I need a discussion for my week 5 Strategy class and a response to 2 classmates

Week 5 DiscussionCOLLAPSE
Recognizing the Need for Change
Rita McGrath, Columbia Business School professor and author of the article, “Transient Advantage,”discusses several traps that can blind a company to the need for imminent changes to their strategy to preserve competitive advantage. These traps, discussed in the second half of the article, include: the first-mover trap, the superiority trap, the quality trap, the hostage-resources trap, the white space trap, the empire-building trap, and the sporadic-innovation trap.
Locate and post a link to an article in The Wall Street Journal, or another reputable source, about a company that fell victim to one or more of these traps.
Identify the trap(s) and discuss why you believe the company’s management missed the warning signs.
What were the impacts that resulted from falling for the trap(s)?
Drawing on the guidance offered by Sherman in Chapter 6, what could they have done differently to avoid the trap(s)?
Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates’ initial posts by Sunday, midnight of your time zone.​
1st person to respond to is Chad
Hello Dr. G. and Class,
Identify the trap(s) and discuss why you believe the company’s management missed the warning signs.
Rita McGrath’s article this week teaches us that successful businesses can no longer rely on established practices and positions, instead, companies must strive for a transient advantage, or the ability to be constantly innovating through new strategic initiatives over and over again (1). The one trap I would like to examine this week is the ‘empire-building trap’ (1). This trap addresses companies that have acquired significant assets over time, but that struggle with bureaucracy, experimental inhibition, and an adverse position on risk (1). I experienced this firsthand when working with Baker Hughes, a GE Company (BHGE) during the initial acquisition and the year following. The article I would like to reference is from the Wall Street Journal which discusses the failed experiment and how Baker Hughes would be spun off as GE attempts to reduce its debt by more than $75 billion by 2023 (WSJ, 2).
What were the impacts that resulted from falling for the trap(s)?
Speaking from personal experience having gone through the merger, I can say that many employees felt that the company simply became too large to operate efficiently. McGrath mentions that a pitfall of the empire-building trap is that it causes “employees who like to do new things to leave” (1). That is exactly what happened, as, within one year of the merger, all six of our technical sales team members left the company (on their own accord) for competitors. However, there was also a “brutal restructuring” (McGrath, 1) that created employee disengagement and created resentment. McGrath argues that restructuring sometimes cannot be avoided, but it is important that companies approach it with compassion to disengage with the least destructive, most beneficial ways possible to keep relationships with ex-employees as amicable as possible (1). The Wall Street Journal article details the failed acquisition and that GE is “deleveraging targets” to cut down on its debt and spin-off unsuccessful ventures (2).
Drawing on the guidance offered by Sherman in Chapter 6, what could they have done differently to avoid the trap(s)?
While GE is a very successful company, when it comes to the entity of BHGE and spin-off, I would classify this as a profit lagger (3). The appropriate response, as Sherman indicates for laggards, is to “shrink to grow around defensible core businesses and fix or fold lagging business units” (3). That is exactly what GE is doing by cutting stakes in Baker Hughes and focusing on making and servicing jet engines (WSJ, 1). When the merger was first announced, I was very excited about the possibilities of the new company and how it would be great to access much of GE’s innovative processes and products. However, Sherman teaches us that a “company must go all-in to support its strategy”, meaning that all corporate capabilities must be aligned with the articulation of market-differentiating strategy (3). That was not the case at BHGE, as new systems were implemented, but there was a lot of confusion and layers of systems upon systems that impeded the speed of business. Speaking first-hand, our team felt that we became more focused on reporting up and within BHGE, than being accountable and available to our clients. Had BHGE focused on decisive action in both concept and execution, BHGE could have become a market-leading oilfield services company given its size, market share, the strength of products, turn-key offerings, and experienced workforce (Sherman, 3). Sherman suggests that a CEO must keep the organization motivated and incentivized to fulfill the strategic direction (3).
