Seminar 1 What is Strategy?

I. Two key papers

1. M. Porter Lush
a. Core of strategy: strategic position: where and how to complete
b. Based on: customers need, variety offered, access to products/services
c. Weakest part of the paper: not clear what the differences areBlue Ocean Strategy
2. Blue Ocean Strategy
a. Blue ocean: focus on avoiding existing competition  lower competition, higher
profits
b. 4 actions framework: raise, create, reduce, eliminate  a new value curve

II. The strategy canvas

1. Play Station & Xbox V. the Wii
(Sony Playstation 3 & Microsoft Xbox 360 V. the Wii)
2. Except for “physical interaction” and “family participation”, the other buyer values for
the Wii are lower than those for Sony Playstation 3 & Microsoft Xbox 360.
3. Will creates new values features (new strategy position) (a Blue Ocean)  avoid
competing in a red ocean.

III. Other creating new strategy position examples

1. Body Shop
2. Lush
3. IKEA
 Ways to defend: clear focus, tradeoffs (focus on certain types of customer in certain
places)

IV. Fit (significant area of Porter’s paper)

1. “Interlocking set of activities”
2. Unique activities generate value for customers
3. IKEA’s value:
a. Choice
b. Low-cost
c. Setting furniture into ‘rooms’ lifestyle purchasing
d. Modern design
e. Immediate delivery
f. Easy to transport & assemble
4. IKEA’s activity map, key elements:
a. Limited customer service
(limits who can shop at IKEA)
b. Self-selection by customers
(limits who can shop at IKEA)
c. Low manufacturing costs
(mass production keeps prices low)
d. Modular furniture design
(customers transport & assemble the furniture)
 These elements reinforce one another helping to lower costs or increase choice
e. Certain types of customers excluded: time poor, the elderly, infirm
f. Certain types of customers included: young, those with children