Lecture 2
30/9/10
Access to Class Material
 http://girtab.ucc.ie/CHeavin
Porter’s Competitive Forces Model
In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its
traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers,
and suppliers.
Figure 3-10
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Traditional competitors
New market entrants
Substitute products and services
Customers
Suppliers
• Low-cost leadership
• produce products and services at a lower price than competitors while
enhancing quality and level of service
• Examples: Wal-Mart, Dell
• Product differentiation
• Enable new products or services, greatly change customer convenience and
experience
• Examples: Google, Land’s End, Apple iPhone
• Focus on market niche
• Use information systems to enable a focused strategy on a single market
niche; specialize
• Example: Hilton Hotels
• Strengthen customer and supplier intimacy
• Use information systems to develop strong ties and loyalty with customers
and suppliers; increase switching costs
• Example: Chrysler, Amazon
Data Display Case
 Critical Success Factors (CSFs)
 Attributes of the entrepreneur/founder
 Flexibility of the organisation
 Ability to establish, coordinate, control and manage
international operations
 Compete on cost and provide customisation
 Develop and maintain core competencies
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http://www.irishexaminer.com/business/kfgbcwkfeymh/rss2
/
Value Innovation: The Cornerstone of Blue
Ocean Strategy
Costs
Value Innovation
Buyer
Value
The Simultaneous Pursuit of Differentiation and Low Cost
Red Ocean Versus Blue Ocean Strategy
Red Ocean Strategy
Blue Ocean Strategy
Compete in Existing Market Space
Create uncontested market space
Beat the Competition
Make the competition irrelevant
Exploit Existing Demand
Create and capture new demand
Make the value-cost trade off
Break the value-cost trade off
Align the whole system of firm’s
activities with its strategic choice of
differentiation or low cost
Align the whole system of a firm’s
activities in pursuit of differentiation
and low cost
What drives your entrepreneurial dream?
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 The mission, personal aspirations and risk propensity of
entrepreneurs
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Each successful entrepreneur brings to their venture an important set of
elements that drives their entrepreneurial dream:
 A mission that determines what kind of business to build of
what kinds of market to serve;
 A set of personal aspirations that guides the level of
achievement to be sought;
 Some level of risk propensity that indicates what sort of
risks are to be taken and what sort of risks are to be taken and
what sort of sacrifices are to be made in pursuit of the dream.
What drives your entrepreneurial dream?
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 Entrepreneurship is a very personal game. Successful
entrepreneurship requires a clear vision about what you as an
entrepreneur want out of the effort.
 Without a clear mission, your entrepreneurial efforts will be
fragmented, lacking in purpose and direction.
 You simply cannot aspire to greatness without tolerating some
level of risk.
 You cannot aspire to greatness without a willingness to share
ownership and control, since successful entrepreneurship is,
most often, a team sport.
What drives your entrepreneurial dream?
12
 Mission
While for many investors the mission is simply to make money, for
entrepreneurs a burning desire to make money is not enough on its own.
 Personal aspiration
There are three questions every aspiring entrepreneur should ask:
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How big do I want this business to become?
What role do I want in this venture: do I want to do, to manage or to lead?
For how long do I want to remain involved with it?
If you want to build a great enterprise, you have to have the courage to
dream great dreams!
 Risk propensity
Most successful entrepreneurs do not regard themselves as risk-takers.
Managers of risk, yes.
“investors want to see that you are willing to rick your capital, just as
they are risking theirs”
Can you and your team execute?
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 Entrepreneurs can succeed in difficult industries, but
they must be able to:
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Identify the CSF specific to their particular industry;
Assemble a team that can execute on these factors.
 Identifying the Critical Success Factors(CSF)
 Knowledge of the CSFs for any industry resides in
the experience of those who have learned – often the
hard way - which things absolutely must be done
right.
Can you and your team execute?
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 In most mature manufacturing industries there are three
broad strategic approaches:
Operational excellence: providing customers with reliable products or
services at competitive prices and delivered with minimal difficulty or
inconvenience. Such a strategy seeks to lead the industry in price and
convenience.
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Minimise costs in every regards;
Optimise business processes for extreme efficiency and effectiveness.
Customer intimacy: segmenting and targeting markets precisely and then
tailoring offerings to match exactly the demands of those niches’. This strategy
is focused on individualised service to each customer, based on an intimate
understanding of what that customer needs.
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Gather detailed information about each customer so that they may be
assigned to a micro-segment in which the offering is tailored carefully so that
segment’s needs. Sometimes, the segmentation is so precise that offerings
are tailored to market segments of one.
Can you and your team execute?
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3.
Product Leadership: offering customers’ leading-edge products and services
that consistently enhance the customer’s use or applications of the product,
thereby making rivals’ goods obsolete’. Product leadership companies seek to
provide a continuing flow of state-of-the-art products or services to remain at the
cutting edge.
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Creativity, to recognise and embrace ideas that may originate outside the
company
Optimise business processes for speed, in order to bring these creative
ideas to market quickly
Relentlessly pursue new solutions that may obsolete those that the
company has just introduced. If anyone is to render the product leader’s
technology obsolete, then the product leader prefers to do so itself.
Investors want to know…
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 Investors want to know that the lead entrepreneur has
identified and understands the CSFs in the industry they
purpose to enter, as well as the market and competitive
environment they will encounter. A credible
understanding of the seven domains can provide the
evidence here. That’s step one.
 Step 2, the crucial one, is that the lead entrepreneur has
then assembled a team that can demonstrate in past
deeds, not word – that its players taken together can
execute. Execute on each and every one of the CSFs that
the venture’s industry and strategy therein will require.
Data Display SWOT
Strengths
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Kevin Neville
Technology
Relationships with customer
Customisation Model
Support from Enterprise Ireland
Employee Loyalty
Opportunities
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Expanding their market in cheap labour
areas
Changing their leader injects new ideas
Updating technology through R &D
Acquisition of new talent due to
globalisation
Weaknesses
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Succession Planning
Location
High Labour Cost
Website
No presence in emerging markets
Centralised Decision Making
Transport Cost
Size vs Competitors
Threats
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Competitors
Quicker and cheaper offered by other
countries