Friday, June 17, 2011

Analysis of source of competitive success

It was a privilege being invited to be a part of Chief-Executive forum where Prof.Sharon Belenzon from Duke University shared his 3 case studies, giving a different prospective towards “Analysis of source of competitive success.

Cirque-du Soleil: Company which found the mantra of success in a dyeing industry like Circus

Strategic Analysis majorly includes how the market is moving & how we can bring more value to customers. A dyeing industry is where we see inability to Innovate. Prof shared the case study of Cirque-du Soleil a company which stepped in the dyeing Industry like circus and proved that with innovation profits are guaranteed.

Things that they did:

- Brought in new elements (music, theater)

- Raised the bar & expectation of the customer satisfaction

- Eliminating the threats (animals, risk acts)

They brought in new elements to circus and invented a new business model. The question was what if many players come into competition, can this business model be patented. We had a discussion on what could be called as Innovation. Is it about inventing a new thing from the scratch or is it about getting components & packaging to build a product. We got the answers when we took the example of the guy who claimed to invent car windshield.

MTN & Orange in Africa: Company which sales with financial weak customers

The key decision is in which industry you would like to invest and start a business. There is no industry which is attractive. Look at the following features before entering into any industry:

- Easy Entry

- Opportunities of problems to solve

- Scope for innovation

- Geography distribution

I totally loved the Game theory introduction. Coming back to this case, its difficult to sell a product or a service to poor customer, but products like Shampoo sashes, interest rate payable for load, prepaid cards are some great business model which proves that the profit margin is more when attempted to make sales to poor customers. From the case study quick things to learn, if a company plans to do business with poor customer market are:

- Build the product at a low cost

- Do mass production

- Thinks of innovative revenue model

- Innovation in service rather than the product

- Strategy to convince to buy the product

- Skilled ways to handle corruptions

Country wise economy model:

This session was a real eye opener, gave me a different prospective to look at the economy model of each country. US economy model is where resource allocation is totally in the hands of the shareholder i.e Market and that is why we see that they are able to handle recessions smartly. They have the ability to adapt to changes easily. On the other hand if we look at India economy it’s basically in the hands of Business groups like Tata’s, Birla’s and Reliance. The ownership & control is diversified and here is the problem. Intercompany Dividend tax has to be introduced, and then we would see a real completion in the market.

The question is why don’t we have some real big Indian IT product company ruling the world today? Why do we see few entrepreneurs making it big like Tata’s?

CEMEX: Company which could maintain a monopoly in multiple regions in a competitive space.

If we look at CEMEX, it’s a company which is spread geographically and has the highest price as compared to all their competitors. Let’s find the answer to why & what made them build this monopoly

- Look for the market where growth opportunity is more

- Country which is politically week

- Less competitors

- Keep the price high and invest only 60% of the total resources

- Be scalable based on the demand

My take away from the session:

Go to the industry which has many problems, link resources to those problems and drive in innovation. Success is in all industry but what’s important is how well you design your strategy and feel the market pulse and act.

1 comment:

Sushrut said...

One of the most awesome case studies in India is honda activa.

When Bajaj was losing money in its Scooter segment and looking to shut it down, Honda entered and disrupted the entire industry. It still takes 6 months to own an activa and people line up for it.

Things that mattered -
1. Design.
2. Change target audience, from middle aged men to working women.
3. Provide features which appealed target audience.