Jan 21, 2011

Business Strategies



Business strategy describes how a particular business intends to succeed in a chosen market place against its competitor. Intelligent business strategies are the cornerstone of successful business venture. It can be reason for small players in the market giving bigger players a run for their money. It represents the best attempt that the management can make at defining and securing the future of that business.
Business strategies are broadly classifier under three categories – Prospector Strategy, Defender Strategy and Analyser Strategy. Each strategy, if implemented effectively, making use of all favourable external factors, can make for an industry leader company. Additionally, each business strategy focuses in on a select segment of the market; therefore it is possible for two competitors in the same industry to be equally successful if they are using different business strategies to target different segments of the market.
Prospector strategy
This is the most aggressive of all strategies. It involves active programs to expand into new markets and stimulate new opportunities. New product development is vigorously pursued and attacks on competitors are a common way of obtaining additional market share. They respond quickly to any signs of market opportunity, and do so with little research or analysis. A large proportion of their revenue comes from new products or new markets. They are often highly leveraged, sometimes with a substantial equity position held by venture capitalists. The risk of product failure or market rejection is equally high. Their market domain is constantly in flux as new opportunities arise and past product offerings atrophy. They value being the first in an industry, as that their “first mover advantage” will provide them with premium pricing opportunities and high margins. Price skimming is a common way of recapturing the cost of development. They can be opportunistic in headhunting key employees, both technical and managerial. Advertising, sales promotion, and personal selling costs are a high percentage of sales. Typically the firm will be structured with each strategic business unit having considerable autonomy. The industry that they operate in tends to be in the introduction or growth stage of its life cycle with few competitors and evolving technology
Defender strategy
This strategy entails a decision not to aggressively pursue markets. As a result, they tend to do none of the things prospectors do. A defender strategy entails finding, and maintaining a secure and relatively stable market. Rather than being on the cutting edge of technological innovation, product development, and market dynamics, a defender tries to insulate themselves from changes wherever possible. In their attempt to secure this stable market they either keep prices low, keep advertising and other promotional costs low, engage in vertical integration, offer a limited range of products or offer better quality or service. They tend to be slower in making decisions and will only commit to a change after extensive research and analysis. Their goals tend to be efficiency oriented rather than effectiveness oriented. The industry tends to be mature with well-defined technology, products, and market segments. Most sales tend to be repeat or replacement purchases. Individual strategic business units typically have moderate to low levels of autonomy.
Analyser strategy
The analyser is in between the defender and prospector. They take less risk and make fewer mistakes than a prospector, but are less committed to stability than defenders. Most firms are analysers. They are seldom a first mover in an industry but are often second or third place entrants. They tend to expand into areas close to their existing core competency. Rather than develop wholly new products, they make incremental improvements in existing products. Rather than expand into wholly new markets, they gradually expand existing markets. They try to maintain a balanced portfolio of products with some stable income generators and some potential winners. They watch closely the developments in their industry but don’t act until they are sure that the time is right.
In my next post on Business Strategies, I will be writing over how some companies leverage with their unique position to create market niche around themselves.

WHO MOVED MY CHEESE???




The story of Who Moved My Cheese? was created by Dr. Spencer Johnson to help him deal with difficult change in his life. It showed him how to take his changing situation seriously but not take himself so seriously. This is a story about change that takes place in a maze where four amusing characters look for cheese. Cheese being a metaphor for what you want in life. Each of us has our own idea of cheese and we pursue it because we believe it makes us happy. The maze in the story represents where you spend time looking for what you want.

Characters:
Sniff (mouse): Who sniffs out change early.
Scurry (mouse): Who scurries into action.
Hem (little person): Who denies and resists change as he believes it will lead to something worse.
Haw (little person): Who learns to adapt in time when he sees change can lead to something better.

Living in constant white water with changes occurring all the time at work or in life can be stressful, unless people have a way of looking at change that helps them understand it .In the story we see two mice do better when they are faced with change, while the two littlepeople’s complex brains and human emotions complicate things. It is not that mice are smarter. We all know people are more intelligent than mice. Everyone knows that not all change is good or even necessary. But in a world that is constantly changing, it is to our advantage to learn how to change and enjoy something better. Move with the cheese!

