Business Strategy Monday: SWOT Analysis

Today’s

Vocabulary

(1) Customer base: The people who might buy your product

Restaurants have a huge customer base, but also huge competition.

(2) Breakthrough: A sudden advance

The world really needs a breakthrough in battery technology. .

(3) Product line: A company’s list of products

Apple has a small line of products, but each one is excellent.

Today’s

Questions

1. Which of these might be a strength?

a. Many suppliers

b. Low entry barriers

c. Economic recession

2. Which of these might be a threat?

a. Many suppliers

b. Low entry barriers

c. Economic recession

3. Which of these might be a weakness?

a. Many suppliers

b. Low entry barriers

c. Economic recession

7 ________________________

BUSINESS STRATEGY MONDAY

________________________

By Jeremy Schaar

Before a company can begin any strategy, they should understand their industry. The most popular way to do this is to create a SWOT. SWOT stands for: Strengths, Weaknesses, Opportunities, and Threats. Today on the blog, you’ll learn what a SWOT is and how to create one for your industry. You’ll learn the vocabulary associated with making a SWOT and be better prepared to discuss your industry in English.

SWOT charts are often created for specific companies, but this post is about industries. It’s important to understand your own company, but you should always begin by understanding your industry.

Strengths

These are the things that are good for your industry.

Examples of Strengths: large customer base, high margins, many suppliers, few competitors, high barriers to entry

Weaknesses

These are the things that make life hard in your industry

Examples of Weaknesses: low switching costs for customers, intense competition, few barriers to entry, high production costs

Opportunities

These are things that might help your industry improve in the future. They’re like future strengths.

Examples of Opportunities: Potential markets, technology breakthroughs, expanding the product line, expanding the customer base

Threats

Threats are like future weaknesses. They’re the things that might make life in your industry harder in the future.

Examples of Threats: fewer entry barriers, political problems, more powerful suppliers,

Here are two simple SWOT charts

Car Industry SWOT

 

Restaurant Industry SWOT

So, can you think of additional items for these industries? Leave your ideas in the comments.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

A, C, B

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You Can Do It All Yourself But You Dont Have To

Business Strategy Monday–Creating Your Value Curve

Watch

On YouTube

YouTubeLink

Today’s

Vocabulary

(1) To devalue: To make something less important

We devalued advertising and instead focused on product quality.

(2) Untouchable: Something that can’t be hurt

After last year’s sales numbers, he’s untouchable. They would never fire him.

(3) Dependable: Trustworthy, something that won’t become bad

He’s the most dependable person in the office. We can trust him to do a good job.

Today’s

Questions

1. What’s one way to create a blue ocean value curve?

a. Lower your prices

b. Value the things customers care about the most

c. Value things differently than the competition

2. What’s a second way to create a blue ocean value curve?

a. Add a new value to the curve

b. Add style to your curve

c. Value everything highly

3. What value did Apple add to the computer industry curve?

a. Style

b. Ease of use

c. Price

7 ________________________

BUSINESS STRATEGY MONDAY

________________________

By Jeremy Schaar

In the past three weeks, you’ve learned what blue ocean strategy is, how one company has used the strategy well, and how to draw a value curve for your industry. This week, you’ll review those three concepts and then think about how you might redraw the value curve and find a blue ocean strategy for your company. You’ll learn more good strategy vocabulary and gain ideas that can strengthen your company’s strategy.

First, what is blue ocean strategy? Blue ocean strategy is when your company creates a value curve that other companies in your industry don’t use. That way you don’t have competition.

What is a value curve? A value curve is a group of things that are important to your industry. For example, restaurants will have taste, price, and location on their value curve. Your curve depends on how important each thing is to you.

To create a value curve, you should think about which things are important in your industry and how important each thing is for your company.

How To Redraw Your Value Curve And Find A Blue Ocean

There are two ways to redraw your value curve and find a blue ocean. First, you can change how you value the things on your curve. For example, if all the restaurants care about taste, you might devalue taste and just have a restaurant in a good location with a good price.

But there’s another way. You can add things to the value curve. Let’s say all the restaurants care about price, taste, and location. You could find a blue ocean by adding entertainment to the curve. If your restaurant is the only one with a jazz band playing, then you will succeed.

A great example of this strategy is from Apple.

Here’s a typical value curve for the computer industry in the 1990s.

Computer Value Curve

And here’s the value curve that Apple drew in order to find a blue ocean and become untouchable for ten years.

