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Case Analysis Models and Tools Perceptual maps Positioning statements (with supporting analysis including Frame of Reference, Points of Parity, Points of Difference) Strategic success: Corporate and business strategies Recommended Readings Mankins, M., Harris, K. and Harding, D. (2017) Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2), pp.66-75. Zwilling – New steps for strategic success in today’s business. Forbes. The Do’s and Don’ts of Rapid Scaling for Startups. FirstRound Review. Introduction Success is now seen as the ability to recognise why a strategy is needed, when and what outcomes it should produce. And to work towards producing that. The idea about successful strategy has changed. The “planning” and “market management” mentality no longer holds in markets where there is regular upheavals in terms of technology, ethical standards and rapidly evolving success factors. Seminar Activities To arrive at what the current crop of unicorn businesses see as success, we have to get insight from what their founders define as success1 . First, they realise that their business can’t be all things to all audiences, so they choose to focus and specialise. This means success in a strategy is defined as being successful within a market, a place and a time. This is the mindset that thinks, success doesn’t last forever, let’s be successful (by some measure – market share, attract investment, become famous) and move on to the next project. 1 Martin Zwilling – New steps for strategic success in today’s business. Forbes. https://www.forbes.com/sites/martinzwilling/2014/02/19/new-steps-for-strategic-success-intodays-business/#343f0c9644fd Strategy is constantly being tweaked, this has shortened the strategic cycle. These modifications arise from the need to invest in new ideas and to create new business and market models required to make those ideas succeed. This means acting on market fluidity that comes from customers, suppliers, employees, partners, shareholders, legislation and those who oppose our actions or ideas (the “anti” groups). Businesses see strategic success not as the strategy’s output, output is the measurement of a successful result. Success at strategic thinking comes from being effective at arriving at the right strategy, for the right place, right time, product, price and for the appropriate customer. Strategic success also requires the ability and passion to see the strategy “through” – to work and implement the strategy to achieve its outcomes. This requires: • shared understanding of the context of strategy definition, drivers of the economy at present (take advantage of this) • good content for strategy – quality, completeness, depth • effective and inspiring process • use of the right “thinking”, what can be best at, passionate about The changing view of successful strategy is the result of the confluence of many factors2 . These are structural market factors that have changed the way markets work and shifted the source of profits from optimization (doing things better or cheaper) to one of topline growth (sell more products/lines/create markets). Rapid growth – scale - future The thinking behind a successful strategy now goes towards growing the company’s share in a market. The idea behind growth as a metric is that growth is measurable. Businesses, especially startups (whether funded privately or through corporates) seek to scale rapidly. A large reason is that businesses are seeking economies of scale. There are critical sizes in market share/outright market size that enable businesses to hire people, make profit and access capital. Scaling is about spreading your excellence3 . This requires a restlessness and relentlessness to make things better all the time. But just like the product-life-cycle, there is a scaling cycle that requires different mindsets and different focus at different stages of scaling. For example, early on Google focused on getting more users and hiring more staff, later they focused on hiring the right staff, and later they focused on getting the organizational hierarchy right so that there were low management/communication overheads so that staff could be more productive. Scaling is also not simply about growing. To grow correctly you must get rid of processes/things/people/markets/products that are no longer useful to your business. These are things that used to work but don’t anymore. Can they be reused? Can they be repurposed? Do we need to shed these things? What is it we do that is stupid (that everyone else does too)? Look around the business as you scale – what is holding us back? What can we cut and what can/must we build? The idea is to remove the bad so that the good can survive. 2 Mankins, Harris and Harding – Strategy in the Age of Superabundant Capital. Harvard Business Review. See this for discussion of how the structural movements of capital has significantly affected how companies formulate run their strategy. 3 http://firstround.com/review/The-Dos-and-Donts-of-Rapid-Scaling-for-Startups/ The idea is to continue carrying forward momentum for your business. The job of management is to keep people’s focus on the future and off the present, to make them think about how great the future would be if they were to do this “painful” thing that is in front of them. Therefore, a major component of having a successful strategy is the future focus and the management of the present to excite employees to work in order to get to that future – i.e., look forward to the next big thing. Capital The main element that has changed the way enterprise thinks about strategy is the abundance of cheap capital4 . This type of scaling is mostly funded by cheap and abundant capital. Calculations show that it is now more effective to spend the capital to grow the business/diversify and get new sales than to optimize existing processes and products. Projections show that this situation is likely to continue for the next 20-30 years. This has changed the strategic approach from that used by large corporates where the focus is on slowly building and optimizing an existing profitable mature businesses to the enterprise approach of trying many new business ideas and then selecting the most promising