Regards,
Chad
Source List:
Rita Gunther McGrath. 2013. The Transient Advantage. Harvard Business Review.
Nita Trentmann. 2021. The Wall Street Journal. GE’s CFO Plays Key Role in Company’s Three-Way Split. https://www.wsj.com/articles/ges-cfo-plays-key-role-in-companys-three-way-split-11636583801?mod=Searchresults_pos3&page=1
Leonard Sherman. 2017. If You’re in a Dogfight, Become a Cat!
2nd person respond to is
Xiaodong Zhu
Hello Dr. G and Class:
Locate and post a link to an article in The Wall Street Journal, or another reputable source, about a company that fell victim to one or more of these traps.
#1 the Product Graveyard – Why Did Netscape Fail, Airfocus.com
Identify the trap(s) and discuss why you believe the company’s management missed the warning signs.
Netscape lost the browser war to internet explorer in late 1990. I identified two traps from Netscape’s strategy.
The first one is the first-mover trap. Netscape is the first successful startup of the internet era and the first commercial web browser released in 1994 (1). Netscape’s had a successful IPO and trusted more than 90% of browser usage (2). The early entry into this product gave Netscape a unique advantage, helping it remain the leader until mid-1997 after Microsoft released the internet explorer 4.0. In 1998, Netscape lost the browser war and failed to keep its position. First-mover status can confer advantages, but it does not do so categorically. Much depends on the circumstances (3). When Microsoft started to bundle the browser with OS, Netscape didn’t define a good strategy to compete with IE. If they focus on browser efficiency, like today’s Google Chrome, they will not lose the game.
The second trap is the superiority trap. As the first web browser product, Netscape used some old code for the Netscape products until it faced difficulties adding new features to compete with internet explorer. The management decides to stop updating the existing version of the software and rewrite the code from scratch for version 5.0. However, version 5.0 took more than three years to develop. When the new version is finally released, the internet explorer already dominates the web browser market. One warning sign management missed is if the code needs to rewrite, they should start earlier.
What were the impacts that resulted from falling for the trap(s)?
The result is that Netscape lost the position of the market leader to Microsoft internet explorer in 1998. Netscape was sold to AOL and then discontinued in December 2007 (4).
Drawing on the guidance offered by Sherman in Chapter 6, what could they have done differently to avoid the trap(s)?
One approach they can do differently is the management need to lead strategically with courage. After being acquired by AOL, Netscape has an opportunity to win it back. Instead of rewriting the whole communicator suite (including navigator, email, and composer), Netscape should focus on web browsers only. Updating the web browser will take a much shorter time. Three years are too long for a new product to release.
Stop updating the old version is also a big mistake. Continuous innovation is essential in sustaining superior performance. Although the technologies were the way to go, Netscape needed to accept a realistic time frame to build those and adopt a transition plan, including an intermediate release based on the old browser code to keep it in the game (5).
Thanks
Xiao
Ref:
David Shedden. October 13, 2014. Today in Media History: The first commercial Web browser, Netscape Navigator, is released in 1994.
Nov 10, 2016. Netscape, the rewrite big mistake. https://www.back2code.me/2016/11/netscape-the-rewrite-big-mistake/
Fernando and Gianvito. April 2005. The Half-Truth of First-Mover Advantage.https://hbr.org/2005/04/the-half-truth-of-first-mover-advantage
Andrei Tiburca. Jan 17, 2020. #1 the Product Graveyard – Why Did Netscape Fail.https://airfocus.com/blog/why-did-netscape-fail/
John Gable. Nov 25, 2013. Why Did Netscape Lose Market Share?.
urgencyasap
ATTACHED FILE(S)