Screen shot 2013-08-25 at 7.44.02 PM

Apply reduced the importance of features and price. They focused on making a computer that was easy to use and dependable. And they added style. No one else was doing all those things. Apple didn’t capture the whole market with their strategy. For many people a feature or the price was the most important thing. But by adding style and refocusing on dependability and ease of use, they were hugely successful.

To redraw your own value curve, that’s what you need to do: Change how you value things and find things to value that other companies aren’t even thinking about yet.

Want to study Business English? Check out the main site for our lessons.

Want to learn more about blue ocean strategy? Click here.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

C, A, A

——————————————

You Can Do It All Yourself But You Dont Have To

Business Strategy Monday–Creating a Value Curve

Today’s

Vocabulary

(1) Dependability: Doing what you said you would do

I prefer this car for its dependability. It might not be the coolest, but I know it will always work.

(2) Comfort: Something that relaxes you, the opposite of stress

This chair is so comfortable! I could sit here all day.

(3) Let’s pretend: We say this before talking about an unreal situation.

Let’s pretend we have an unlimited budget. What will we do?

Today’s

Questions

1. How might a restaurant find a blue ocean?

a. Going to the city center

b. Leaving the city center

c. Doing something different than the competition

2. Which things go on a value curve?

a. Things important to your industry

b. Things customers want or need

c. Things that your competitors aren’t doing, but you can do.

3. Why might an airline not value low ticket prices?

a. They might get revenue in other ways

b. They might create a flight people will pay more for

c. A and B

7 ________________________

BUSINESS STRATEGY MONDAY

________________________

airline By Jeremy Schaar

The past two weeks I’ve been writing about blue ocean strategy and value curves. Today, I’ll review what blue ocean strategy and value curves are. Then I’ll write about how you can apply it to your industry.

Blue ocean strategy is when a company tries to move to an area without competition. They do this by changing their value curve. A value curve is a set of things that are important to your industry and how important they are for your company.

For example, a restaurant might have three things on its value curve: price, location, and taste. Which do you think should be important for a restaurant? Which shouldn’t be important? There’s no perfect answer, but imagine a city with many expensive restaurants in the city center. They all serve really great food. It’s a red ocean and everyone is trying to make their food a little bit better to compete. A company could find a blue ocean by charging less money and leaving the city center or sacrificing taste.

What about your industry? How might you find a blue ocean?

The first step is to think about what’s on your value curve. These are things important to your industry. Then you should decide how much you value each thing. Compare this with how much your competitors value each thing. Then redraw your value curve.

Let’s pretend you’re in the airline industry. Airlines have a real red ocean industry, so this is hard. (But no one ever said business was easy.)

Values

The first thing is obviously ticket price. Do you want to try to and offer cheaper tickets or will you try and get customers in another way? For customers, price will often be the most important thing, so you’ll probably want to value price a lot. But maybe price won’t be important to you. You might try and sell fewer tickets at a higher price. Or you might try to convince people your tickets are worth more money. Or you might try and get revenue in other ways.

After that, there’s comfort during the flight. How big are the seats? What other things can you offer to make the flight more comfortable? This will include everything from pillows to the TVs on the backs of seats and good food. If you value this high, maybe you can charge more. If it’s low, you can save on ticket price.

Dependability is another important value for airlines. Are the flights on time? How often do you have delays? Do you lose bags? Increasing speed and reducing errors will mean increasing costs, but it might be worth it. Many people will pay more for a dependable airline.

Customer Service is the final value I’ll mention today. What happens when there are delays? What mileage programs do you offer? Will you value this high and spend money on more customer service employees? Or will you not worry about it?

We might continue to add values, but this should give you an idea of how to create a value curve. Next time, we’ll look at how to change your value curve to beat the competition.

Want to study Business English? Check out the main site for our lessons.

Want to learn more about blue ocean strategy? Click here.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

C, A, C

——————————————

You Can Do It All Yourself But You Dont Have To

Business Strategy Monday–American Giant

Today’s

Vocabulary

(1) Blue ocean: A strategy that results in little competition

It’s difficult to find a blue ocean in the banking industry.

(2) Sacrifice: To let go of something that’s important in order to get something else.

Let’s sacrifice the show in Florida and use the money to give everyone a raise.

(3) To compete on price: To use price as the reason for buying your product.

Big stores like Costco compete on price more than anything else.

