This week started out with me vowing to actively engage in the learning by being aware and controlling my learning by assessing what I already know, what I need to know and how to apply the necessary knowledge in order to make the right decisions when any potential issues do arise.
Mondays lecture was quite interesting. We were asked to pair up with someone else of similar build and asked to have an arm wrestle. The objective of the game was to get as many points as possible by forcing the opponents hand on the table. During class, I must admit I felt the whole point of the exercise was futile and honestly thought it was a waste of time. However, upon reflection it dawned on me that perhaps the whole point of the exercise was to show us the distinctions between cooperativeness and competitiveness. I might be completely off target here but let me expand on what I mean...
If Person A co-operates and Person B competes = Person B (i.e. the one competing wins)
If Person A competes and Person B co-operates = Person A (i.e. the one competing wins)
If Both Person A and Person B co-operate = Both Person A and Person B win!!!
Thus, essentially this exercise highlights the fact that there will always be some people in a team that are innately competitive whereas similarly, there shall be people in the team who are more than willing to co-operate. Strategically, this would dictate that in order to achieve maximum success and efficiency in the Mikes Bikes, it must be imperative for all team members to co-operate. Critically, one could argue that this concept could extend beyond the team members to the teams in any given ¿world¿. For instance, if all the teams in a ¿world¿ agree to keep the retail prices at a pre-agreed minimum level it would present a level playing field for all teams. Conversely, if one team were to defect and sell their bikes under this minimum retail price, this would ensure the lowest possible prices for consumers and they could instantly take profits from the other team. This highlights the important fact that in this simulation in order to achieve the highest profit it is imperative to consider how other firms respond. After some discussion with some of my team mates it became quite obvious that this sort of scenario is bound to arise (especially from the marketing/advertising perspective). If all the firms cooperated and maintained low advertising, and resisted incentives to cheat, they could be more profitable. The general consensus from the whole class is to advertise extensively, although it must be noted that if all firms were to advertise extensively, none of the companies would receive a high shareholder value (market share). This is something for all of us to consider¿.
On the whole, I did not find the reading from Kim and Mauborgne (2002) where the emphasis is on drawing a ¿strategy canvas¿ and having a visual strategy very interesting. The sole reason for this is because as a team we already have a broad plan by action by which we intend to reach our objectives. Nonetheless, one aspect that did standout in the text was when the authors indicate that if a company¿s strategy is formed reactively it effectively loses its uniqueness. Even so, realistically I believe that in Mikes Bikes it must is hard to be different from the market – at least until the research and development of new products are implemented. Starting off, I believe that most teams will have a similar strategy but as the game continues, efforts must be put into developing a niche product which can stand out from the rest and create a market which is uncontested. This was a topic of great debate between our team members on Wednesday wherein we had to deliberate whether the best option in our team would be to differentiate our market segment or just focus and specialise in one particular segment. Without giving too much away, we decided to adopt a narrow focus. The segmentation strategy that we employed in this week¿s rollover has targeted market segments in the game which would be less vulnerable to cost leadership – thus price-fixing would not affect us much. This was done after careful consideration by ascertaining the needs and wants of the mass market and competing through quality, brand and customization.
The reading from Kim and Mauborgne (2004) about charting the ocean strategies was quite interesting. This once again confirms my beliefs about how the market will turn out in the Mikes Bikes game. At the start it shall start of being a red ocean where all firms would try to outperform their rivals and eventually as the ¿space gets more crowded¿ the challenge for all teams would be to effectively channel our strategies towards an unknown market space – ie the Blue Oceans. Upon reading it the first time, I felt that simply by aiming to create an innovative product devoid of competition and focus on expanding and growing the products would be an impossible task. Likewise, Kim and Mauborgne state, ¿mostly, blue ocean is created from with a read ocean¿. This is suggesting that all that is needed is to alter the boundaries of an existing industry. I feel that there is a high degree of risk in undertaking this strategy as you run the risk of having a customer base that starts at nil but can be limitless. The primary risk in such an innovative strategy is that you might risk alienating your existing customers and also do not have the liberty of having a validated market space (like the red ocean). On the other hand, if a firm is not willing to take the risk and decide to stay in the red ocean they can always run the risk of being overwhelmed by competition.
In summary, I am inclined to say that this week has taught me that as a team we have to decide whether our managerial strategy is going to be a market-competing strategy (Red Ocean) or whether we must establish a market – creating strategy (Blue Ocean). Each has its advantages and disadvantages, however I believe the best way to be successful in this simulation is to make effective decisions, have a certain degree or risk, do your research and know the right time to make the shift from dominating a market to creating a brand new market. The most important aspect of this assignment is establishing tactics by which our strategies can be implemented. Going forward, we endeavor to continue the norm and write down the tactics for each of the functional areas in the business to implement these strategies!
Till next week!
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