and scaling the idea. This change in the fundamental way capital should be structured has seen large corporations not seeing growth in the last decade, these corporations have a backward looking mindset of protecting their valued products and brands. As discussed in the last lecture, market, capital, product, share price and employment growth have come from start-ups who have scaled successfully. This scaling is possible because the after tax cost of borrowing capital for promising startups is essentially zero. Capital is now free. So it makes sense to see how fast and how much you can grow a “free” capital dollar, as opposed to investing that same dollar to increase efficiencies in a business that has reached its natural maximum size. The way to quickly grow that dollar is to reimagine markets and ways to service markets that can be scaled. This does not necessarily use new technologies, but new business structures, ideas and processes. E.g., starting a platform for private car sharing/hailing – UBER. The assets are already there, the workforce is willing, workforce and customer are unhappy with what is currently available (taxis) and can see ways to make improvements to the service. It only takes the scaling of the excellent idea to make UBER one of the largest companies in the world. The same goes for sharing music (Spotify), and short term rentals (Airbnb). What has made this possible is not only cheap capital, but an abundance of capital. At least for now, this sees a whole lot of capital (estimates at 3x what was available in the 1980s during the dotcom boom) chasing comparatively fewer projects. This means that some outlier projects are likely to get funded and the premier projects are likely to attract more funding. This is all good news for enterprise. A big problem with traditional ways of thinking about strategy is “hurdle rates” or the minimum rates of return required by businesses. For many older corporations these are set too high, a leftover from times when capital was expensive. High hurdle rates become a barrier in the corporation’s willingness to invest in riskier or new-technology projects. It also prevents the corporations from 4 Mankins, Harris and Harding – Strategy in the Age of Superabundant Capital. Harvard Business Review. looking beyond their current technology or industry – for example, Kodak invented digital photography but chose not to pursue the market or technology. High hurdle rates also discourage companies from aggressively pursuing growth. This is because growth is financially painful. A large amount of investment needs to be made to chase rapid scaling with unclear (shifting) strategy and the need to reinvest because of the need to pivot to more viable projects. This goes against traditional corporate training of sustained orderly management of capital for a projected return. We are not advocating for wild and irresponsible spending of capital, but to think about how to use capital in a more effective way given movements in capital and market structures. Under market conditions that have prevailed for the last decade, weighted average cost of capital favors choosing the growth option, not the optimization option. Horizontality This has given to the thinking that a business should find opportunities to invest in related businesses – to pursue markets and products that are related to the core business. This does two things. First, the strategy protects and strengthens the core business proposition – you are protecting the company’s golden goose. Second, it improves the company’s market proposition by building the business out to offer a comprehensive solution. This type of scaling enables the business to find symmetries and synergies that may not previously have been available. The strategy also makes the business’s products more attractive to their customers as they become a comprehensive solution provider. For example, WPP is one of the world’s leading advertising agencies and has invested in projects that build out their capabilities to service different channels and advertising functions. Essentially this type of scaling gives the company the chance to become a market leader. Structure There are many types of organizational structures available (see Lee and Edwards chp 2). However, to keep costs down, most start-ups begin with a very basic structure – a marketing person and a technology/product person. The challenge here is how to use this very lean structure to build a most valuable product (MVP 80%), track its performance and learn from the failures so that the business can pivot quickly to a product version or other product that is successful. This duo also has to get traction on the ground in order to scale the market, process and product. How do we learn to succeed? One way is to look at reasons for failure and work to avoid these things happening in our business. The main reasons startups fail: 99% Lack of planning and experience These are people who adopt the “try by doing” and “pay my dues” type strategy, they also don’t know what they don’t know and are too stubborn to get the right people into the venture. I classify them as being “try my luck” people who do not think or know that marketing has a scientific methodology, or are too lazy (miss appointments or do not work on their part of the project) or stubborn (normally product designers who think they “know it all”) to listen to good and competent marketers. Stay away from these types of characters at all costs. 95% Don’t meet projections Their strategy is too optimistic. Typically these businesses inflate their projections in an effort to attract more venture capital. Or, they are inept at gauging the amount of competition versus headroom versus growth rate in a market segment and miscalculate (inept business skills). Or, they are lousy at marketing and cannot build out to their intended market, don’t pivot quickly and smartly enough, and/or invest too fast in the wrong segment/product. This lot typically have inept product or market people or a bad dynamic where they are not open to other people’s ideas. Also lack funds or are not willing to spend on getting good help. Can work with these people but need to be very strict in getting the strategy, measurement and metrics right. Have to be ruthless with this lot and walk away if they are stubborn. 