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strategy and competition
When running and managing a business, mastering these excellent management methods and tools will help you outperform others. In the workplace, if you are familiar with these methods and tools, you will be able to grasp the opportunities in the workplace and be promoted quickly.
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strategy and competition
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
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strategy and competition
Methods to tap the core competitiveness of enterprises
VRIO model
What is VRIO model?
Value
Whether a resource or capability can become the core competitiveness of an enterprise, the first thing that needs to be judged is whether it has value to the enterprise.
Resources without value, no matter how rare they are and how difficult it is for others to copy, can only become useless.
Rarity
It means that few companies have this resource or capability in the market.
Imitation cost (Imitability)
In short, imitation cost refers to the difficulty of imitating this resource or capability by competitors or other enterprises.
For enterprises, once those advantageous projects are copied or effectively replaced by other resources, the advantages of the enterprise will be greatly reduced.
Organization
A resource or capability by itself does not generate any competitive advantage for an enterprise. Only when an enterprise can mobilize its own management system, business processes, and even organizational structure and corporate culture to adapt to its high-quality resources can it fully leverage the value of the resources or capabilities and create a sustainable competitive advantage for the enterprise.
Look at a case
Xiaomi VRIO Competitiveness Analysis
Xiaomi’s competitive advantage segmentation
Innovative business methods
Xiaomi's innovative business methods are valuable and relatively scarce, but they are not inimitable.
However, all policies and organizational behaviors of Xiaomi Company provide support and guarantee for the implementation of innovative business methods, so they are highly organizeable.
Elite talent team
value
Xiaomi has the best human resources, and the team is led by Lei Jun.
It is composed of senior employees from top IT companies at home and abroad, and continues to introduce heavyweight executives who agree with Xiaomi's development vision, forming the company's unique human capital.
scarcity
Entrepreneurs with star power and teams of cutting-edge talents who are well-matched to the enterprise are rare.
There are very few innovative companies that can provide a free and equal working platform like Xiaomi.
inimitability
The founders and high-end talent team grow together with the company.
Organizability
Elite talents have room to fully develop their own value
The company is "people-oriented", has a flat and decentralized structure, abandons hierarchical concepts, and maximizes the value of talents.
Internet communication method
value
Build a Xiaomi community.
Enhance the interaction between users and employees; use new media to stimulate user enthusiasm for participation and obtain feedback.
Timely adopt user opinions and make improvements, accurately grasp market changes and user needs, and effectively identify opportunities.
scarcity
Establishing Internet-based communication channels is a required course for modern enterprises.
The core of the Internet is sharing, so there is no scarcity
inimitability
: Many competitors have established communication platforms with users or disseminated information through new media.
Organizability
The resources have a wide audience and strong influence, and enterprises can organize and utilize them well.
User common growth strategy
value
Xiaomi captures users’ desire to be “different” and participate in creation.
Starting from MIUI, we gradually penetrate the user participation strategy to enable users to participate in various processes of the product production chain.
Improving products and services will help companies identify changes in market demand and further create innovations.
scarcity
The boundary between users and Xiaomi is blurring. Users are both consumers and creators of products.
Users are seamlessly connected with the production process of products, but companies that can deeply involve users are scarce.
inimitability
The realization of user value is closely linked to Xiaomi's continuous improvement, and it also enables users to treat Xiaomi's products as if they were products designed and produced by themselves.
Organizability
Xiaomi hopes that "everyone can enjoy the fun of technology." Its purpose is: to bring value enhancement to users.
Therefore, it is Xiaomi’s original intention to involve users in every process of the value chain. The company's policy system is also structured to support this goal.
Product ecosystem construction
value
The mobile Internet ecosystem surrounding MIUI;
An intelligent hardware ecosystem that connects devices with routers as the center;
E-commerce platform ecosystem;
Xiaomi's ecosystem construction relies on hardware and uses software and services to obtain and analyze information. In this way, we can continuously improve products according to user needs, improve the ecological chain, and effectively identify opportunities and threats.
scarcity
The ecosystem created based on the "triathlon" strategy has advantages in hardware, software and user communication. Its formation process is unique, making it difficult for most competitors to complete the triathlon.
inimitability
When an enterprise's products and services form an ecosystem, the enterprise becomes a complex system that interacts with each other.
The formation of this system is closely related to the development of enterprises, entrepreneurial leadership and user participation, so it is difficult to imitate.
Organizability
All resources in the ecosystem are interconnected and support each other. Its purpose is: to build the Xiaomi brand and realize user value. Therefore, it is organizeable.
