Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases 23th edition

106)    LinkedIn uses a focused differentiation strategy—concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by focusing on these specialized customer groups' networking needs better than its more broadly based rivals, attracting a devoted set of customers in the process.

 

107)    Industry environments characterized by high-velocity change require companies to repeatedly adapt their strategies. For example, companies in industries with rapid-fire advances in technology like medical equipment, electronics, and wireless devices often find it essential to adjust key elements of their strategies several times a year, sometimes even finding it necessary to reinvent their approach to providing value to their customers.

 

108)    The company has used an emergent strategy in response to unexpected shifts in customer requirements and newly appearing market opportunities. Inevitably, there will be occasions when market and competitive conditions take an unexpected turn that calls for some kind of strategic reaction. Hence, a portion of a company's strategy is always developed on the fly.

 

109)    The company has adopted a proactive strategy and used its existing market position to create a new market opportunity. This planned initiative improved the company's financial performance and secured a competitive edge.

 

110)    Selling high-quality Keurig machines at a very low price is the company's customer value proposition and then selling low-cost refills at a relatively higher price is the company's profit formula. The two elements of a company's business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition lays out the company's approach to satisfying buyer wants and needs at a price that customers will consider a good value. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.

 

111)    Thin-crust pizzas allow the pizza maker to cut down on dough costs; that is, its profit formula and free soft drinks with a larger pack are both a profit formula and a value proposition for customers. The two elements of a company's business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition lays out the company's approach to satisfying buyer wants and needs at a price that customers will consider a good value. The profit formula describes the company's approach to determining a cost structure that will allow for acceptable profits, given the pricing tied to its customer value proposition.

 

112)    Companies do not get to the top of the industry rankings or stay there with illogical strategies, copycat strategies, or timid attempts to try to do better. Only a handful of companies can boast of hitting home runs in the marketplace due to lucky breaks or the good fortune of having stumbled into the right market at the right time with the right product. Even if this is the case, success will not be lasting unless the companies subsequently craft a strategy that capitalizes on their luck, builds on what is working, and discards the rest. So there can be little argument that the process of crafting a company's strategy matters—and matters a lot.

 

113)    Good strategy and good strategy execution, especially during a global pandemic, are the most telling signs of good management. The rationale for using the twin standards of good strategy making and good strategy execution to determine whether a company is well managed is therefore compelling: The better conceived a company's strategy and the more competently it is executed, the more likely it is that the company will be a standout performer in the marketplace.

 

114)    The better conceived a company's strategy and the more competently it is executed, the more likely that the company will be a standout performer in the marketplace. In stark contrast, a company that lacks clear-cut direction, has a flawed strategy, or cannot execute its strategy competently is a company whose financial performance is probably suffering, whose business is at long-term risk, and whose management is sorely lacking; that is, how well a company performs is directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.

 

115)    Focused differentiation. Basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage include a low-cost provider strategy, a broad differentiation strategy, a best cost provider strategy, and a focused differentiation strategy. Lululemon previously adopted, and via its acquisition of Mirror, is now building out its focused differentiation strategy via multiple channels, still concentrating on a narrow customer segment and outcompeting rivals by offering customers attributes that meet their specialized needs and is more appealing than rivals' offerings—at a price premium over its rivals in activewear.