80% Don’t see projected return on investment Their marketing strategy is faulty and they spend too much to get success. This group normally meet their projections but have not controlled spending and risk. This comes from not getting rid of the old and bad in their business so that the good can grow. Typically this group are sentimental hoarders who think every component of their business/people are irreplaceable and there is only one way to do things – their way. Do a very strict pivot and spring cleaning strategy with this group. 40% Lose all or most of the investment They have no clear risk assessment and de-risking in strategy or no strategy at all. Typically, they start a business and don’t measure their performance or do not attempt to turn things around and pivot. Do not meet projections or have no clue how to do it. Don’t care if they don’t meet targets and have no idea what return their spending is giving them. Be very strict about measurement and growth plans with this group. Constrain them to being investor type people and Essentially, not proactive types who have an “employee” mentality, not an entrepreneur mentality. run their strategy for them. If they do not listen, leave them alone and let them go bankrupt. Things needed for startups to succeed Thinking global and not local Need a scaling strategy from day 1 – scale smartly and scientifically. Build all parts of the business to handle scale. Competing on price and not value Don’t build a me-too product. Build a product that gives people new types of value. Build a product that gives people new ways to access the same value. Not knowing who the true buyer is Get a marketer who is worth their salt on the team. Marketer to identify and verify market and come up with a strategy to build out to access that market segment. Declining addressable market Make sure that the market is growing in its TOTALITY. Make sure that the available market share is growing (a function of how many competitors are in the market and how much money they are burning to get market share). A poor launch story Get branding professionals and copywriters in to create your launch kit. A broken commercial model Work hard and make sure that monetization is viable. Test and verify that your target customers are real and the group is large enough. Make sure that you are the right price. Make sure there is more than 5 ways to get money from the product. Make sure you constrain your spending and work for free. Spend where it counts – where you will get money in. Unclear about competitive dynamics Map your competitors and stalk their every aspect: • Market • Size • Offering • Price • Velocity and throughput • Where they source their product • Their strengths and unique selling propositions • Their campaigns • How much they have in reserve capital • Every product element and offering • Every marketing campaign • Every strategy and the markets they are building out to • Why did they not touch some of the identifiable markets out there • Are they profitable? Why? Do projections Be clear about what you are offering and make sure you get professional help to convey that offering and reach your verified segments. Poor market positions • Map the market using branding and perceptual tools. • Be realistic and anticipate the worst case scenarios. • Project positions to competitive landscape and try to verify which customer groups will like the positioning. • Pivot the positioning constantly. • Do AB testing. No uniqueness or scarcity in the market • Choose products that can be differentiated by brand • Choose something that people are willing to pay money for – or you can convince them easily to pay money for • Choose something that people cannot easily do themselves or that you will help them do easier, cheaper, better • Choose something that is apparent to make people’s lives better – convenience, access to riches, ways to save money, make them smarter, stronger, more beautiful or reduce their personal or professional shortcomings (bad breadth, dodgy credit history etc…) • Choose something that the government will pay for An easily replicable proposition • This is all about having a sustainable offering • How do we make it so that it is hard for others to copy us? Doesn’t disrupt traditional markets • Look for competitors that sell the same product in the same format, if there are competitors, keep innovating • Look for ways to offer the same value proposition using an easier, cheaper, more convenient way • Look for ways to increase what customers can get from you, over what your strongest competitor can offer • How and where can you find new customers, or customers that use the product in new ways • Or found a new industry by changing the way customers access the product (has to be better, bigger, easier, cheaper) A business model that doesn’t scale • Build automation into your business model • Build self-serve processes • Build outsourcing • Build ability to attract large numbers of quality staff quickly • Build attractive points that allow you to bid for venture capital • Build a process that allows you to build out to different markets quickly – this should be in your proof of concept Where to scale to? 4 largest projected economies by 2030: USA, China, India, Japan These elements should be put into a matrix and used in product and market planning. They should be reviewed weekly or fortnightly in light of market developments. Make sure that this process is documented as it helps you think. In building out the product and market it is systematic thinking that helps you win. Use these as you build your proof of concept 80% MVP. See Martin Zwilling – New steps for strategic success in today’s business. Forbes for the following. Reward intelligent failure Scale/scope/future The pivot Informed experiments People, their ideas, talent and productivity Human capital breeding Engaged innovative energetic – how? Your systems Get rid of systems and processes that encourage time wasting, complexity, layers and dampen initiative Get rid of organizational drag
Hi there, please follow the structure that involves cover page, main body, appendix (three bullet point with about 50 words) and references.