Once long ago in a land far away, there were four little characters who ran through a maze looking for cheese to nourish them and make them happy. As different as mice and little people were they shared one thing in common: every morning they put on their jogging suits, running shoes, left their little homes and raced out into the maze looking for their favourite cheese. The maze was a labyrinth of corridors and chambers, some containing delicious cheese. But there were also dark corners and blind alleys leading nowhere. It was an easy place for anyone to get lost. However, for those who found their way the maze held secrets that let them enjoy a better life.

The mice Sniff and Scurry used the simple trial and error method of finding the cheese. They often got lost and bumped into walls. But after a while, they found their way. For Hem and Haw their powerful human beliefs and emotions took over and clouded the way they looked at things. It made life in the maze much more complicated and challenging. One day all four of them discovered in their own way, what they were looking for, at the end of one of the corridors in cheese station C.
Every morning the four of them raced to the cheese station and enjoyed the cheese. Sniff and Scurry woke up early every morning and when they reached their destination, they took off their running shoes and hung them around their neck-so they could get them quickly when they needed them again. The little people woke up a little later each day to go to the cheese station. After all they knew where the cheese was and how to get there. They wrote on the wall: Having cheese makes you happy!

After a while the little people’s confidence grew into arrogance of success. Soon they became so comfortable that they didn’t even notice what was happening. But Sniff and Scurry continued their routine and inspected the area every day to see if there were any changes. One morning they noticed that the cheese was missing. But the mice were not surprised as they noticed that the cheese had been getting smaller each day. They knew exactly what to do. They put on their running shoes that hung conveniently around their necks and were quicly off in search of new cheese. They didn’t over analyse things. The situation in cheese station C has changed so they decided to change. Later the same day the little people found the cheese missing. They were unprepared for what they saw. Hem screamed at the top his voice that it was not fair. They didn’t want to deal with what they were facing. Their behaviour was not attractive or productive but it is understandable. Getting cheese wasn’t easy. It meant a great deal to the little people. It was their way of getting what they thought would make them happy.

That night before going home hungry and discouraged Haw wrote on the wall: The more important your cheese is to you the more you want to hold on to it!
Next day Hem and Haw returned to Cheese Station C and found no cheese. Haw shut his eyes tightly and didn’t want to know that the cheese disappeared gradually. He wanted to believe that it disappeared all of a sudden. He wondered where Sniff and Scurry were. But Hem believed that they were smarter than the mice and that they should be able to figure this out. While they were still trying to decide what to do Sniff and Scurry went farther down the maze looking for cheese in every station they found. They didn’t think of anything else but finding cheese. They didn’t find anything for sometime until they finally went into an area of the maze they had never been before: Cheese Station N. They could hardly believe their eyes. It was the largest store of cheese they had ever seen.

While Hem and Haw were becoming frustrated and angry and were blaming each other for the situation they were in. They continued to go to the same cheese station. They tried to deny what was happening, but found it harder to get to sleep, had less energy each day and were becoming irritable. Hem suggested that if they worked harder they will find that nothing has actually changed and that they might find the cheese somewhere nearby. Next day with a chisel and a hammer they made holes in the wall of the station and peered inside but found nothing. Haw was beginning to understand the difference between activity and productivity. But Hem believed that sooner or later the cheese will be back. Haw realised they were losing their edge. He started laughing at himself for doing the same thing every day and expecting different results. It took him a long time to find his running shoes as they put everything away on finding cheese station C as they thought they would never need them again. Haw tried to convince Hem that it was time they move on and change themselves. But Hem didn’t agree. Haw prepared to leave and announced “It’s Maze time!” Hem didn’t laugh or respond. Haw wrote on the wall: If you don’t change, you can become extinct.

