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Strategy - Coggle Diagram
Strategy
External Analysis
Bargaining Power of Buyers
Few Concentrated buyers & High Volumes
Standardized Products
Buyers can backward integrate
Many Sellers
No/low switching costs
Bargaining Power of Suppliers
Suppliers are more concentrated than the industry/few suppliers
No/few substitutes
Suppliers can forward integrate
High switching costs involved in changing suppliers
Suppliers are not dependent on the industry
Rivary(Price competition only)
Industry growth is slow
Perishable goods
Rivals are highly committed
Numerous competitors
Low Switching costs for customers
Firms can't read each other's signal
High Exit Barriers
Threat of Entry (Barriers of Entry)
Incumbency Advantage
Government Policy
High capital requirement
Fear of Retaliation
Intellectual Property
Supply side economies of scale
Demand side benefit of scale(network effects)
High Customer Switching costs
Unequal access to distribution channels
Substitudes
(Many Substitutes)
Price Differentials
Substitutes have favorable price-performance ratio relative to the industry
Low Switching costs
Behavioral Economics
(a subfield of economics that integrates the insight of psychology; departures from the standard economics module)
Present Bias(The present is given an extra weight)
Time Inconsistency
Internalities
Framing effects(how things are presented matters)
Lost Aversion
Endowment effects(people tend to overrate the status quo)
Projection Bias(People tend to project their current state of mind into the future)
Choice Overload
Solution: choice architecture(changing the environment to guide decisions)
Menus
Store Layouts(check-out area)
Online Shopping Website
Internal Analysis(SouthWest)
Value Capture
Drive Down Costs (Cost Leader)
Drive up WTP (Differentiator)
Both (Stuck-in-the-middle/Dual Advantage)
Competitive Advantage: wider wedge between WTP and OC than its rival's
Gaining Advantage
Value Drivers
Complements
Breath of Line
Quality
Technology
Service
Customization
Corporate Social Responsibility
Network Externalities
Delivery
Brand
Geography
Risk Assumption
Cost Drivers
Low Input Costs
Organizational Practices
Economies of Scale
Economies of Scope
Vertical Integration
Learning curve
Sustaining Advantage (Isolation Mechanisms: Retaining Customer+ Preventing Imitation)
Dedicated Asset
Casual Ambiguity
Property Rights
Sunk Costs
Increase Switching costs(Retaining Customer)
Searching Costs
Learning Costs
Transition Costs
Objective
Value Capture(See Internal Analysis)
Value Creation
Value added
Total Value added: WTP-OC
Operational Effectiveness(best practice,outsourcing; Toyota)
Easily Emulated
Relative Improvement to no one
Company convergence
Strategic Positioning
Varitety-based positioning (Product-based;Jiffy Lube)
Need-based positioning(Customer-based; Southwest, IKEA)
Access-based positioning(geographic-based; Carmike Cinemas)
Value added of Player X: VA by all- VA by all except X
Total Surplus: Customer Segment (WTP-price)+ Firm Segment(price-cost)
Bad vs. Good by Richard Rumelt
Bad
Failure to face the problem
Mistaking goals for Strategy
Fluff
Bad Strategetic Objectives
Good
A diagnosis (identify the critical problem and simplifies current situation)
Coherent Steps (coordinated steps to support the guiding policy)
A guiding policy (overall approach to cope with obstacles)
Activitity Fit & Trade-off
Fit: how a company's activities can interact and reinforce each other in support of underlying value proposition
Trade-off: what not to do; creates need for choice and protects against straddlers
Platform(EA&Xbox): creates value by facilitating exchange between different users
Network Effect (Positive/Negative)
Same Side (value increases with more users on own side)
Cross Side (value increases with more uswers on the other side)
Platform Strategy
Growth(Chicken and egg problem)
Subsidize(important users and first users)
Seedling(capture strong users/provide the service yourself; Adobe/Quora)
Micro-lauch(Facebook)
Vendor/Merchant to Platform(Amazon)
Envelopment (bind together different types of platform;Wechat)
Pricing
Price-sensitivity (subsidize the side that is less price sensitive)
Demanding of quality (charge the side that provides quality
Ability to capture cross-side network effect(subsidize the side that does not make money using network)
User's brand value(subsidize influential users)
Negative same-side network effect(rivalry)
Output costs(save costs when adding a new subsidize-player costs essentially nothing)
Winner-gets-all
Multi-homing costs
Neither demand special features
Strong& positive network effects
Threat of envelopment
Find a "bigger brother"
Legal remedies
Change business model