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3C Model by Kenichi Ohmae, A Strategic Management Tool - ToolsHero
3C Model by Kenichi Ohmae, A Strategic Management Tool - ToolsHero
This article explains the 3C model by Kenichi Ohmae in a practical way. After reading
you will understand the basics of this powerful strategy and competitive advantage
tool.
1. The Corporation
2. The Customer
3. The Competition
This balance within the 3C model can lead to a sustainable competitive advantage.
1. The corporation
It’s certainly not necessary for a company to excel in one specific function. If there’s a
clear advantage in one important function, the company can then also reinforce and
improve other functions from that strength.
If labour costs are rising, it can be an attractive option for companies to outsource part of
the work. They then do need to consider the competition; if their production is outsourced
to subcontractors, it can influence the cost price. To counter this, a company can improve
the cost effectiveness. Firstly, by trying to lower the basic costs compared to their
competitors. And secondly, by lowering the functional costs, including those for transport.
A third option would be to combine certain key functions with other businesses, sharing
overhead costs. Examples could be transport, warehousing or call centres.
2. The customer
The customers are the basis for any corporation according to Kenichi Ohmae. Without a
doubt, a corporation’s foremost objective ought to be the interests of its customers rather
than those of its stock holders or other parties. What is important are elements like needs,
requirements, demands, problem areas, buying motives, value components, decision-
makers, etcetera. Segmentation of objectives (use of products) and customers (geography,
age, social interests ) and the market (potential customers, competitors) are important for
constructing and adopting a strategy. Using (digital) questionnaires, reviews and platforms,
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a company can find out what customers are thinking and seriously include this information
in strategic decisions.
3. The competition
Something that’s sometimes overlooked, is using the difference in profit source. Where
does the company get most of its profits? With selling existing products, selling new
products, selling services, etc. Related to this is the difference in the ratio between fixed
and variable costs, which can be particularly important to low-turnover companies. Fixed
costs can for instance lower prices in a slow market and help gain market share.
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