing layout based on efficient production process. / Internal Business Process / - Large capital required for expanding business.
- Form horizontal linkage within a firm to share value chains activities.
- Research market to determine target customers, goods, and area.
- Establish customers’ acceptance of new products to gain more customers. / - Make it easy and cheap for first-time buyers
- Emphasize advertising
- Build brand loyalty
- Use price cuts strategy / - Capability to reduce extra value added activities to lower prices.
- Expertise in marketing and promotion. / Organization structure / - Outsource the high margin activities. / Linkage
Internal Business Process / - Form alliances with suppliers on price and shipping term.
- Concentrate on buying power to secure high volume purchasing.
· Turbulent and high velocity
The industry situation characterized by:
- Rapid-fire technoligical change
- Short product life cycle
- Entry of important rivals
- Rapidly evolving customer requirements and expextations
Examples
- Personal computer hardware and software
- Video games
- Wireless telecommunications
- Medical equipment
- Biotechnology
- Prescription drugs / React to change (Defensive)
- React and respond as needed
- Defend and protect the company’s position / - Introduce better production in response to new offering of rivals. / - Be sensitive to where the market and rivals are going not to be behind the trend
- Quick response in changing process of manufacturing / Plant/manufacturing / - Learning curve effects to improve plant layout and work flows
- Cell based manufacturing process to quickly react to shifting market conditions
- Develop new product based on economies of scale for available components and parts / Product quality
Process quality / - Produce better, more attractive, and profitable product
- Bypass the value chain
- Associate costs of distribution allies
- Marketing directly to end users
- Respond to unexpected changes in buyer needs and preferences. / - Adapt customers needs quickly
- Ability to develop internal operation efficiently
- Be tolerant toward change / Plant
Equipment / - Simplify manufacture line to adapt to the change quickly
- Redesign machinery and equipment to gain increased operating speed. / Internal business process / - Coordinate information flow well between departments or from up to down
- Modify business process flexibly
- Adjust to new government policies. / - Ability to reshape its strategy or create new strategy
- Knowledge in laws and regulations / Organization structure / - Reorganize its structure to fit the strategy / Internal business process / - Hire people who have knowledge or train employees to keep updating government polices
Anticipate change
Plan ahead for expected future changes
- Add/adapt resources and competitive capabilities
- Improve product line
- Strengthen distribution / - Analyze the prospects for market globalization / - High skill in seeking and analyzing new market
- Superior ability to create executes strategies / Internal business process / - Hire or train people that posses flexible thinking that can quickly switch gears and approaches to new market
- Research buyer needs, preferences, and expectations. / - Skill to research its customers and market
- Institute feel for what the market will be or buyers will like / Organization structure / - Form cross functional teams to speed up the action of producing new product or quality to satisfy customer needs / Internal business process / -
- Monitor new technological developments closely to predict future path / - High skill in technology
- Well-informed in technology trend / Internal business process / - Hire technically skilled people or train superior intellectual employees
Lead change (Offensive)
- Seize the offensive
- Be the agent of industry change; set the pace
- Influence the rules of the game
- Force rivals to follow / - Pioneer new and better technologies / - Be creative
- Ability to realize new ideas
- Superior skill in technological development
- Invest large capital in R&D
- Strong motivation to lead the industry / Organization structure
Technology requirement / - Form teams or work groups to facilitate an exchange of ideas and foster a climate of support
- Invest in e-commerce / Process quality
Internal business process / - Empower employees to motivate them in innovating new process and fulfilling new idea
- Collaborate with suppliers to share the latest technology
- Share sense of being a leader in the industry
- Introduce innovative products that open new markets and spur the creation of whole new industries. / - Be creative
- Idea to add attractive feature to products
- Knowledge to start up in new market
- Long-term business sight
- Manage a diversified group of business / Organization structure / - Corporate restructuring and turnaround / Working with buyers and suppliers
Process quality / - Innovate new product or process with suppliers and distributors
- Create unique mission
- Seek to set industry standards. / - Ability to act more quickly than rivals
- Large capital required to invest in resources, capacities, and market recognition
- High skill and knowledge in technology
- Patent, copyright / Facility
Technology requirement / - Locate its facilities based on economies of scale for available resource and market to set up standard faster than rivals
- / Process quality / - High capacity utilization
· Maturing
- Industry that is moving from rapid growth to significantly slower growth.