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 1 of 13

JWI 540: Strategy

Week Five Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 2 of 13

EXPLORING STRATEGIC OPTIONS

What It Means

Organizations that excel at creating winning strategies – the kind that lead to sustainable competitive
advantages – are typically those that are willing to look beyond the status quo and the standard list of
levers that can be pulled by any of their competitors. They are willing to step back and ask a broader set
of “What if…?” questions. They look outside their own industries to generate ideas, and they seek input
from smart, engaged people. In Jack’s words, “they get every brain in the game.”

Why It Matters

• Strategists who are bold, think creatively, and explore lots of different ideas generate a better list
of choices and uncover more strategic options. Even though the majority of these ideas may
ultimately be rejected, there is no way to predict where the next breakthrough may come from.

• If you’re only looking for ideas in the same areas as your competitors, you’re a lot more likely to
generate the same list of strategic options they generate.

• Moving too quickly to a “standard” set of moves usually just preserves the status quo way of
thinking that typically only delivers a short-term advantage that your competitors can easily
match.

“Great ideas are everywhere if you’re
willing to look for them…never allow your
organization to be limited by ’not
invented here’ syndrome.”

Jack Welch

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 3 of 13

YOUR STARTING POINT

1. What processes do you and your team use to identify new and innovative approaches to the
market that can increase your competitive advantage?

2. When was the last time you looked outside your own industry for new ideas?

3. How confident are you that you understand why your customers buy from you? How about why
potential customers buy from your competitors instead of you?

4. What big changes/developments, if they were to happen, would better fulfill the needs/wants of
customers?

5. If your organization were to start the business from scratch, with no preconceived restrictions,
what would you do differently?

6. How difficult would it be to implement some (or all) of these new ideas within your existing
business?

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 4 of 13

HOW DO WE GENERATE STRATEGIC OPTIONS?

Imagine a restaurant that offers only one dish on the menu. The lack of choice is not likely to be
successful. The same is true for a company that only considers one strategic option. To craft a great
strategy, start with a full menu of options.

Now, it is true that some strategies start as a big “Aha!” moment – a sudden and surprising insight about
how to improve the company’s value proposition to outperform competitors in ways that are difficult for
them to imitate. More often, though, great insights emerge from great processes. To help you develop
such a process, we will explore two approaches that can get the creative juices flowing.

APPROACH ONE: GET SYSTEMATIC

Some strategists will tell you that there are three basic strategies: You can compete on cost, execution, or
innovation. Walmart has made a fine art out of beating the industry on price. Southwest Airlines is best in
class at execution. And Google is the king of innovation in its space.

But for open-minded strategy leaders, these three broad categories serve only as a starting point. Even if
you have a clear idea which one makes the most sense for your company, you’ll have to get more
specific.

Imagine that you have decided to pursue a strategy broadly based on keeping your costs – and therefore,
your prices – lower than your rivals’. You might start by generating strategic options related to where you
compete. Which customer segments, which products, and which geographies would be the basis of a
viable and valuable low-cost strategy? Would you serve young families or single adults? Would you
compete in urban centers in one region or across the nation?

With cost as your umbrella strategy, you might also identify strategic options related to how you compete.
Would you reduce costs as you gain buying power with suppliers? Would you offer relatively standardized
products? Would you deploy a new production or distribution model?

Consider the furniture retailer IKEA. Its cost-based strategy began with the concept that there was an
opportunity to sell people quality furniture at low prices. But its build-it-yourself strategy – getting
customers to drive off with a box of furniture parts to assemble at home – emerged from the generation,
evaluation, and combination of an array of strategic options. That process explored a bevy of questions:
How will our stores be designed? Which products will we offer? How will we manufacture them? Whom
will we hire?

Systematically generating options is sometimes criticized for being slow and too easy for competitors to
predict and imitate. By contrast, getting more creative with options that are less related to your company’s
existing activities or are even completely new to your industry is more likely to surprise the competition
and give you a greater advantage.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 5 of 13

APPROACH TWO: GET CREATIVE

Innovation gurus have proposed a host of ways to help an organization break out of a rut in their thinking
and come up with outside-the-box ideas. Some are plain silly while others only put a creative veneer on
conventional notions. But a few exercises have proven to be quite effective.

Old-fashioned brainstorming, with no rules set and no judgments passed on the validity of ideas, can
sometimes help a group get past its normal self-filtering mechanisms and come up with more, different
options. You can collect data on dissatisfied customers, suppliers, and distributors to identify pain points
that your company can eliminate as a way to capture value. For example, IKEA’s strategy was designed,
in part, to eliminate the customer pain point of waiting around for the delivery of overpriced furniture.

