The competition between firms in the Mikes Bikes Project became intense, I realized that more and more bike producers entered the market and tried to gain the share of the market. As a result, it is the time for my group to develop the new strategy in order to meet the current competitive market. The key theme of Week 05¿s lectures and readings is the development of the strategy. In Monday¿s lecture, the lecturer mentioned that strategy is the key factor that brings the revenue, profit and brand loyalty to a firm; therefore we must develop our own unique strategy.
In the lecture, we have discussed about the Porter¿s Generic Strategy, Porter¿s Generic Strategy shows that a company can always choose four different strategies which are cost leadership (Lower cost and broad target), differentiation (Differentiation and broad target), cost focus (Lower cost and narrow market) and differentiation focus (Differentiation and narrow target). It seems the Porter¿s Generic Strategy gives us some ideas about the strategy development, but it is very difficult to choose the right strategy. For example, as a company that mainly produces the lower quality leisure bikes, if the company choose the strategy that is cost focus, then it tends to lose a great share of customers because focusing on one group of customers will make the firm lose other groups. The problem is if the firm choose the differentiation focus, then it tends to suffer from huge cost due to the intense spending on differentiated design and R&D. This leads to the conflict between low cost and differentiation.
As a HR, I am suffering from intense pressure as well because each strategy requires me to make the right decisions when I change the number of employees, the training hour and quality spending. I did feel risky when I made changes on the number of employees and quality spending because my changes need to match to the decisions from of the other departments of the firm, a simple mistake can lead to the decline of the shareholder value. This time, I have realized the powerfulness of team collaboration; it is the key to strive for perfection and excellence. The whole structure of the market has changed due to the massive entrance of the firms, as the result, it is very important to develop a right and effective strategy. It is important for our team to know our ¿Focus, Divergence and Tag Line¿ before we develop the strategy that is suitable for our firm¿s development. (Kim & Mauborgne, 2002) Based on the theory of focus, we need to know the core value and goal of our firm. One thing I realized is that the current bike¿s market is approaching to the Red Ocean situation. (Kim & Mauborgne, 2004) The characteristic of Red Ocean is that the companies try to outperform their rivals in order to grasp a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth will reduce. (Kim & Mauborgne, 2004) A key idea I have learnt from the reading is that we cannot focus too much on competition; instead, we should create a leap in value for both buyers and the company. This means in order to be the winner, we have to become a Blue Ocean Firm. Blue Ocean Strategy is about doing business where there is no competitor. It is about creating new land, not dividing up the existing land. I think our company should learn the development strategy from Cirque du Soleil. (Kim & Mauborgne, 2004)
In the overcrowded industries, differentiating brands becomes harder in both economic boom and recession, the rapid improvement and change in the technology caused supply existed demand. (Kim & Mauborgne, 2004) As a result, we need to be able to create the new ideas, to make our bikes have different feature and quality and stand out from the competitor, which is our goal!!
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