Hi there, please follow the structure that involves cover page, main body, appendix (three bullet point with about 50 words) and references.
please finish case study in week 2 (positioning and growth strategy) and week 4 (sustainable supply chain strategy)
if there is any questions please let me know!500 word for each case study, choose week 2 and week 4 case study.
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Answer
Week 2: Positioning and Growth Strategy
Lulu’s Positioning and Marketing Mix Elements
Lululemon Athletica is the customer loyalty brand leader in the athletic wear sector which has 211 stores in the U.S with 91 others in global markets (“Lululemon Athletica Inc Apparel and Footwear”, 2017). Lululemon continues to expand into new markets including Australia. Lululemon is effectively positioned in the market. Notably, the firm has a high brand position based on the fact that it differentiates itself in the market through its product offering. The firm does not have strong competitor in the market since none of the firms utilise the same material as the one used by Lululemon’s brand. As a result, the player has managed to maintain a value-based policy for all its market commodities.
Looking at the marketing mix elements, it is evident that the firm executes its brand positioning effectively. On the product element of the marketing mix, the firm offers different athletic apparel such as pants, performance shirts, shorts, lifestyle apparel, and yoga accessories suggesting diversity. Place element of the marketing mix shows that Lulu’s brand is distributed on an international scale in markets such as Canada, the US, Taiwan, and Sweden among others (Hansen, 2004). The price of the commodities offered by Lulu is highly affordable since it is mainly targeted for the members of the middle-class. Moreover, the firm relies on a premium pricing policy strategy. The retailer has further relied on exclusive marketing to promote its brand awareness. Moreover, through efficient customer service, the products are effectively marketed to the potential customers hence driving brand loyalty (Lee & Edwards, 2013).
Threats
Athleta and Under Armour pose a competitive threat to Lululemon as they focus to capture the Women’s market. Noticeably, the players have established rivalry through cheap competition. Notably, Athleta and Under Armour sell the same style yoga pants at cheaper prices than Lululemon which further affects the profits of the business. According to the case study, the two players avail the product at a price which is $30-$50 less than that offered by Lululemon (“Lululemon Athletica Inc Apparel and Footwear”, 2017).
Can Lululemon Sustain Explosive Growth
Lululemon is yet to hit its peak. This provides an indication that the firm can sustain an explosive growth which was established by the athleisure product line. Notably, an increased spending is noted among the consumers aged between 18-34 years for the specialty activewear (“Lululemon Athletica Inc Apparel and Footwear”, 2017). Therefore, to ensure growth, Lululemon should focus on the formation of strategic partnerships with players such as fitness studios. This will result to increased brand recognition through the administered unique services which further increases the sales and revenue potential for Lululemon.
Positioning Statement
As a superior quality brand, Lululemon will offer its athleisure products to consumers in the Asian market through their workout studios at a 50% discount for the first two months of its sales.
Positioning Map
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In the map above, it is evident that Lululemon will position itself on the fourth quadrant within the Asian market where it offers it product of a high quality at a low cost.