Haw thought about he’d gotten himself into this cheeseless situation. He knew Hem was wondering, “Who moved my cheese?” but Haw was wondering, “Why didn’t I get up and move with the Cheese, sooner?” Haw became more anxious and wondered if he really wanted to go out into the Maze. He wrote on the wall: What Would You Do If You Weren’t Afraid?

Sometimes some fear can be good. But it is not good when you are so afraid that it keeps you from doing anything. He looked to his right, to the part of the Maze where he had never been, and felt the fear. He hadn’t had any Cheese for so long that he was now weak. It took him longer and it was more painful than usual to get through the Maze.

He decided that if he ever got the chance again, he would get out of his comfort zone and adapt to change sooner. It would make things easier.
Then, Haw smiled a weak smile as he thought, “Better late than never.”
During the next several days, Haw found a little Cheese here and there, but nothing that lasted very long. Things seemed to have changed since the last time he was out here. But he was taking control, rather than simply letting things happen to him. Later, as Haw looked back on things, he realized that the Cheese at Cheese Station C had not just disappeared overnight, as he had once believed. He had to admit however, that it he had wanted to, he probably could have seen what was coming. But he didn’t. He decided he would stay more alert from now on. He would expect change to happen and look for it. He would trust his basic instincts to sense when change was going to occur and be ready to adapt to it. He wrote on the wall: Smell The Cheese Often So You Know When It Is Getting Old.

Haw finally came across a huge Cheese Station, which looked promising. But he was disappointed to discover that it was empty. “This empty feeling has happened to me too often,” he thought. He felt like giving up.But he wrote on the wall: Movement In A New Direction Helps You Find New Cheese and moved on. It was a marking for his friend Hem, hopefully, to follow.

Haw looked down the dark passageway and was aware of his fear. Then he laughed at himself. He was letting go and trusting what lay ahead for him, even though he did not know exactly what it was. To his surprise, Haw started to enjoy himself more and more. “Why do I feel so good?” he wondered. “I don’t have any cheese and I don’t know where I am going.”He stooped and wrote on the wall: When you stop being afraid you feel good.

He to make things even better he saw himself in great realistic detail, sitting in the middle of a pile of all his favourite cheeses. The more clearly he saw the image of himself enjoying New Cheese, the more real and believable it became. He could sense that he was going to find it. He wrote: Imagining Yourself Enjoying Your New Cheese Leads You To It.

Haw kept thinking about what he could gain instead of what he was losing. He realized that change could head to something better. Then he raced through the Maze with greater strength and agility. Before long he spotted a Cheese Station and became excited as he noticed little pieces of New Cheese near the entrance. He realized that if he had moved sooner, he would very likely have found a good deal of New Cheese here. He wrote: The Quicker You Let Go Of Old Cheese, The Sooner You Find New Cheese.
Haw made his way back to Cheese Station C and found Hem. He offered Hem bits of New Cheese, but was turned down. Haw just shook his head in disappointment and reluctantly went back out on his own. He was happy when he wasn’t being run by his fear. He liked what he was doing now. Now he felt that it was just a question of time before he found what he needed. He realized: It Is Safer To Search In The Maze, Than Remain In a Cheeseless Situation. The fear you let build up in your mind is worse than the situation that actually exists. Now he realized it was natural for change to continually occur, whether you expect it or not. Change could surprise you only if you didn’t expect it and weren’t looking for it. He wrote: Old Beliefs Do Not Lead You To New Cheese. He was behaving differently than when he kept returning to the same cheeseless station. He knew that when you change what you believe, you change what you do. He wrote: When You See That You Can Find And Enjoy New Cheese, You Change Course.

He also wrote: Noticing Small Changes Early Helps You Adapt To Bigger Changes That Are To Come. When it seemed like he had been in the maze forever, his journey- at least this part of his journey-end quickly and happily. Haw proceeded along a corridor that was new to him, rounded a corner, and found new cheese station N. Piled high everywhere was the greatest supply of cheese he had ever seen. He realized that fastest way to change is to laugh at your folly-then you can let go and quickly move on. Haw had also used his wonderful brain to do what Littlepeople do better than mice. He envisioned himself – in realistic detail finding something better – much better. He reflected on the mistakes he had made in the past and used them to plan for his future. He knew that you could learn to deal with change. He realized that there is always New Cheese out there whether you recognize it at the time, or not. And that you are rewarded with it when you go past your fear and enjoy the adventure. But Hem still had to see the advantage of changing himself.


