Useful Frameworks to Drive your Business Strategy – Part 1 of 2

Over the past year I have learned a few useful business frameworks that can be applied to any industry. I have divided this post into two parts as it would be too long to fit 8 frameworks in one post. Each framework is explained with a case study. All case studies were done as part of my MBA coursework at University of California, Irvine and are not endorsed by the companies mentioned in these two posts on business strategy.

What is business strategy? Business strategy is about planning how an organization will achieve its goals; about winning; choosing activities different than rivals; deciding where to compete and how to compete

1. Porter’s Four Corners Analysis: This framework is used to understand your company’s drivers, assumptions, current strategy and capabilities (4 corners) as well as your competitors’ strategies and thus better position your future strategy. Future strategies can be based on a specific scenario or a specific market. For example the case study below analyzes GE’s strategy to win the contract for China’s Smart Grid (specific market). The second presentation shows how GE would change it’s strategy if  China decides to own 33% of all GE’s Smart Grid patents (specific scenario).

2. Judo Strategy: This is a market entry strategy and how to win against bigger competitors with agility and nimbleness, hence the name Judo Strategy. Its typically used by smaller companies who value skill over size and strength. Large companies use it to unite superior skill to move into new areas where powerful opponents exist.

3. Network Effects: This strategy is specific to the hi-tech industry. The value of the product/service increases as more people use it. The size of suppliers (one side of the network) influences the size of consumers (other side) and thus the value of the network. For example, increasing the number of games/applications built for the iPhone was one reason for the increase in iPhone users when compared to other phones. This also applies to Groupon – more restaurant tie -ups = more consumers compared to other location based advertisers.

4.  SWOT Analysis: Strengths, Weaknesses, Opportunities and Threats for a company gives a good overall picture of what internal and external factors to capitalize on and what to watch out for. These reports for almost every company are already available on Datamonitor (online database of company reports, news, etc) but if you don’t have access to such reports you can always create your own. Google’s SWOT Analysis from Datamonitor is available on the right.

Frameworks 5-8 can be read in the next post.

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