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SMMCG8[BS-4]LN7&LN8, over 200 million combinations of coffee drinks…

- - - - produces products or services that are similar to its competitors
      - at a lower cost
      - controlling costs in order to generate economic value added and profits
        
        bring costs down
        but won’t cut products value
        
        price in such a way can undercut its typical competitors and still make a good profit
    - - produces products or services that are unique and different from competitors
      - command a price premium
      - value creation for customers rather than cost-control and produces higher EVA and profits
        
        companies focus on increasing the value created for customers
        
        successful differentiator can charge a price premium
        
        still be able to track customers because of the value being provided to them.
  - - - Reduce the expense when producing the company's product or service
        
        Resources
        
        Capabilities
        
        Activities system
      - Focus on
        
        scale and learning economies
        
        input costs and specific cost
        
        managerial inefficiency or bureaucracy
        
        provide a very significant opportunity
        for a low-cost strategy
        
        Manager need to study the business and prioritize where most of the cost being incurred
      - Example
        
        Walmart
        
        Reduce by
        
        building or acquiring key resources
        
        a fleet of trucks
        
        a good IT system for managing the logistics
        
        Excellent at
        
        developing strong supplier relationships
        
        great procurement capability
        
        gathering detailed supplier cost data
        
        analyzing consumer buying behavior
        
        collecting price sensitivity data
        
        hardball negotiation tactics with suppliers
    - - Focus on
        
        a firm needs to identify leavers that can help it increase value for customers
        
        what things might drive customer value
        
        companies need to rely on market research and combine that with their own insights about customers
      - Factors that can affect customer perceptions
        
        product features
        
        e.g.
        
        smartphone
        
        better Cloud backup service
        
        better way to retrieve your phone if you misplaced it
        
        new security device
        
        megapixel camera
        
        waterproof
        
        customer service
        
        e.g
        
        hotel industries
        
        customization
        
        e.g.
        
        Starbucks
        
        a various flavor of latte
        
        four basic types
        
        how much coffee
        
        types of milk
        
        four possible cup sizes
        
        compliments
        
        e.g.
        
        Apple iPod
        
        Legal music
        
        the complement from the iTune store
      - use resources, capabilities, activities to create value
        
        e.g.
        
        customization of Starbucks
        
        a set of activities surrounding order placement and delivery
        
        every order gets repeated multiple times
        
        educate customers about how to customize their coffee orders
        
        good equipment
        
        recruitment and staff training
  - - - narrow or focused low cost
        
        Companies may not have significant scale economies.
        
        Avoid customer segments or channels that are too costly to serve.
        
        e.g.
        
        Geico(insurance company)
        
        sells to customers through the phone and Internet, not through insurance agents
        
        It avoids many of the costs of managing insurance agents.
        
        Ikea
        
        It doesn't want to sell to customers who want their furniture pre-assembled as they are too costly to serve.
        
        Checkers and Rally's(hamburger chain)
        
        cater predominantly to drive-thru sales
        
        Although they're losing some eat-in customers, they avoid the real estate and operational cost.
      - broad differentiation
        
        focused differentiation - e.g. luxury products
        
        It helps promote the aura of exclusivity around the product, making them more valuable to customers.
        
        It's help to contain some costs because the volumes in which these products would be sold at non-luxury retailers may be too small to justify the logistics inventory and potential unsold stock.
- - - - creating higher economic value
    - - Success factors
        
        Make sure the company is not in trouble
  - - - the ability to customize create customer value
        
        Provide differentiated advantages
        
        Dual advantage
        
        lower the cost
    - - total quality management practices
        
        significant source of customer value.
      - TQM
        
        Control costs
        
        Reduce customer maintenance costs and save other costs
    - - highlight fundamental management innovations
      - Help companies reduce or at least control costs while increasing value
        
        successfully pursue a dual advantage
  - - - Create more differentiation and reduce costs
    - - The trade-off between cost and differentiation in each business unit of the entire company
- - - - Performed well 1982-2000
        