- When nearly all potential buyers are already users of the industry’s products.
- Market demand consists mainly of replacement sales to existing users
- With growth hinging on the industry’s ability to attract new buyers and convince existing buyers to up their usage.
- Typical growth rate is under 5% (roughly equal to the growth of the customer base or economy as a whole)
Strategic pitfalls in maturing industies / Pruning marginal products and models / - Maintain many product versions at the manufacturing level to increase inventory-stocking costs for distributors and retailers. / - Ability to achieve design, parts, inventory, and production economies. / Plant
Design / - Simplify the manufacturing process or employ cell-based manufacturing process to reduce production time
- Producing various models with sharing the manufacturing process
- Employee production design and layout based on efficient manufacturing process. / Alliance / - Make agreements with suppliers on price and shipping term.
- Concentrate on buying power to secure high volume purchasing.
- Prune marginal products from the line. / - Ability to select right products to prune based on margins and firm’s competitive advantages. / Learning curve effect / - Select the lowest margin or obsolete items.
- Keep up being on the edge of the trend. / Marketing / - Research customer needs, wants, preference, and trend.
- Permit more concentration on items whose margins are highest and/or where a firm has a competitive advantage. / - Ability to choose right products to concentrate on.
- Capital capability to invest on improvement of manufacturing layout for the concentrating items. / Learning curve effect / - Improve production layouts efficiently. / - Create new product features.
- Find further uses for the product.
- Sustain buyer excitement.
More emphasis on value chain innovation / - Lower costs
- Better product or service quality
- Greater capability to turn out multiple or customize product version
- Shorter design-to-market cycles / - Ability to define a firm’s value chains, to assign operating cost and assets to value activities.[2] / Technology / - Manufacturing system mechanizes high-cost-activities.
- Redesign production lines to improve labor efficiency.
- Build flexibility into the assembly processes so that customized product versions can be easily produced.
- Increase use of advanced technology. / Alliances / - Collaborate on the use of Internet technology and e-commerce techniques with suppliers and distributors to streamline value chain activities and implement cost-saving innovations.
A stronger focus on cost reduction / - Push suppliers for better prices. / - Strong market position.
- Ability to negotiate with suppliers. / Scale economies / - Purchase large volume of inventories at discount prices. / Linkage / - Secure long term relationship with suppliers.
- Implement tighter supply chain management practices. / - Ability to communicate with suppliers. / Location / - Locate close to suppliers to shorten the shipping time. / Linkage / - Make agreements with suppliers on shipping time.
- Cut low-value activities out of the value chain. / - Ability to define a firm’s value chains, to assign operating cost activities. / Learning curve / - Find firm’s value activities in production, design, inventory, R&D, advertising, and inbound and outbound logistics. / Interrelationship / - Integrate with suppliers and buyers to avoid bargaining power and reduce procurement and transportation costs.[3]
- Develop more economical product designs. / - Large capital on R&D with new ideas and technologies. / Learning curve / - Keep recording new ideas and up with new innovation and technologies. / Internal business process / Human resources:
- Hire or train employee to develop cost effective products.
- Reengineer internal processes using e-commerce technology. / - Technical capabilities / Internal business processes / - Commitment to continuously improve employee’s technical skill in order to use e-commerce effectively in the workplace.
- Shift to more economical distribution arrangements. / - Large capacity of available stock items. / Scale economies / - Schedule longer production runs for fewer models.
- Sell the standard products worldwide to avoid lost time in model changeover, shorter production runs. / Linkage / - Coordinate inbound logistics with suppliers on order size.
Increasing sales to present customers / - Provide customers complementary items and ancillary services. / - Production and operation capability to offer additional items and services. / Interrelationship / - Share know-how or production lines within products and services. / Process quality / - Linkage activities of procurement and assembly between items and services to reduce the number of value activities.