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Current product market choice
Current terms of competition
Increase in market share through differentiation
High market share through increased production
Focus on home consumption
Number and geographic distribution of brewing plants
Economies of scales in distribution system
Good second mover - Kirin immitated anyone coming out with a
new product and used its advantage in reputation, distribution
and financial clout to gain advantage over originator
Use of differentiation to achieve product parity only
Kirin vs Competition
SWOT => derive business strategy
Plot ROE vs market share for all
companies
Implication of Kirins position for its
business level strategy
Outcome
significant competitor
Significant terms of competition
Define future competition terms
How to change the playing field?
Action steps
Backup slides
SWOT
Rows S, W, O, T
Sub-rows
Financial ratios
Operating ratios
Columns Companies
Operating ratios - Nominal range for the
given industry
Financial ratios Nominal range for other
industries in the same country/region
Financial ratios
Chart color grade based on its
attractiveness
Explain how the company achieved
the existing level of attractiveness
Explain how chosen strategy would
impact the ratios
Operating ratios
Chart color grade based on its attractiveness
Explain how the company achieved the existing
level of attractiveness
Explain how chosen strategy would impact the
ratios
Explain impact to current value chain activities
Value chain activities
Primary activities: inbound logistics, operations, outbound
logistics, marketing and sales, service
Support activities: procurement, technology development,
human resource management, firm infrastructure
Organization structure
Functional strategies
ROE
ROS business strategy
Asset turnover technology strategy
Characteristic of the industry? Is it uniform
across players in the industry? If not,
analyze why.
Recommended strategy
How to implement the strategy?
How will it impact RoE?
Which sub factor will it impact? Does the
denominator or numerator or both in
tandem change?
Cost Leadership
Goal achieve low cost position
Propellants
Favorable access to raw materials
High capital
Implementation
Aggressive construction of efficient scale facilities
Cost minimization in R&D, service, sales force, advertising
Requirements
Heavy capital investment
Aggressive pricing
Probably incur start-up losses
Low cost distribution system
Strengths
Virtuous cycle => low cost -> high market share -> high margins -> reinvestment in new
equipment and technology -> low cost
Threats
Imitation by competition
Anti-monopoly
Change in technology
Differentiation
Goal gain brand loyalty and increase customer willingness to pay a premium for
perceived product uniqueness and superiority
Propellants
Strong marketing abilities
Reputation for quality or technological leadership
Requirements
Product engineering, Creative flair
Strong cooperation from channels
Approaches
Design or brand image, Technology, Features, Customer service, dealer network etc
Implementation
Does not allow the firm to ignore costs though not a primary strategic target
Tradeoff with cost position if the activities required in creating it are inherently costly such as
extensive research, product design, high quality materials, or intensive customer support
In some businesses, differentiation may not be incompatible with relatively low costs and
comparable prices to those of competitors
Caveats
May sometimes preclude gaining a high market share - Creates a perception of exclusivity
which is incompatible with high market share
Focus
Focusing on a particular buyer group,
segment of the product line, or
geographic market
Caveats
Precludes high market share
Value Chain
TBD
Cost of a single beer how will
recommended financial ratios impact
the contributors to cost and thereby
price use this to arrive at
recommended price
Why sell more soft drinks? Youth
transition from soft drinks to
alcoholic beverages