Haw went over and wrote down a summary of what he had learned on the largest wall of Cheese Station N.
Change Happens
They Keep Moving The Cheese
Anticipate Change
Get Ready For The Cheese To Move
Monitor Change
Smell The Cheese Often So You Know When It Is Getting Old
Adapt To Change Quickly
The Quicker You Let Go Of Old Cheese, The Sooner You Can Enjoy New Cheese
Change
Move With The Cheese
Enjoy Change!
Savor The Adventure And Enjoy The Taste Of New Cheese!
Be Ready To Change Quickly And Enjoy It Again & Again
They Keep Moving The Cheese

While Haw still had a great supply of Cheese, he often went out into the Maze and explored new areas to stay in touch with what was happening around him. He knew it was safer to be aware of his real choices than to isolate himself in his comfort zone. He hoped and said a little prayer wishing his friend Hem might finally realize the importance of change.

Move With The Cheese And Enjoy It!
The end.......
Or is it a new beginning???

Person in Focus: Richard Branson


Lets start with Richard Branson- a person who barely needs any introduction. This Post is on his mantra of doing business- HAVING FUN.
Following are a few of his statements exemplifying how Virgin uses advertising as a tool to make the most out of current events and how one integrates fun as an element in business.

-"The four P's -- people, product, price and promotion -- are often
cited as the keys to a successful business. Yet this list omits a vital ingredient that has characterized Virgin companies throughout our 40 years: Fun, with a capital F."

-Talking about the launch of Virgin Atlantic: "We also started to run some funny, pretty direct and usually highly topical advertisements to grab the public's attention. Such "in your face" ads were largely unknown in the stodgy world of airlines, so our approach quickly gained us notoriety, press coverage and, above all, visibility. The humor stood out against our moribund competitors, and soon Virgin Atlantic itself -- not just the ads --became synonymous with a cheeky and upstart personality and, more importantly, a fresh, different
approach to commercial aviation."

-"Marketing teams in London and New York frequently reacted quickly to the day's news and, within 24 hours, placed tactical-response
advertisements in key markets. The day after John Sununu, then White House chief of staff, was castigated for using public money for a
limousine to take him on personal trips, Virgin ran a one-off ad saying if only he had booked Virgin Atlantic, he would have gotten the limo for free!"

-"When Gen. Manuel Noriega, the former leader of Panama, was extradited to Miami for trial, we ran a big picture of him, with the caption, "Only one person has flown to Miami cheaper than on Virgin Atlantic!""

-"This sense of humor and risk-taking has infused many of our other businesses. Virgin Mobile Canada produced a series of memorable advertisements poking fun at famous people. When Elliot Spitzer, the
former governor of New York, resigned over a sex scandal, where he was identified as "client No. 9," our ads that week showed a picture of Spitzer with a thought bubble proclaiming: "I'm tired of being treated
like a number. "The ads were all about Virgin Mobile's personalized service. They went on to say: "At Virgin Mobile, you're more than just a number. When you call us, we'll treat you like a person, not a client. Whether you're No. 9 or No. 900, you'll get hooked up with
somebody who'll finally treat you just how you want to be treated.""

-"Another ad in the series showed Hillary Clinton with a thought
bubble saying, "I wish my bill wasn't so out of control.""

-"All of it has definitely made an impression and infused that "Virgin
feeling" into new ventures. While it is not enough just to be the
joker in the pack, if your service and product excel, then making
people smile will help you establish a place in their hearts as well
as their minds. Try taking yourself and your business less seriously.
You may be surprised that many others will take you more seriously."

Just one word for Branson's ideology "Immortal". He certainly has made an indelible impact on the way we look at companies today.