An option-generation team could start with a broad societal trend or a radical change in an industry – the
move from print to digital media, for example – and then look for ways that the company could exploit that
disruption of the status quo. Or, having come up with an array of incremental and unexciting strategic
options, the team might try pairing them in surprising combinations that create unexpected advantages.
(Coyne, Clifford, & Dye, 2007)

INVOLVE THE RIGHT OPTION GENERATORS

A process is only as good as the people involved in it. And when it comes to options generation, you
should gather people with the right skills, personalities, and knowledge. You want to include creative and
lateral thinkers who are able to articulate ideas they generate. You want people who are skilled at both
debate and diplomacy, unafraid to voice their views, but tolerant of other viewpoints. They shouldn’t
bristle when laughed at and should be comfortable with ambiguity.

Knowledge of the organization, the industry, specific technologies, competitors, and regulatory issues is
also important. Even though naïve questions may open up new areas of exploration, there must be real
and credible expertise in the room. There must be people familiar with such issues as the company’s
capabilities, the cost ranges for various resources, and the time requirements for change efforts.

LEARN WHAT YOUR CUSTOMERS WANT

No one needs to tell you to listen to your customers. Most companies collect customer satisfaction data
and pay a lot of attention to the latest ways to meaningfully measure that satisfaction. In the case of a
business with a focused set of products or services – say, a specialty retailer – such data can be helpful.
But if your business serves multiple market segments – think of a department store, for example – it is
difficult to hear a single voice of the customer. That can lead a company down the dangerous path of
trying to be all things to all people. So, how do you further define which customers to target, and what to
sell them as you explore strategic options?

Consider that you have developed a state-of-the-art tennis racket made of the latest composite materials,
and you plan to price it at the high end. You might choose to target either the affluent customer who can
easily afford your high-tech product, or the tennis fanatic who is willing to pay almost any price for

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 6 of 13

equipment that will improve their game. If you decide to focus primarily on the former, you might consider
unique style elements, like bold colors, that will heighten the racket’s perceived value.

In refining your target customer segment, keep in mind that some customers are more profitable than
others. Repeat purchasers, for instance, often buy a product without needing to be convinced through
advertising, or they may buy high-margin, after-sale services.

Along with identifying your target segment, you need to analyze these customers’ preferences and
estimate their demand, both for current and imagined offerings. Imagine that you are thinking about
opening a gas station. You could track the number of vehicles passing your location on the highway and
research the basic demographics of potential customers, as well as the amount they spend on non-
gasoline purchases when traveling. Deciding whether to include a donut shop, a game arcade, or an auto
repair facility at your station requires at least this level of customer understanding.
But descriptive customer data is only a start. You will also want to question consumers on basic
preferences such as how much they are willing to pay for your product. More useful questions will probe
the nature of the customer experience: Why and when do you choose our product over competing
offerings? What is different about the times you choose our product from the times you choose an
alternative?

INCREMENTAL OR GAME-CHANGING?

When asked about disrupting the playing field with new products, many companies focus on incremental
product development. This is natural and generally the fastest and safest approach; it is what
organizations do every day. Think about Nike and Reebok, constantly overtaking each other with a brand-
new running shoe with new colors and lighter weight, all of which is good. These are incremental product
design changes. Companies that truly gain a competitive edge, more often than not, get there with brand-
new products that can’t be easily copied, either through new manufacturing processes or because of
patent protections.

Meaningful differentiation does not have to involve making a brand-new invention or making a huge
technological leap forward. We all know this is not simple, or else your R&D department would be doing it
every day. But what you may be able to do more quickly is identify an unmet customer need and adapt an
existing product to enter a different market. GE enjoyed tremendous growth thanks to the invention of
polycarbonate, under the Lexan brand name. The product was originally used in 1960 for the visors of
NASA astronauts because of its hardness, transparency, and light weight. Over the years, GE identified
other uses for the material, often by combining it with other chemicals. By the late 1960s, Lexan was used
to replace glass in windows, signs, and greenhouses. When laminated in a greater thickness together
with glass, it was sold as bulletproof panels. In the 1970s, it started replacing more fragile and easily
scratched glass in car taillights and safety work glasses. When sprayed with an anti-paint coating, it
started being used for bus shelters and anti-graffiti applications. When coupled with other layers, it was
eventually used to produce CDs and DVDs.