Summarize
The communication method of the Internet is competitive balance;
Innovative business methods are temporary competitive advantages;
The elite talent team, user common growth strategy and the construction of product ecosystem have become the sustainable competitive advantages that support Xiaomi's development.
VRIO model
The VRIO model can not only analyze the competitiveness of our resources, but also guide us on how to find high-quality competitive capabilities.
Huawei’s strategic planning and execution secrets
BLM model
What is the BLM model?
The abbreviation of Business Leadership Model is business leadership model. It is a strategic planning and leadership model derived from IBM's Business Leadership Model
What is the core idea of BLM?
a main line
strategic intent
business design
core tasks
formal organization
Two major guarantees
leadership
values
three questions
Where are you going?
where are you now?
how to get to?
four step cycle
strategy formulation
Strategy decoding
strategy execution
strategic review
BLM model decomposition
Strategy
What is the nature of strategy?
Strategy is motivated by dissatisfaction, which is the perception of a gap between the status quo and expectations.
What are these differences?
performance gap
A quantitative statement of the gap between current operating results and expected values;
opportunity gap
A quantitative assessment of the gap between existing operating results and those resulting from new business designs.
What's the difference between them?
Performance gaps are often particularly sensitive and can be filled through efficient execution without requiring changes in business design
Opportunity gaps are only known by those who see the opportunities. To fill an opportunity gap, new business design is required.
Core tasks of strategic planning
Look at the rules and see who grasps it more accurately
Enterprises must follow the natural laws of the industry, firmly grasp their main channels, find the customers they should choose most, and develop and grow with them, focusing on which aspects will gain the recognition of customers if they persist in doing so.
Find your position, find the most valuable thing to do
Enterprises cannot do everything, they can only do the most valuable thing. If you fail to grasp the rules and develop based on your own capabilities, it will be difficult for the company to achieve long-term operations. When this market rises in the future, the right choice will eventually obtain high returns.
How to formulate a strategy?
strategic intent
The direction and ultimate goals of the organization are consistent with the company's strategic priorities;
How to formulate strategic intent?
Think clearly about the company’s strategic intent? What do you want to be? Is it technology leadership or market leadership? This is based on each person's different judgments. If you are weak, you will only take one scoop.
innovation focus
Conduct exploration and experimentation in step with the market. Filter ideas from a wide range of resources, explore new ideas through pilots and in-market experiments, and invest and manage resources carefully to respond to changes in the industry;
Are there any pitfalls?
Are these innovations customer needs?
Does the company have the ability to accomplish this?
business design
A deep understanding of the external world provides the basis for business involvement that leverages internal capabilities and continues to add value.
how to do?
① Establish a planning team to continuously conduct market insights based on the company's business, purchase industry reports to understand the market, analyze competitors, and output comprehensive and detailed special reports for reference in decision-making by the company.
②Build a strategic community. Use the smartest brains of the company to let the people who know best to study topics related to them, present them in the form of an online community, and brainstorm, which can effectively make up for the lack of individual insight.
market insight
Understand customer needs, competitor trends, technological developments and market economic conditions to identify opportunities and risks, with the goal of explaining what is happening in the market and what these changes mean for the company;
How to conduct market insights
Look at the market
Look at the industry
Look at customers
Look at competitors
look at yourself
Execution
Critical tasks & dependencies
Actions necessary to meet the requirements of the business design and its value proposition. Which tasks are completed by us, and which tasks can be completed by our partners in the value network? Interdependencies between organizations are the foundation of effective business design.
formal organization
To ensure that key tasks and processes can be effectively executed, corresponding organizational structures, management and assessment standards need to be established, including the size and role of personnel units, management and assessment, reward and incentive systems, career planning, and the physical location of personnel and activities. To facilitate managers to guide, control and motivate individuals and groups to complete important tasks of the team.
Talent
Characteristics, capabilities and competitiveness of human resources. For strategy to be effectively executed, employees must have the ability, motivation, and actions to implement key tasks.
atmosphere and culture
Create a good work environment to motivate employees to complete critical tasks. A positive atmosphere can inspire people to create outstanding results, make them work harder, and inspire them in times of crisis.
Values
Values are the basic criteria for decision-making and action.
Victory is often a fluke, but failure is always around. When an enterprise is doing something, values will guide it to make the right choice, especially where there is no process or the process is wrong.
Huawei's core values
Customer-centric
Based on strivers
long and hard struggle
persist in self-criticism
What should we pay attention to when formulating corporate values?
Achieve customers. Customers are the ones who pay for you. Achieving customers is actually achieving ourselves.
Innovation is important. The industry environment, customer needs, and competitors are all changing, and we must change with them.
Integrity and responsibility. If we fail to serve customers well, we will actively improve and customers will give us opportunities.
