Lecture 7

Question 1

Giordano case study

Answer 1

Increase customer service level of the low-cost market of clothes retailer.

• Opinion
• Feedback

Question 2

Kwick Fit

Answer 2

Repair center:

• Feedback system
• Quality of service
• 100 % customer satisfaction
• Honest
• Develop trust

Question 3

Ryanair

Answer 3

• Food doesn’t include ( low material cost, low labor cost )
• Standardized of planes ( all components the same, one supplier)
• Turnaround time (don’t have a cleaning time, the plane always works)
• Low-cost airports

Question 4

Operations strategies

Answer 4

1. Top-down perspective (what should be done)
   - Corporate strategy decisions (relationship, What business to be)
   - Business strategy decisions (the mission, objectives)
   - Functional strategy decisions ( resources )
2. Bottom-up perspective (day to day experience )
   - Operational day-to-day
   experiences and learning
   - Emergent sense of what the strategy should be
   - Consolidated into a formal strategy
3. Market requirements perspective (customer expects )
   - Perfomance objectives
   - Customer needs
   - Competitor actions
4. Operations resources perspective( what I am able to do)

Question 5

5 forces vs. blue oceans

Answer 5

Differences:
- 5 forces model takes the view that the competition is the main issue the business faces(red ocean), but the blue ocean strategy takes the view the innovation that creates new market space where no competition exists.

Similarities:

• Both help to define possible improvements for the organization to increase sales
• Both strive to differ one company from another.

Question 6

BLUE OCEAN STRATEGY( Itunes, NINTENDO WII), Red Ocean strategy

Answer 6

The red ocean is all the industries in existence today – the known market space.

Red ocean strategy is all about competition. As the market space gets more crowded, companies compete fiercely for a greater share of limited demand.

• Competing for the existing market
• Beat the competition
• Exploit existing demand
• Make the value cost trade-off
• Align the whole system of the firm’s activities with its strategic choice of differentiation or low cost.

Blue Ocean Strategy is a marketing theory in which a business enters a market that has little or no competition. The strategy focuses on moving away from an existing market and searching for new markets in which few or no firms operate and where there is no pricing pressure.

• Make the competition irrelevant
• Create and capture new demand
• Brake the value cost trade off
• Align the whole system of the firms activities in persuade of differentiation and low cost

Question 7

„Five Forces Model“

Answer 7

1. Competition (Rivalry of competitors)
   • Price competition
   • Advertising activities
   • Number of competitors
2. Customers (Market power of customers) (более высоких требований к качеству товара, к уровню сервиса, оказывать давление на уровень цен)
   • Share of total purchases from the supplier (Google)
   • Degree of customers’ price sensitivity and market awareness (Pharma)
3. Suppliers (Market power of suppliers)( (Количество поставщиков в отрасли незначительно, Объем ресурсов ограничен и не обеспечивает потребность рынка, Отрасль не является приоритетной для поставщиков)
   • Competitive intensity
   • Degree of differentiation of suppliers, e.g. through patents, standards, brands
4. Potential new competitors (threat of market entry)
   • Economies of Scale
   • Patents, brands (Pampers)
   • Customer loyalty: Switching costs, ‘Lock-In’-dependency, standards (Apple)
   • Retaliation, e.g. by price dumping (Samsung)
5. Substitute product (threat of substitutes)
   •Customers tendency for substitution (telephone to skype)
   •Relative price/performance ratio (Ryanair, Lidl)
   •Switching costs (Expensive grocery - Cheap grocery)

Question 8

What is meant with strategy canvas?

Answer 8

A strategy canvas is basically a line graph that plots factors against their importance for a company and then compares benchmarks to its competitors to formulate the competitive strategy.

There are four action frameworks which are: raise, reduce, eliminate, and create.

Airline example: Southwest airline company focuses on offering friendlier service, speed, and frequent departures. but they don’t pay to other factors such as meal or seat reservation.