Think about how the main characteristics of your products can be directly applied to another industry
either by themselves or in conjunction with other products or services.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 7 of 13

ALTERING CUSTOMER PREFERENCES

As you explore strategic options, do not ignore the possibility of proactively working to alter customer
preferences as a way to change the playing field. In some cases, organizations can directly influence the
customer by creating a desire for a product through marketing efforts. Social media is often a key
strategic marketing tool for many consumer companies, given its ability to reach and influence large
populations, especially younger demographics.

You have probably already seen how better information can persuade you to buy one product over
another.One of the consumer trends that has picked up speed in recent years is the demand for organic
fruits and vegetables. Farmers and nonprofit organizations have been dedicating time and resources to
inform the public about the risks of mass-farmed crops and the use of antibiotics and hormones in meat.
Grocery stores nationwide have been influenced by this change in customer perception and have steadily
increased the amount of organic produce and meat they carry to meet customer demands. They often
provide better margins for the producers as well.

Especially if your product is clearly differentiated from the rest of the market, you may pursue a marketing
and education strategy to influence your customers. Sometimes, the industry may be more receptive to a
new message in light of a catalyst event. Scientific studies showed that currently available, reusable
water bottles might release particles of BPA, a toxic chemical. Companies like Nalgene, which did not use
BPA, took advantage of the opportunity and heavily promoted their products, significantly growing their
market share.

LIFE CYCLE AND MEANINGFUL DIFFERENTIATION

An important set of factors to consider in assessing which options may be best to pursue concern the life
stage of your industry. Traditional management theory breaks down the life cycle of an industry into four
main stages:

1. Introduction
2. Growth
3. Maturity
4. Decline

These are fairly broad terms, but reflecting on where your industry is in its life cycle can help you
determine what could be your best approach to growth.

During the “Introduction” stage, a product or service has just emerged, and the focus is on educating
customers on the benefits of the innovation while trying to define new standards. Think about the creation
of the computer industry in the second half of the last century. As personal computing was becoming a
technical possibility, the first set of challenges revolved around helping customers understand what a
personal computer was and why anyone would need one.

As the boundaries of the new industry became clearer during the “Growth” stage, customers were
becoming better informed about what options were available. During this phase, there was less of a need
to define the space and pitch the concept. Instead, the growth challenge was focused on direct head-to-

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 8 of 13

head battles. Who was faster, cheaper, and more capable? If your industry is in this stage, you will
probably favor organic growth as your main strategy. Customer demand is increasing, typically at a fast
pace, so the focus is on providing the right products and ensuring there is enough capacity to fulfill
demand. Research & Development often plays a particularly significant role at this stage, as
organizations help push the boundaries of existing solutions while coming up with new ways to serve
unmet customer needs. Depending on the cycle time of your industry, this phase can be very short or
very long.

As a side note to the definitions of market cycles, keep in mind that whether the cycle is viewed as short
or long may depend on how broadly or narrowly you define your industry. If you look at your industry as a
particular subset of clothing or toys, such as something that may be sold in just one fashion or holiday
season, your main product may move from high growth to mature as a short-term fad passes. If you
defined your industry as toys and family entertainment, you may have experienced the rapid growth of
board games, followed by maturity, then circling back to new growth in video games and interactive
games.

Companies that are in a “mature” industry generally find it difficult to create the meaningful differentiation
needed to grow. Mature industries have well-defined products and educated customers. As a result,
finding new, untapped opportunities or product niches becomes more difficult. The focus often shifts to
offering better prices to attract new customers. The airline industry is a great example of a mature
industry in which gaining a customer generally means another company is losing those sales. The size of
the pie is fixed, and the only question is how it gets sliced. In such an environment, inorganic growth
would be your preferred growth strategy. This explains why, over the years, many airline companies have
either merged or made acquisitions.

Since the number of new customers has not been significant enough to drive growth for all industry
players, and the need for business travel has been reduced with the acceptance of videoconferencing,
the best option has often been to acquire, or create an alliance with, another airline in order to realize
economies of scale and absorb its customers. But, beyond acquisitions, there are other strategic
directions for growth even in mature markets.