Business Success: Pursue the continued success of both ourselves and our customers, and achieve a win-win situation.
Leadership
Strategic planning first looks at leadership, which refers to the ability to lead everyone from one victory to another.
Faced with a rapidly changing market, more and more complex customer demands, constant pressure from competitors, and even unanticipated product subversion, sometimes we feel like we are in a dark cave, unable to see clearly where the road ahead is. At this time, it is necessary for senior management to lead everyone towards the light with the fire in their hearts.
Leadership development for senior management is to drive change by leading their senior teams in the exploration and design of strategic issues and opportunities and the execution of projects.
McKinsey’s classic strategic planning tool
Strategy Level 3
What is level 3 of strategy?
Protect and expand core business
Contains the current core business at the heart of the enterprise, which generates most of the profits and cash flow.
What is the focus?
Profit, cash flow, return on investment
Operating costs and productivity, etc.
Need implementers and actors
What are the precautions?
What we are thinking about is whether the core business brings enough profits to support investment?
Does the company have strong performance guidelines to increase profits and generate revenue in the next few years?
Will the company have a competitive cost structure in the next few years?
Will the company have stable operating performance in the next few years?
Will the company's sales share grow in the next few years?
Will the company be invaded by new competitors, new technologies and new regulations in the next few years?
Develop viable future businesses
Contains future business and vision, it is the direction of future development of the enterprise and the seeds of business choices. It is the development engine for the company's sustainable operations.
What is the focus?
Valuation of projects to be selected, speed of conversion to actual business, number of optional projects
Return size and probability of success
Pioneers and explorers who need unconventional thinking
What are the precautions?
Does the company set aside time to consider growth opportunities and industry evolution?
Has an extensive backlist of projects to revitalize existing businesses and create new ones been developed?
Compared with last year, three years ago, and five years ago, are these potential projects significantly different?
Have you figured out effective ways to turn these candidates into new businesses?
For these candidate projects to be turned into new business?
Build new businesses that will emerge with momentum for growth
It is the growth engine for the company's sustainable development.
What is the focus?
Market share, number of new customers, revenue growth
Capital investment efficiency and expected net present value
Need entrepreneurs and pioneers
What are the precautions?
Is the new business going well in the market?
Are you ready to make significant investments to accelerate its growth?
Is investor confidence in these businesses rising?
Are these new businesses attracting other businesses?
There are obvious differences in the goals and specific implementation measures at the three levels. Only by distinguishing the management systems of the three can we avoid the growth obstacles caused by the use of the old system and adapt to the need to create a new ladder.
How to effectively manage these three levels?
System management
The first level: unremitting exploration through communication, research, thinking, alliances or small-scale investments, seeking new opportunities and forming strategic vision.
The second level: Seize the opportunity, increase investment, grow rapidly, quickly build ladders, and establish positioning advantages.
The third level: strengthen management, emphasize the discipline and planning of the execution process, enhance predictability and responsibility, and ensure excellent performance.
Talent management
The first level: establish the key points of personal recent performance (position promotion and compensation), including penalties due to poor performance, and implement a "no excuses" management style.
The second level: Provide autonomy in action and freely issue founding commissions; provide opportunities to create personal wealth through cash bonuses and shares; provide entrepreneurial opportunities so that they can leave "heirlooms".
The third level: provides psychological rewards, recognizes imaginary projects, provides freedom to experiment and explore, provides career benefits: satisfies the curiosity to develop intelligence; opportunities to become second-level business builders and financial rewards.
performance management
The performance evaluation criteria at the first level should be to reduce costs, improve labor productivity, and increase profits.
The second level should focus on products and services, the speed of attracting customers, and the scale, speed and efficiency of business expansion. The goal is not to make profits as quickly as possible, but to defeat competitors and occupy the best market position. The performance evaluation criteria should be the expansion of market share, the development of new customers and the growth of sales.
The third level would ideally have a set of alternative projects whose value will increase during future development and refinement. Performance measurement criteria should be the number of alternative projects, the cost of acquiring and maintaining these projects, the likelihood of project success and the size of the return.
business plan management
The first level is mainly business execution issues, which focus on how to maintain and develop existing businesses to bring more cash flow and profits.
The second level focuses on the establishment of the business and the resources it requires. The second level of business must be planned. How much investment is required, how big the risk is, how many people are needed, etc.
At the third level, experts and scholars should be invited to participate to stimulate creativity, determine the future and direction of the enterprise, raise venture funds, and invest in emerging products.
Strategy Tools for Strategic Business Selection
BCG matrix
What is the BCG matrix?
