This Looks Familiar
The problem with this week being on business models and strategies is that it¿s hard to use examples or describe what we have done this week (and from the start) without giving anything away. We do have a business model, and have identified what the market segments want, and how to best appeal to them by improving our bike manufacturing competencies for what is needed for each market. This goes hand in hand with our strategy. We have decided on what segments we will target and how we will appeal to the consumers. In our first team meeting (not the team making meet and greet) we discussed what our strategy going into the practice would be. We did actually say whether we would do differentiation, cost leadership or focus, which is reassuring since Peter used Porter¿s broad strategy model in class as a hint of what should be the starting point of our first rollover discussion & decisions. Looking at the results for week one we had like a $1 increase in SHV and have negative cash and needing to borrow more, but I was expecting that our plan to require a lot of capital, our math showed us making quite a large loss but our sales were above expectation which is a good sign.
As I was reading Magretta (2002) reading about business models after the two strategy ones I really had difficulty understanding what the difference is. She explains near the end however, the one thing our team has been conscious of but decided to ignore for the first turn as it is impossible to know anything. That is the business model doesn't take competition into consideration, our discussions about our decisions discussed what others might do but ultimately we had no idea and decided to do what we were good at in Solomike & practice/offline. Next week we will examine their (competitor) decisions and alter our business accordingly. I suppose you could say our business model will be much the same as with all our investment we have to stick at it but our strategy will change. Examples would be planning to be a cost leader so reducing costs and selling bikes cheap with larger margins (which would be the model), but seeing that no one else is following that route too much so we sell our bikes at a slightly higher price for an even larger margin, and still have the cheapest Kids bike, or something. In the simulation the audience is hard-coded, we are told their wants and needs through vague descriptions and make assumptions on where to place our bikes on the product design graph. The fact we know what they value and how we can make money out of this is second thing discussed in the reading and the most basic idea of what a business model is.
I feel we know Mikesbikes well enough as a team that we can implement our strategy due to our familiarity with the software. Now all we need to do is see how well it works. It¿s kind of difficult to perfect certain ¿offerings¿ that we can put on our strategy canvas as laid out by Kim & Mauborgne (2002) but try to get as much relevant info from the reports as we can. We have actually decided on price (and will be able to see competitors next week), relationship management, speed, accuracy, etc. And will work to compare with competitors, especially the ones in our industry segments, because we plan to follow our model with just small adjustments to strategy. The reports will also give insight into our internal success goals in regards to things like inventory, efficiency, cash flow, R&D success and other aspects vital to our core strategy. The canvas of main points of competition is not the only way we will access our internal process improvement and relative performance but we will use it to make adjustments on our current ideas (Kim & Mauborgne, 2002).
Kim, W. C. & Mauborgne, R. (2002). Charting your company¿s future. Harvard Business Review, 80(6), 76---83
Magretta, J. (2002). Why business models matter. Harvard Business Review, 80(5), 86--92