        Differentiated Advantage
        
        Customer service
        
        Fall in 2008
        
        some leadership missteps
        
        the great recession of 2008
        
        facing increased competition from discount retailers like Walmart and online retailers like Amazon
        
        laid off talented sales people
        
        Leading Edge Logistics
      - Electronics retailer
    - - Internal Decline
        
        a deterioration of internal fundamentals which undermining its competitive advantage
        
        Example: Nokia and Blackberry who lost their prominent position in wireless phones and Kodak who was unable to cope with the advent if digital cameras
      - Environmental Change
        
        diminishes the value of internal strengths
        
        no longer aligned with the environment and no longer enjoyed a clear competitive advantage
  - - - higher-order or secondary capabilities help companies change how they survive and perform
    - - acquisitions
      - alliances
      - new product development
      - business development
      - organizational transformation
  - - - opportunities, strategic options
    - - resources owned or available
    - - activities and routines
        
        be well encoded and deployed effectively in pursuit of a new strategy
    - - it transformed and thrived while Kodak wilted in the harsh light of digital imaging
      - Positions
        
        resources like deep knowledge
        
        strong intellectual property in the film,
        paper, and photochemical business
      - Processes
        
        meticulous product development processes
        
        marketing processes
        
        systems engineering processes
      - Paths
        
        successful business in membranes and
        filters for industrial applications
        
        successful cosmetics line
        called ASTALIFT
        
        some successful businesses applying its film technology towards coating in LCD screens and touch screens, applications
- - - - make a series of tactical plan
      - collect data
        
        why
        
        Many people make hasty decisions,not really to think
        
        Product development is hands-down your highest opportunity cost resource
        
        Confirm the feasibility of the direction
    - - spend time talking to customers
      - Don't insert sales or marketing between you and customers
      - listen customer's complaint
  - - - leader style
        
        classical servant leaders
        
        at bottom of inverted pyramid
        
        take care of everyone
  - - - not day-to-day operational decision
      - really shape the direction of your business
        
        To prioritize which are the most important
        
        which need most time,attention and focus
      - put aside the short-sighted and weigh short-term benefits or detriment
        
        common sense dicision are usually the right ones
    - - find the people who fill your disadvantage
      - understand what your strengh are, what your weakness are
      - know yourself
- - - - Why
      - How
        
        Expertise
        
        Country Financial's CEO : Kurt Bock
        
        Keep from being irrelevant
        
        Robo-advisors
        
        '' Advice is great when we continue to innovate ''
        
        Problem
        
        People do less planning
        
        Only 7% of the cohorts had additional product
        
        Redouble the effort
        
        Cognitive dissonance
        
        Ignore things that we don't like
        
        Desensitize oneself from everything that's good
        
        1 more item...
        
        Create burning platform
        
        1 more item...
        
        Catalytic's CEO and founder : Sean Chou
        
        Aggressive
        
        Adding
        
        Strong
        
        1 more item...
        
        Adding
        
        1 more item...
        
        Avant's CEO and founder : AI Goldstein
        
        Change the strategic position may lose value
        
        '' The best decision with the best information ''
        
        Be careful to mind sunk cost fallacy
        
        Have trust
        
        Embracing the change
  - - - Country Financial
        
        Value add & service space
        
        Target market
        Middle-income households
        
        Have assets to protect
        
        Have income that they need to secure for the future
        
        Never be the lowest cost
    - - Avant
        
        Differentiation
        
        Ease of use & real time in nature
        
        Service & customer orientation
        
        Transparency & clarity of product
        
        Regulatory environment & scheme
        
        Provide great value
        
        Build so much brand value with the customer
        
        Never be the cheapest alternative
    - - Fieldglass
        
        Overall offering
        
        Platform
        
        Community
        
        Value proposition
        
        VMS
        
        Vendor Management System
        
        Ecosystem
        
        Other customers of Fieldglass
        
        Never positioned on low price basis
        
        People