Today’s

Questions

1. Why might it be a good idea to make low quality medical equipment?

a. So you can make more

b. So you can have a low price

c. So you can sell more

2. What strategy do most clothing companies have?

a. High price, High quality

b. Medium price, medium quality

c. Low price, medium quality

3. What is American Giant’s most important value?

a. Speed

b. American-ness

c. Quality

7 ________________________

BUSINESS STRATEGY MONDAY

________________________

By Jeremy Schaar

Last week on the blog, I presented blue ocean strategy and discussed value curves. Today, I’ll review those concepts and present a company that has a great blue ocean strategy.

Blue ocean strategy means changing your values. A blue ocean is a set of values that other companies aren’t using. That’s why there’s no competition.

For example, let’s say that you make medical equipment. Everyone in your industry really values high-quality equipment because it will save more lives. You don’t value a low price because you would need to sacrifice quality. It’s a red ocean. There are many competitors trying to make higher quality equipment.

But there’s an opportunity. In some places, they can’t buy the high-quality equipment. They want a company that values a low price. If you start making low-quality and low-cost equipment, you’ll find yourself in a blue ocean.

A real example of blue ocean strategy is American Giant. American Giant makes hooded sweatshirts. Most clothing companies try to produce a pretty good shirt at a really low cost. This usually meant production in a country like China or Vietnam. They then sell it in their store or at a partner store. This is a red ocean. Everyone produces similar quality shirts and competes on price.

American Giant

American Giant

American Giant decided to make the highest quality shirt in the world. It’s produced in San Francisco. It’s more expensive (~$75), but it’s incredibly comfortable and will last forever. You can only buy it on their website. By focusing on quality, they created a product without competition. That’s a blue ocean.

Want to study Business English? Check out the main site for our lessons.

Want to learn more about blue ocean strategy? Click here.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, C, C

——————————————

You Can Do It All Yourself But You Dont Have To

Business Strategy Monday–Strategy vs. Tactics

Watch

On YouTube

YouTubeLink

Today’s

Vocabulary

(1) Strategy: The general thing you do to succeed

Our strategy is to provide great customer service.

(2) Tactics: The specific things you do.

We carefully hire associates and train them to make the customer happy.

(3) Timeless: Something that time doesn’t change.

A great story is timeless. It doesn’t matter when you’re born, you’ll enjoy it.

Today’s

Questions

1. Which of these is a strategy?

a. Giving a credit card holder a special color card

b. Providing a fun setting for family dinners

c. Increase sales

2. Which of these is a tactic?

a. Letting an airline passenger sit in a special waiting room

b. Making customers feel important

c. Growing the customer base

3. Are game dynamics a strategy or a tactic?

a. Strategy

b. Tactic

c. Both

7 ________________________

BUSINESS STRATEGY MONDAY

________________________

chess piece

By Jeremy Schaar

So, what is strategy anyway?

This week on Stuart Mill English, I’m featuring game dynamics. Game dynamics are the things that make us want to keep playing games. They motivate us. In business, we can use game dynamics to motivate customers to do what we want them to do.

What does this have to do with business strategy? First, we should define what strategy is.

Strategy is the general description of the company’s plan.

Strategy is not a goal. A goal is something you want.

Strategy in not a tactic. A tactic is a very specific way of doing something.

Let’s look at two examples.

Example 1 Goal: Increase sales

Strategy: Go global

Tactic: Open an office in France

Example 2 Goal: Develop better products

Strategy: Take financial pressure off engineers

Tactic: Open a R&D center away from the main office

My favorite way to check if something is a strategy is to ask if it is timeless. Timeless just means that time doesn’t change it. We might say “our love is timeless” because it won’t change over time. In business, timeless strategies are just as good in 1813, 1913, and today. The strategy of expanding the places you sell will always be an option. 100 years ago, that might have meant moving to a new town. These days, maybe you start selling the product online. Those last two things–moving to a new town, starting online sales–are tactics.

So, how about game dynamics? Well, the dynamics themselves are timeless and therefore they can be a strategy. The specific way you use them is a tactic. For example, one game dynamic is “status”. Status is feeling important. For a company strategy, you might try to make customers feel important. That means to give them status. How you do that is a tactic. For example, airlines let people sit in a special waiting room. That’s a tactic.

Tomorrow, for Global Marketing Tuesday, I’ll talk about how game dynamics can be used to market a product.

Want to study Business English? Check out the main site for our lessons.

Want to learn more about strategy vs. tactics. Click here, here, or here.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, A, A

——————————————

You Can Do It All Yourself But You Dont Have To

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