Week 4: Sustainable Supply Chain Strategy
The struggle of the Supply Chain Industry
The fashion industry is struggling to engage the consumers as a result of its lack of transparency in the supply chain as well as the use of the unethical business models. Babicheva, (2019) indicates that the fashion consumers have failed to have a full transparency across the value chain which has further resulted to the consumer distrust. Evidently, the fashion sector has been drastically been affected by the increased trust deficit which has negatively influenced the online fashion organisations. This has left the consumers in the market wondering if it is advisable to share information with retailers and brands (Cervellon, 2011).
Everlane’s Success
Everlane’s success is accrued to its use of radical transparency. The clothing and accessories brand has focused on spreading its factories across the globe to ensure that it can maintain a direct contact and relationship with the consumers to provide them with products of a high quality, but of a reasonable cost. Notably, the fashion outlet does not rely on the use of brick and mortar stores. Instead, they share images of its factors and provide its consumers with tours of their factories, provide cost breakdowns hence coming up with a brand representing a strong ideology (Babicheva, 2019). In this case, sustainable fashion industry players should learn from Everlane’s example and provide the consumers with supply chain transparency to gain their trust.
Radical Transparency Definition
Everlane’s credo is not overstated. Evidently, with its radical transparency, the firm is focused on more than simply increasing it sales as it is also focused on sharing a set of values. Notably, Everlane establishes a meaning connection between its brand and the audience, thereby creating a brand loyalty and awareness which cannot be achieved by well-established fashion retailers in the market (Babicheva, 2019).
Business Operations Model
Through Porter’s Five Forces, Everlane’s business model can be viewed as follows. The threat of substitute is moderate and new entry is relatively low. The power of buyers is considered as moderate while that of the suppliers is low. Through the implementation of the value chain model, it is evident that the firm’s business model is the major source of its competitiveness. Notably, the fashion producer relies on differentiation for competitiveness. Through its business model focused on promoting its supply chain transparency, the firm has managed to perform better than the competitors in the market. Looking at the primary activities of the firm which involves the creation of quality fashion products, the support activities, specifically the innovations in the firm’s business model has resulted to the differentiation advantage experienced by the business which increases its competitiveness and profitability in the sector (Mihm, 2010).
Development Strategies
Everlane can consider market development/expansion strategy to ensure growth and still maintain transparency in the market. With this strategy, the fashion outlet will sell its current products in a new market. This will create a new market for the company’s goods which also increases its sales. Additionally, the firm can also consider widening its product line through product expansion strategy. In this case, Everlane will continue selling within the current market. However, it will expand its product line to include other fashion commodities to capture a new market and further increase its sales. In both cases, the firm will not have to change its business model which focuses on transparency (Joy et al., 2012).
References
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Babicheva, E (2019) “Building the Fashion Business of the Future: Everlane and Its Radical Transparency.” Cervellon, M. (2011) “Consumers' perceptions of 'green': Why and how consumers use eco-fashion and green beauty products”. Critical Studies in Fashion & Beauty, vol. 2 no. 1, pp. 117- 138 Hansen, K.T. (2004) “The world in dress: Anthropological perspectives on clothing, fashion, and culture”. Annual. Review of Anthropology, Vol. 33, pp.369-392. Joy, A., Sherry Jr, J.F., Venkatesh, A., Wang, J. and Chan, R. (2012) “Fast fashion, sustainability, and the ethical appeal of luxury brands”. Fashion theory, Vol. 16, no. 3, pp.273-295. Lee, A. & Edwards, M.G. (2013), Marketing Strategy: A Life-Cycle Approach. Cambridge University Press. – Chapter 2, Corporate and business strategies, a market oriented perspective. Lululemon Athletica Inc Apparel and Footwear. (2017), Passport Report. Retrieved from https://www.euromonitor.com/lululemon-athletica-inc-apparel-and-footwear/report Mihm, B. (2010) “Fast fashion in a flat world: Global sourcing strategies”. International Business & Economics Research Journal (IBER), Vol. 9, No. 6, pp.55-63. Clutejournals.com Priest, A. (2005), “Uniformity and differentiation in fashion”. International Journal of Clothing Science and Technology, Vol. 17 no. 3/4, pp.253-263
Appendix
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