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Marking For Entrepreneurs

10/26/2011 Tomeka Lewis

1. American businesses have been accused of being short sighted, focusing on short term financial performance instead of taking a longer term view. Describe and discuss some (at least 5) performance measures a manager can use that will more accurately reflect the long term viability and health of the firm. Finally, explain how the manager of a department store (such as Macy s or Dillard s) could use the five measures you selected as indicators of long run success for the store. Customer Satisfaction/Brand Loyalty- It s a simple business fact that companies obsess over getting new customers. They advertise, plead, and bend over backwards to get new customers . The only problem is after they make the sale, they ignore them. Existing customers are the best source of sales growth. In fact the top 20% of your repeat customers are contributing 80% of your sales. So, how can you shift your focus from constant prospecting towards repeatedly satisfying the customers you already have? Simple. Increase the value of your company. Value is what keeps customers loyal to a store, a brand, or a company. It all comes down to customer service. The better you treat your customers the better they will. in turn, treat your business. Product/Service Quality- When it comes to customer satisfaction, it all comes down to perception: How the customer sees and experiences the product and service provided by your business. It s not what you believe or think, or what your studies or focus groups tell you, but what your actual customer feel, experience and say. So your bottom-line, financial results are tied to customer satisfaction and quality. Brand/Firm Associations- A successful brand is the most valuable resource a company can have. A brand association is anything linked in memory to a brand. Such as Mc Donald s (Disney) could be linked to character Ronald Mc Donald (the clown) (mickey mouse), a consumer segment such as kids, a feeling such as having fun, a product characteristic such as service, a symbol such as golden arches (Letter M ), a life style such as hurried (casual). A link to a brand will be stronger when it is based on many experiences. It will also be stronger when it is supported by a network of other links. Disney sells experience Happiest place on earth slogan refers to a family experience. Relative Cost- A value analysis, in which the component s value to the customer is quantified, may suggest that the point of superiority could support a price increase or promotion campaign. If, on the other hand, a component is less expensive than that of the completion, but inferior, a value analysis might suggest that it be de-emphasized. Thus, for a car with a cost advantage but handling disadvantage, a company might de-emphasize its driving performance and position it as an economy car. Innovation- Innovation is the key driver of competitive advantage, growth, and profitability. There are many parts of the whole field of innovation: strategic innovation, new product development, creative approaches to problem solving, idea management, suggestion systems, etc. A manager of Macy s could use customer satisfaction/brand loyalty as an indicator of long run success by remembering that customers expect a positive experience. Macy s manager can use product /service quality for long run success by keeping in mind that quality is multidimensional both about a physical product and the performance of any physical product. Macy s manage can use brand/firm associations by only being associated with people, places and things that have a positive impact on their firm. Macy s manager can use relative cost by strategically pricing their products according to its value. Macy s can use innovation as an indicator of long run value by turning a new concept into commercial success or widespread use. 2. Describe and compare the three strategic philosophies of strategic commitment, strategic opportunism and strategic adaptability. Be sure to include the advantages and disadvantages and risk of each philosophy. (This answer should be at least 3 paragraphs long; a summary table by itself will not

do.) Finally, select a leading firm in the industry on which you are writing your term report, and provide a detailed explanation of which of the three philosophies that firm appears to be using. (If they are using a blended philosophy, describe how they are doing so.) Strategic commitment involves a passionate, disciplined loyalty to a clearly defined business strategy that can result in an ever stronger and more profitable business over time. This stick to your knitting focus avoids being distracted by enticing opportunities or competitive threats that involve expending resources which do not advance the core strategy. The advantages of strategic commitment: continuous improvement, commitment, charismatic, centralized, long term, eye on ball. Disadvantages: implementation barriers, faulty assumptions of the future and paradigm shift. The risk of strategic commitment is strategic stubbornness, lose relevance. Strategic opportunism is driven by a focus on the present. The premise is that the environment is so dynamic and uncertain that it is at least risky, and more likely futile, to predict the future and invest behind those predictions. The advantages of strategic opportunism are that the risk of missing emerging business opportunities is reduced. Another is that the risk of strategic stubbornness is also reduced. The disadvantages of strategic opportunism are strategic drift. At least three phenomena can turn strategic opportunism into strategic drift. First, a short-lived, transitory force may be mistaken for one with enough staying power to make a strategic move worthwhile. Second, opportunities to create immediate profits may be rationalized as strategic when, in fact, they are not. Third, expected synergies across existing and new business areas may fail to materialize owing to implementation problems, perhaps because of culture clashes or because the synergies were only illusions in the first place. Strategic drift not only creates businesses without needed assets and competencies, but it can also result in a failure to support a core business that does have a good vision. Strategic adaptability, like strategic opportunism, is based on the assumption that the market is dynamic, the future will not necessarily mimic the past, and an existing business model, however successful, may not be optimal in tomorrow s marketplace. Unlike in strategic opportunism, however, there is also an assumption that it is possible to understand, predict, and manage responses to market dynamics that emerge and even create or influence them. Strategic adaptability is about managing relevance. Advantages of strategic adaptability adapt to changing marketplace, being relevant, visionary, diverse, identifying and evaluating trends, adaptationsupporting culture, and strategic flexibility. Disadvantages and risk are strategy blunders and misreading trends. Park Oaks Condominiums uses a strategic opportunism philosophy. Park Oaks saw an opportunity and seized it. They build their condos near a college campus with no campus housing and market their condos to students, staff, and young professionals. 3. Select 2 of the following five value propositions: systems solutions, corporate social responsibility, superior customer relationship, quality and value. Describe and discuss the ways in which a firm would operationalize each of the 2 value propositions you select. Illustrate each of your 2 discussions with a description of a firm not mentioned in the book that appears to be pursuing that value proposition. Explain why you have identified each of the firms as pursuing that particular value proposition. All firms place an emphasis on the customer. A few, however create an experience that connect the offering to the customer on a more involving and passionate level. For these firms, customer intimacy is a strategic option. Starbucks vision of a third place where people feel comfortable and secure represents an experience that many customers view as a high point in their day. Some local hardware stores create offerings, specialized services like hot popcorn, and personal customer relationships that allow them to

