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Magretta (2002) simplifies the business model into the generic value chain that is underlying in all businesses: The activities required to make the product and the activities required to sell the product. In our last rollover due to the high level of idle time in comparison to other teams it was clear that we did not engage enough in activities related to selling the product. Our marketing and advertising costs were lower than other teams, which saved on costs, but badly affected our profitability. I think that perhaps some risk adversity was what held us back from spending more on marketing, and because of past experience in the practice rollover where we were the only team who had entered that particular market and so did not need to spend much on advertising at all. The problem, therefore in this scenario was risk adversity.

The reading from this week that has helped to analyse the problem of risk adversity further is Kim & Mauborgne's Blue Ocean Strategy. This reading talks about how greater opportunities lie in creating uncontested market space that makes the competition irrelevant. Instead of competing within the boundaries of an industry for a limited amount of market share, there is the possibility of creating a "blue ocean" fuelled by innovation and customer value. Risk is high in this strategy as there are so many unknown factors, but the rewards can be much greater as you have a huge advantage over any other business that tries to enter the market space you have created. Adopting an openness to taking risks and perhaps being more creative or innovative with the simulation will be helpful in the weeks to come to ensure we gain a competitive advantage. 

It is obviously not possible to create a whole new industry in the simulation as the markets have already been decided along with customer demand, product preferences; and we are limited to manufacturing bikes. However; I do not think that this automatically means that being creative and taking some risks will not pay off. As long as the product we are selling is appealing to the market and the numbers make sense we should have a successful business model (Magretta, 2002). The theory suggests that innovation can occur incrementally and it does not mean drastically changing everything in the business; but rather adopting a different perspective and appealing to a customer value point that may have been unmet in your or competitors current product offerings (Kim & Mauborgne, 2004). 

The action that needs to be taken is an open discussion within the team around our attitudes to risk; any ideas of how to be creative within the confines of Mikesbikes; and which markets are perhaps uncontested or have the most "Blue Ocean Strategy" space within them for us to take over. We may also benefit from having a conversation with Peter around innovation in the simulation and examples of how teams may have created incremental product or process innovation in the past. 




References:

Kim, W. C., & Mauborgne, R. (2004). Blue Ocean Strategy. Harvard Business Review82(10), 76–84. Retrieved from http://search.ebscohost.com.ezproxy.auckland.ac.nz/login.aspx?direct=true&db=buh&AN=14599913&site=ehost-live&scope=site

Magretta, J. (2002). Why Business Models Matter. Harvard Business Review80(5), 86–92. Retrieved from http://search.ebscohost.com.ezproxy.auckland.ac.nz/login.aspx?direct=true&db=buh&AN=6623782&site=ehost-live&scope=site

5 Comments

  1. It is obvious that you have a good hold on the daudelin reading as you have implemented the structure really well in your writing and you have applied the other readings really well in your journal also. It seems you don't have a lot to work on as it is quite clear that you can pull solutions to your problems from the readings as well as think outside the box when those solutions are invalid or cannot be applied.

    Your journal was really easy to follow due to the natural flow of your writing which made it so easy to understand (convenient).

    Overall, such a well thought out journal with a lot of insights outside your own which was really great!!

    1. I struggle to see how Ciara can use your feedback to improve her work. Your goal is to provide actionable feedback, and your feedback doesn't deliver that. 

  2. First off, love the title (smile)Nice clear structure and readability too.

    On the reflection, I think risk is a tricky obstacle to tackle. Great reference to theory and application, as I think the Blue Ocean is really relevant to how the simulation is structured. I think the analysis of your problem is really in-depth, however it broadens out to a few different issues (such as risk in investing in advertising a product vs. risk in developing a range of products) which could make reflection harder compared to focusing on one problem at a time.

    When you did focus on one issue, u aced it though so great job and best of luck moving forward.

    Kashyap

    1. "Aced it" seems like an overstatement.

  3. Ciara Moynihan your structure in So it begins... is much better than this. I think Tayla Eveleigh and Zoe Hall were wrong when they suggested that it was too structured. Those other journals were better.

    That said, I'm pleased to see that you are listening to / attending to the feedback you are getting.

    Your goal here is to demonstrate the one (probably little) thing that you have learnt at Daudelin's structure let's you do that much better than this format. For example, your first paragraph is something of a mixture of problem, analysis and theorising/hypothesising. I'd encourage you to revisit Daudelin and follow her prescription even more ... down to the type of questions you ask in each section. 

    At the end of the day, it should be about what you have learnt/are trying to do better, and not what the team is doing. Of course, your actions might be intended to change something in the team—but at the end of the day it is about you and your team.

    Regarding the hypothesising/theory part. Many people, like you, seem to be forcing in the reading of the week. Daudelin, I think, is pretty clear it is about your hypothesis/theory about what went on. Yes, that might draw of theories you know (that helps the robustness), but if the 'theory of the week' doesn't fit with the problem that matters to you stick with your problem.

    Overall, I think if you go back to your previous approach, and if seek to improve how you apply Daudelin to your situation then you'll be well placed when it comes time to do the summative learning journal. You've been on a good trajectory up until this 'blip'.