Five Strategy Tools to Gain Competitive Advantage - Free eBook in PDF Format

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Business Strategy eBook  

Book Description - ISBN 978-1-62828-933-6 (40 Pages)
This free eBook describes five tools available to managers that help them to gain a competitive advantage within their market sector. These tools will assist you in defining the best strategy to attain your desired business goal.

Chapter 1 - Porter’s Four Corners Model
Competition within a market usually relates to the potential rewards offered by participating in that market. So success requires you to be better than the competition. Porter’s Four Corners model helps organizations to think about finding ways around the competition by predicting competitors actions. Armed with this knowledge your decisions can enable you to ‘better’ their planned actions gaining market share. The ‘four corners’ are - motivation drivers; motivation management assumptions; actions strategy and actions capabilities.

Chapter 2 - Kay’s Distinctive Capabilities Framework
Many market sectors have reached or are approaching market saturation and Kay’s Distinctive Capabilities Framework is a perfect tool to help you develop your competitive advantage. This tool identifies capabilities that are unique to your business, which give you a competitive advantage over the rest of the market. While a distinctive capability is not, in and of itself, a competitive advantage, it offers the opportunity to differentiate a product or service in such a way as to create a competitive advantage.

Chapter 3 - Ohmae’s 3C Model
Kenichi Ohmae developed his ‘3C’s Model’ so that success over competitors could be achieved by focusing on three key components. According to Ohmae, the three key players in any business strategy are customer, competitors and corporation. By bringing these together in a winning strategy your organization should find the ‘best’ market sector for success.

Chapter 4 - VRIO Analysis
One of the best tools to help you analyze the strengths and weaknesses of your organization is VRIO analysis. This business analysis framework stands for the following – Value, Rarity, Imitability and Organization. Each of these four points helps you better understand the capabilities of your organization and how they can be used to compete in that market. By understanding your in house capabilities you are better placed to beat the tough competition you will encounter.

Chapter 5 - Weisbord’s Six-Box Model
Developing a successful competitive strategy requires a clear understanding of the functional abilities of your organization. The Weisbord ‘Six-Box’ model was developed specifically to accurately assess the functioning of any type of organization. The six boxes its uses to perform this analysis are purposes, structure, relationships, rewards, leadership and finally helpful mechanisms.

You will learn:
  • How to use Porter's Four Corner's Model to help you determine a competitors course of action.
  • How to discover your organization's unique capabilities using Kay's Distinctive Capabilities Framework.
  • How to use the 3C’s Model developed by Kenichi Ohmae to gain a strategic view of the factors needed for success.
  • How to use VRIO Analysis to locate the advantages that your company may possess over the competition.
  • How to use Weisbord’s Six-box Model to accurately assess the functioning of any type of organization.

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What is Porter’s Four Corners Model?

  • Porter’s four corners model is a predictive tool that helps in determining a competitor’s course of action. The four corners are:
  • Motivation – Drivers: What is it that drives the competitor? These drivers can be at various levels and dimensions and can provide insights into future goals.
  • Motivation – Management Assumptions: What are competitor’s assumption about the industry, the competition and its own capabilities?
  • Actions – Strategy: What is the competitor actually doing and how successful is it in implementing its current strategy?
  • Actions – Capabilities: What are the strengths and weaknesses of the competitor?
  • Unlike models that rely on a firm’s current capabilities to determine future strategy, Porter’s model additionally calls for an understanding of what motivates the competitor.
  • This added dimension of understanding a competitor’s internal culture, value system, mindset, and assumptions helps in determining a much more accurate and realistic reading of a competitor’s possible reactions in a given situation.


What is Kay’s Distinctive Capabilities Framework?

  • The Distinctive Capabilities Framework was developed by John Kay, economics professor at the London Business School and published in his book ‘Foundations of Corporate Success.’
  • Distinctive capabilities are those that are unique to your business, those which give you a competitive advantage over the rest of the market.
  • In order to achieve success, a company should implement at least one of the three distinctive capabilities mentioned by Kay. The three capabilities are: reputation, architecture and innovation.
  • The buyer may select your product on the strength of your reputation alone – which is a unique competitive advantage that cannot be easily replicated by your competition.
  • Architecture is the connections you have with suppliers, the people you have working for the company, and the list of customers that you have accumulated.
  • The most innovative companies are often the most successful in the long run because they can remain ahead of the competition on an ongoing basis.
  • A company can use any or all of these distinctive capabilities to be consistently successful.


What is Ohmae’s 3C Model?

  • The 3C’s Model developed by Kenichi Ohmae offers a strategic look at the factors needed for success. These are: the customer, the competitors, and the corporation.
  • The primary goal should be the interest of the customer and not those of the shareholders because a company that is genuinely interested in its customers will automatically take care of shareholder interests.
  • All businesses need to have a clear understanding of who the competition is, and what that competition is capable of doing.
  • The corporation does not have to excel in every function to win. If it can gain a decisive edge in one key function, it will eventually be able to improve its other functions which are now average.
  • Only by integrating these three, can a sustained competitive advantage exist.


What is VRIO Analysis?

  • The strategic process that any firm goes through begins with a vision statement, and continues on through objectives, internal and external analysis, strategic choices (both business-level and corporate-level), and strategic implementation.
  • VRIO Analysis falls into the internal analysis step of these procedures, but is used as a framework in evaluating just about all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under.
  • The VRIO Analysis considers several evaluation dimensions for the organization as well as for its competitors: Value, Rareness, Imitability, Organization.
  • Value: ‘Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?’
  • Rarity: ‘Is control of the resource/capability in the hands of a relative few?’
  • Imitability: ‘Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?’
  • Organization: ‘Is the firm organized, ready, and able to exploit the resource/capability?” “Is the firm organized to capture value?’
  • Using VRIO Analysis is a great way to locate the advantages that your company may possess over the competition.


What is Weisbord’s Six-Box Model?

  • The six-box model is a generic framework developed by the American analyst Marvin Weisbord to assess the functioning of organizations.
  • The six-boxes that make up the model are: Purposes, structure, relationships, rewards, leadership, and helpful mechanisms.
  • Purposes: Do organizational members agree with and support the organization’s mission and goals?
  • Structure: Is there a fit between the purpose and the internal structure of the organization?
  • Relationships: What type of relations exist between individuals, between departments, and between individuals and the nature of their jobs? Is their interdependence? What is the quality of relations? What are the modes of conflict?
  • Rewards: What does the organization formally reward, and for what do organizational members feel they are rewarded and punished? What does the organization need to do to fit with the environment?
  • Leadership: Do leaders define purposes? Do they embody purposes in their programs? What is the normative style of leadership?
  • Helpful Mechanisms: Do these mechanisms help or hinder the accomplishment of organizational objectives?
  • One of the most common mistakes in business is assuming that you already know everything there is to know about the way your business operates and the way it competes in the market.
  • Taking the time to go through Weisbord’s six-box model as it relates to your organization is a useful exercise that could yield a number of interesting and revealing discoveries.


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