prosper while competing with big boxes such as Home Depot or Wal-Mart. Nordstrom s has generated a customer link by offering personalized service and a shopping experience that often delights rather than merely satisfies. Apple and 3M have similarly connected by providing products that generate a Wow! response. Superior quality- Lexus has been among the leaders on a variety of objectives quality indicators. Among the many reasons behind the Lexus achievement, several stand out. First, the Lexus concept was based on quality from its inception. Toyota launched Lexus in the early 1980s as a brand that would take automobile design, manufacturing, and retailing to a new level. Second the brand delivered on the concept, as Lexus drew on assets and competencies developed by Toyota to make cars that were more reliable and had fewer defects. Third, a new dealer network offered the potential to break room industry norms and provide a pleasant buying experience. Forth, the positioning of the Lexus brand delivered the quality message consistently over the years Finally, Lexus excelled in the new standard of quality, clever features, and ridability. Borders announced that it is filing chapter 11. On the same day I received a detailed email from the CEO of Borders, Mike Edwards, explaining the situation and outlining how it would impact faithful customers. They understand the value of the customer relationship enough to know that this announcement will cause some concern and questions among their buying public. So rather than allow people to speculate or rumors to grow, they are up front and spell out the details. Apple really never ceases in coming up with ways in improving their craft and in amazing us with the latest trend and technology that they have to offer. Early this year, Apple announced that they will be releasing the second generation iPad with iPad2. Unlike the first model, iPad2 is lighter, slimmer and more powerful in terms of performance and speed with its 1GHz dual-core A5 processor. I have identified Borders with pursuing the superior customer relationship value proposition because I am a loyal customer of Borders and I have experience firsthand how they maintain their customer relationships. I have identified Apple with pursuing the superior quality value proposition because again I have firsthand experience with this firm and they never disappoint. 4. A firm s ability to maintain relevance depends on the way it interacts with emerging trends. A firm may be a trend neglector, a trend responder or a trend driver. Thoroughly describe each of these three types of interactions. Then illustrate each of your 3 descriptions with an example of a firm not mentioned in the book that appears to be pursuing that type of interaction. Explain what each firm is doing (or has done) that causes you to place it in the category you selected. A trend neglectors-firm that miss or misinterpret trends, perhaps because they are too focused on a predetermined business model. Such firms are often characterized as having inadequate strategic analysis capability, organizational inflexibility, and/or a weak brand portfolio strategy; they eventually wake up in surprise to find their products are no longer relevant. At the other end of the spectrum are trend drivers, those firms that actually propel the trends that define the category (or subcategory). Trend responders those firms that can recognize and evaluate trends, then create and implement a response can sustain success in dynamic markets. Trend Neglector- Until recently Borders looked as if they might stay in business. But its unsecured creditors rejected a $215.1 million buyout bid from Najafi Cos in Phoenix. With Borders closing shop, more Americans will turn to online competitors for books and music accelerating a trend that hurt Borders. The company fumbled through the digital age, missing important shifts in the industry as consumers migrated online and towards digital books. Trend responder- Why did Borders fail when Barnes and Noble didn t? They re both in the same business, yet one is going strong while the other is

liquidating. Barnes and noble embraced new tech trends, while Borders didn t. Borders waited until it was too late to get into the e-reader business, while Barnes and Noble s Nook was already well established. When new tech trends roll around, I notice that companies usually respond in one of three ways: they embrace it, they fight it, or they do nothing. Trend driver- An iPhone is a worldwide bestselling Apple s smartphone, definitely being far more than just a means of communication. It provides its user with a possibility to enjoy a variety of features including immaculate multimedia playback. iPhone ensures the best viewing experience, allowing enjoying any kind of videos such as music videos, TV shows, or full-length movies with maximum comfort.