My name is 정희라 and I gonna explain the example about limitation of operational efficiency.
As you see, SPA brand like Uniqlo, Zara and so on is a warehouse store. It decreased operation efficiency and this strengthened operational efficiency made effect on low price. Many consumers who want to buy low price clothes received good impression. But this operation can be found national brand like 8seconds from 제일모직, topten10 from 신성통상. Making an additional remark, topten10, the last one, receiving attention from consumers because of its good quality and low price.
Like this, operational efficiency can allow to be imitated and winning of the group that departed later.
So, operational efficiency cannot act like strategy in these days.
Other example will be presented by next speaker, 귀호.
Today's typical OE's failure another example is apple and samsung. This two brand is competition relation in smart phone product. apple and samsung seek innovation.
But in smart phone product area many technologies can be imitated easily. For example apple's swiri and samsung's s-vocie. Those two technologies are very similar. So apple and samsung has many problems about smart phone tech. The two brand try to reduce their rival's market share. So two brand fight unnecessary fight like patent war in USA. This war is very needless for those two brand. Those two brand spend a lot of money to this war. Those two brand insist they develop technology and reduce cost. But those two groups today's activity is very consumptive and mutual destructive. So we think those two groups' relation is today's OE's example.
someone think OE and strategy are same thing. But those are very different. Strategy make enterprise developed consistently. OE is part of strategy. OE is necessary but not sufficient. OE is enterprise's position. In contrast strategy is both enterprise and customer's position. Strategy is discrimination over diversity and targeting for special customer. And strategy has trade-off. Trade-off means gain and lose. Enterprise gain somethings because of strategy also lose somethings because of strategy. This trade-off make other enterprise imitate our enterprise's strategy difficultly. If enterprise only has OE, the enterprise could not success in market. Because OE is imitated very easily.
I'm manyeon, i will talk about the strategy. Before other teammate talked about limits of the Operational Effectiveness.Operational Effectiveness can't keep going company, but It is necessary in order to take advantage of the limited resources.
It is important that doing unique thing other cant do. Prof Porter's strategy is having special place.
In other word, It is differenciation. In this screen there are some words that poter's said. Succesful
Strategy includes positioning, trade-offs, fit and OE.
Let's talk about positioning.
Porter classified positioning into three categories.Variety based positioning is meeting needs of various customers. Daiso is an example. They have many very cheap products. Its quality is not good, but fine. Daiso is different from traditional mart or department store. Economical consumers can buy almost thing that they want.
Needs based positioning is fully satisfying the needs of minorities. In picture there is ailienware made by Dell like a super car. Ailenwares targets are game manias. It is a very compact but very powerful like a big desktop. The price of full customized ailenware can buy 15 similar size laptop. But the its size,desgin and specification like monsters make consumers buy it.
Access based positioning can be explained by Mcdonalds.most people go to Mcdonalds at lunchtime. But they made a mcmorning and mccaffe. So we can go there when we want a light breakfast or a cup of coffe. And Somtimes we go there child want to get happymeal toys.
Next I will explain about the trade-offs and fitting.
If you success positioning, can be faced with other companys challenge. They have much money and can copy succesful things. Trade-offs and fitting make them hard to chase. Continuously I will explain it from Hansung computers case. Hansung make many models, but they have same design. And they dont have a nice service like Samsung. They trade-offs design and good service. But
They have most cheap price and best price perfomance.
And these organic elements are very complemented, so other firm cant catch up with them.
“Special K” is also one of strategy. It satisfy the needs of consumers. Today many twenties and thirties are concerned about their nice figures. So cereal market produces new dietary food. It targeted specified consuming public. Now, “Special K” occupied best market share.
“Special K”’s trade-off is the risk of new market and cost. At first, diet cereal is unfamiliar with consumers. Therefore it had ambiguous brand and cannot appeal to consumers. And also new diet cereal needs new production line. It costs a great deal. However, “Special K” read a new trend, which concentrates on their shape and it aimed at specific consumer. Finally it opened up a new market.
Operational effectiveness is not strategy. Operational effectiveness is necessary but not sufficient. Strategy should also include positioning, trade-offs and fit. The essence of strategy is choosing to perform activities differently than rivals do. Strategic positions based on needs, accessibility and variety of products. And it requires trade-offs which create the need for choice and purposefully limit what a company offers. Therefore a strategy define a company’s position and make trade-offs and build fit.