Some companies decide to grow their business by focusing on specific niches where they have a
competitive advantage. This was the preferred approach by Southwest Airlines, which focused on fewer
routes, lower costs, and creating a company culture and customer service that were very different from
other airlines. To succeed with this approach, the company strategy needed to be laser-focused, so that it
could create a competitive advantage through differentiation. Southwest’s success is clearly linked to that
unrelenting strategy focus. And they understand that they cannot be everything to every customer. In
2008, the CEO of Southwest, Herb Kelleher, helped his customer service department when they were
struggling to address a litany of complaints from a single passenger. This passenger had become
infamous at Southwest; every time she flew with them, she sent several complaints to their customer
service department. Southwest did not know how to respond anymore until the CEO decided to send a
personal note to her. It simply said: “Dear Mrs. Crabapple, we will miss you. Love, Herb”. As Jack said,
you need to be “laser-focused on your strategy,” which includes defining which customers you want to
impress.

Another opportunity for meaningful differentiation available to all companies, independent of their
industry’s maturity stage, is to expand their product offerings. To do this, an organization needs to

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 9 of 13

understand which other types of products or services their customers would be interested in and make it
convenient to buy them all in one place. Online retailers, such as Amazon, do this very well by displaying
a list of other products that customers may be interested in buying when they review a selected item. To
find complementary products and services your existing customers would buy requires a deep
understanding of the customers’ needs and their buying patterns, but you don’t need to do all the legwork
yourself. Ask your customers what other products and services you could provide to make their lives
easier.

STRATEGIC OPTIONS IN A DECLINING INDUSTRY

Opportunities for growth through meaningful differentiation narrow considerably once an industry moves
into the “Decline” stage. At this stage, some companies decide to stay in the game and grow their share
within a shrinking playing field. As an example, look at the tobacco industry and Altria, the parent
company of Philip Morris. They focused on maintaining their market share in the U.S. and driving
international expansion to maintain their margins in a declining industry in the Western hemisphere.

Other companies have stuck around to become the “last and best” of a dying industry. While such an
approach may not sound too inspiring to some, it can take a long, long time for an entire industry to
completely die out. The one or two companies that remain may well be able to maintain some very
lucrative business for many years.

Regardless of which approach makes the most sense for your organization, execution is the fundamental
driver of success.

TURN YOUR OFFERING INTO A CUSTOMER’S SOLUTION

Focusing on attributes rather than on products and services leads us to the next level of satisfying
customer desires. In the memorable words of marketing expert Theodore Levitt, “People don’t want to
buy a quarter-inch drill. They want a quarter-inch hole.” (Christensen, Cook, & Hall, 2006) People often
are not interested in acquiring your product. All they want is a solution to their problem. Forget about what
you are selling and focus on how what you are selling can help the customer.

Too many companies think from a producer’s perspective and spend a lot of time considering how to
make and distribute what they sell. Depending on the power in their supply chain, they may feel they have
little ability to shape the consumer environment or influence the consumer’s purchasing process. Instead,
they try to excel in terms of product features or packaging, adapting their offerings to consumer demand
now or in the near future.

Let’s return to our example of the company with a new technology for tennis rackets. Typically, it would
devote a lot of resources to perfecting the new technology and touting its benefits. A more strategic
approach, though, would be to start with the tennis-playing customer rather than with the high-tech racket.
Rather than pushing your product through the supply chain to the customer at the other end, think about
solving a customer’s problems. How can you persuade her to bring your product into her life? Think about
this customer as she steps into her tennis club’s pro shop and walks up to a display of rackets. Does she

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 10 of 13

see information-rich display materials describing the racket’s new technology and how it can improve her
game? This can make it easier for her to accept the significant premium she will have to pay to acquire
this cutting-edge piece of equipment. But why limit your thinking to the point of purchase? Before the
customer encountered the display, she moved along what we will call a consumption chain that stretches
back well before the moment she handed over her credit card. (MacMillan & McGrath, 1997)

MEET THE CUSTOMER ALONG THE CONSUMPTION CHAIN

About a month before this hypothetical customer entered the pro shop, she had an experience that
sparked her desire for a better-performing racket. She was playing in a club match, and the opposing
team had newer rackets, fancier bags, and high-tech tennis shoes. Her thought process at that moment
linked cool equipment to status, confidence, and performance. When she thought about a racket, its
technical specifications were less important than its image as state of the art.