That is, the Boston matrix, also known as the market growth rate-relative market share matrix, the Boston Consulting Group method, the four-quadrant analysis method, the product series structure management method, etc.
What is the function of BCG matrix?
Through the two dimensions of "expected market growth rate" and "relative market share", we can evaluate an enterprise's overall business situation.
This enables the company to rationally arrange its product portfolio despite limited resources, harvest or abandon shrinking products, and increase investment in products with development prospects.
What is the principle of BCG matrix?
By analyzing the external market attractiveness and internal corporate strength, the BCG matrix divides the analysis results into four quadrants and distinguishes four different business combinations.
What four business combinations?
Product groups with “double high” sales growth rate and market share (star products)
A product group with “low” sales growth rate and market share (thin dog products)
Product groups with high sales growth and low market share (problem products)
Product groups with low sales growth rate and high market share (Golden Bull products)
What are the similarities and differences between the four business combinations?
A. Star products
Typical characteristics are high expected market growth rate, high relative market share, and the product has entered the development stage.
Enterprises must continue to invest in star products to maintain the same growth of their own products and the market.
Not only will star products not generate positive cash flow, but they will also damage the company's cash flow under certain circumstances.
Development strategies are needed
Expand scale and seize market opportunities, expand investment, establish long-term goals, increase market share, and strengthen competitiveness.
B. Cash cow products
Typical characteristics are low market growth rate, high relative market share, and the product has entered the maturity stage.
As a leader in cash cow products in mature markets, this business enjoys the advantages of economies of scale and high profit margins.
From a financial perspective, cash cow products are characterized by large sales volume, high product profit margins, and low debt ratios. Moreover, due to the low growth rate, there is no need to increase investment.
Development strategies are needed
For cash cow products, it is suitable to adopt a stable strategy to maintain the product's market share and consolidate its market position.
C. Problem products
Typical characteristics are high market growth rate and low relative market share.
The market is very attractive, but there are many internal problems within the company. The financial characteristics are low profit margins, insufficient funds required, and high debt ratios.
Problem products are risky because they require a large amount of capital investment to develop. But what is not certain is whether the company can outperform its competitors in this business after investing a lot of money.
Development strategies are needed
Growth strategy: suitable for continued investment in problematic products that can establish a competitive advantage for the company and enhance its core competitiveness.
Contraction strategy: suitable for problem products that continue to invest but cannot create value for the company.
D. Slim dog products
Typical characteristics are low market growth rate and low relative market share.
Slim dog products neither generate a large amount of cash nor require a large investment; that is, they do not have good market development prospects nor a strong market position.
Slim dog products have no chance to improve their performance. Financially, they have low profit margins, are in a state of capital preservation or loss, and have high debt ratios, which cannot bring profits to the company.
Development strategies are needed
Sell or liquidate the business to transfer resources to more profitable areas.
BCG matrix analysis steps
A. Evaluate business development prospects
Predict future market opportunities through established data forecasting methods.
B. Evaluate business competitiveness
The BCG matrix uses "relative market share" to evaluate a company's business competitiveness.
The evaluation needs to be based on sufficient market research, so that relatively accurate data can be obtained.
C. Determine the matrix standard line
This step consists of two parts, determining the standard line of "relative market share" on the horizontal axis and "market growth rate" on the vertical axis.
The purpose is to divide the market growth rate and relative market share into four business combinations: "high-high", "high-low", "low-high" and "low-low".
Methods for determining market growth rate include: taking the average growth rate of the industry as the cut-off point, and taking the average growth rate (weighted) average of multiple products as the cut-off point.
Generally, a market growth rate of more than 10% can be defined as a high market growth rate. When determining relative market share, dynamic factors need to be taken into account.
D. Place the business into a two-dimensional matrix
Commonly Used Wrong Competitive Analysis Tools
SWOT analysis
By analyzing advantages and disadvantages, internal and external, we can achieve better analysis results and find the direction of action.
How to operate: Strengths - Weaknesses - External Opportunities - Threats
Practical operation
Strengths
What do you do particularly well?
What are your strengths and weaknesses?
What are you most focused on?
What are your outstanding professional skills?
What are some things you can do to find fulfillment?
Weaknesses (own disadvantages)
What do you hate most about yourself?
What activity are you least good at?
What ability or skill would you most like to have?
What do you think you need to improve most right now?
Opportunities (external opportunities)
Are my professional skills competitive in the job?
What factors in the external environment are favorable to me?
What abilities/skills do I have that others don’t have?
Threats
What threats are currently facing?
Are there any environmental factors that you cannot change even if you continue to improve and improve?
Are your experience and skills becoming obsolete?
What factors in the team hinder your personal development?