This week¿s readings have emphasized the need for effective business models and strategies and have made me aware of potential problems that could be faced within mikes bikes. One of these problems include that of differentiating our bikes from the competition, this has been highlighted throughout all three texts as an essential aspect of a business¿s success.
I like the ideas presented about the red and blue oceans, where red is highly saturated markets and blue is new innovative markets. The paradox of most business strategy is a military style; entering the red sea and claiming competitive advantage (Kim & Mauborgne, 2004). However it makes a lot more sense to enter and create blue oceans in order to succeed without constraints of pre-set boundaries, standards and brand names with loyal customer bases. This seems to be a challenge in itself as basically all our needs and wants are already satisfied by some product or service. There is always space in vastly saturated red oceans to create blue oceans, but this would take a lot of innovation and an effective business model and strategy. The element of creating difference and your own blue ocean can be relevant to mikes bikes and emphasize the need to differentiate from competitors rather than trying to do the same thing but better. The creation of blue oceans is a product of strategy and as such a product of managerial action the trade-off between low cost and differentiation should be rejected (Kim & Mauborgne, 2004).
The strategy canvas in the Kim and Mauborgne (2002) article is an appealing idea because I find it a lot easier to think things through once I know the bigger picture. The use of the different scales to measure business current activity and strategy, then comparing this with competitors would create a clear bigger picture as to what the businesses current strategy is, thus comparing this with competition highlights areas that need to be changed in order to differentiate from competitors. More so the before and after graphs would help stay focused throughout strategic activity.
As well as having an effective strategy an effective business model is also important, the difference that strategy deals with competitive advantage and business models are systems of how pieces of the business fit together (Margretta, 2002). Magretta (2002) suggests that it is the understanding of the motivation of buyers, consumers and competitors that creates a successful business model, and that this model should be constantly revaluated as to ensure it is still effective to the ever changing market. This can be seen within mikes bikes where the position of the bikes changes each roll over, this emphasizes the need to constantly revaluate our business model and strategy. I also liked the metaphor used where by a business model is a narrative, like telling a story, and if this story doesn¿t make sense change needs to be made and faulty assumptions corrected. In order to take action towards differentiating from competition a bigger picture needs to be created and motivations of all aspects need to be considered and understood.
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