This customer reads tennis and fashion magazines. If the company studied her behavior carefully, it
might surmise she has clipped out an ad for a tennis shop downtown (she craves more variety than her
local pro shop offers), and she has asked her husband for a new racket for her birthday. She has also
tried out two different rackets while on vacation in Florida but is unable to recall the brand of either one,
let alone the stringing pattern or the specifics of the technology. She is not loyal to any one pro shop, and
she buys new tennis outfits every six to ten weeks.

By carrying out this type of analysis as part of your strategic options generation process, you can create a
detailed understanding of this consumer and the segment she represents. Good strategic analysis
enables you to understand segment-specific preferences and purchasing triggers at a deep level.

If there are enough consumers out there like this one, the racket company may decide to launch a survey
on racket preferences in tennis magazines, featuring the chance to win a new tennis wardrobe. The
company may decide to partner with another equipment firm specializing in tennis bags and accessories.
It may even decide to sell directly to customers, cutting out the pro shop middleman.

Clearly, a company needs to do more than focus on superficial characteristics of a particular customer
segment. Looking at the various points along the consumption chain where it might create opportunities
to interact with customers boosts sales and encourages customer loyalty. For our hypothetical tennis
racket company, relationships can continue long after consumers have decided to buy a racket.

Many companies increasingly see after-sales service as a way to extend their active relationship with
consumers. Ideally, it will stick with customers to the end of the consumption chain — to the moment of
product disposal. Given the premium price of the racket, does it offer discounted or even free restringing?
Can it motivate a repeat purchase through a donation drive to collect rackets for a school program?

As this example indicates, numerous opportunities exist in the life of a product: awareness of a need,
openness to solutions, search for solutions, selection of the product and accessories, purchase,
maintenance, and disposal. The exact steps in the consumption chain will vary depending on the product
or service, the industry, the consumer group, and geographies. A clear, data-driven picture of the stages
in the consumption chain is invaluable to both strategy development and execution. Consumer

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 11 of 13

preferences and behaviors evolve over time as the customer interacts with your firm, your people, your
brand, and your product. Preferences and behaviors shift as different options become available in the
marketplace, as fads and fashions wax and wane, and as a consumer’s spending power shifts up or
down.

Understanding the consumption chain enables more meaningful market segmentation based on
consumers’ behavior or their relationship with an industry, a product, or a brand, rather than simply on
observable characteristics like age or gender. The more you understand your customer, the better you
will be at choosing your objectives (what you hope to achieve in a given time period), your competitive
advantage (how you will uniquely compete for the same consumer’s spending), and your scope (the
markets, products, channels, and geographies in which you will operate).

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 12 of 13

SUCCEEDING BEYOND THE COURSE

As you read the materials and participate in class activities, stay focused on the key learning outcomes
for the week and how they can be applied to your job.

• Examine different approaches for generating strategic options

Now that your team has identified risks and opportunities, you are ready to generate options to
mitigate those risks and capitalize on the opportunities. Use the techniques presented in the
course readings and lecture notes to get every brain in the game.The goal is not to make a final
decision on the preferred winning move(s), but to generate a viable list of options which can then
be further refined to identify the best choice.

• Review, refine, and socialize your initial strategy ideas

Gather other team members who have not been a part of the strategy meetings and get their
input. Strategy leaders often don’t want to present their ideas until everything is finalized, but
there is a danger to this. Ideas that could have been vetted and refined can open the door to
even bigger ideas. Not socializing initial strategy ideas robs the organization of the benefit of
additional input.Also, those who have not been a part of the strategy development process may
feel excluded or may not want to challenge an idea that is being presented as a done deal.

• Evaluate your ideas to identify red flags and avoid possible “traps”

When you’re working on a new strategy, it’s natural to be filled with company pride.Of course,
you want to be excited. You want to be the best and you want to find new ways to conquer the
world. But don’t let your enthusiasm blind you to reality. Being aware of the traps that can
undermine your winning move is critical. The time to do this is when the strategy is being
developed, not after you have launched it.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be
copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University.

JWI 540 – Lecture Notes (1214)Page 13 of 13

ACTION PLAN

To apply what I have learned this week in my course to my job, I will…

Action Item(s)

Resources and Tools Needed (from this course and in my workplace)

Timeline and Milestones

Success Metrics

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more