Week 5 Learning Journal
Business Models and Strategy
This week¿s readings were mainly focused on business models and business strategy for instance, in our teams we had to figure out moving forward what strategy we were going to focus on for mikes bikes such as what market segments to target that would increase our capitalization levels. I really enjoyed reading the article on why business models matter for the reason that it discussed Peter Drucker¿s Model, of what kind of customers the business intended to attract, what the target market is going to be and more importantly what does the customer value. In addition to that, the Peter Drucker¿s model also discussed how to deliver value at an effective pricing level and what the purpose of our business is (Magretta, 2002).
This article was extremely useful as we used these questions and applied to our business firm, this enabled us to think about what target market to focus on and how much additional monetary value should be assigned to each department. We came to a conclusion that we needed profitable customers, but in order to get profitable customers we needed cash on hand to make quality products at a cost effective price (Magretta, 2002). Furthermore, (Magretta, 2002), differentiates between a business model and a strategy and that a they are not the same thing, however they are linked together because a business model focuses on systems that bring a business together whereas, strategy makes emphasis on competition and how an organisation can do better than its rival companies, by making their products and distribution channels significantly different than what is offered in the market (Magretta, 2002).
(Kim, & Mauborgne, 2002), argues that an effective strategy has three significant qualities, for example, focus, divergence and a compelling tag line while reading this article this is something that stood out to me the most for the reason that is provided an organisation the opportunity to dominantly focus on a specific strategy, for example, providing high quality customer service to its customers, divergence is concerned with keeping up with competition from rival companies, organisations can differentiate themselves by creating a dissimilar value than its competitors. For example, Dell computers has a different distribution channel than its competitors, reducing the costs of having stores and retailers, creating a different value strategy. Lastly, having a compelling tag line that is able to attract customers, enabling the product or service being remembered by the consumers, for instance, The Warehouses, tag line of ¿where everyone gets a bargin¿, illustrates to customers they sell products at lower prices that its competitors.
Blue ocean strategy focuses on beating competition and trying to attain new potential customers. For instance, increasing industry standards and creating uniqueness within the organisation. (Kim, & Mauborgne, 2004).Creating a blue ocean means that an organisation should create a large market space with the opportunity to have potential profits to be unlimited. For example, reducing costs and increasing revenue levels and identifying potential new customers and new markets to enter . (Kim, & Mauborgne, 2004).
Overall, I found that this week¿s readings were very useful and it enabled me to think about, the strategy¿s that I could apply to products from having the role of R&D. I also found that this week¿s readings were more business focused where the articles provided specific examples of organisations that implement such strategies within their companies.
Kim, W. C. & Mauborgne, R. (2002). Charting your company¿s future. Harvard Business Review, 80(6),76---83
Kim, W. C. & Mauborgne, R. (2004). Blue ocean Strategy. Harvard Business Review, 82(10), 75--84
Magretta, J. (2002). Why business models matter. Harvard Business Review, 80(5), 86---92