Showing posts with label business strategy. Show all posts
Showing posts with label business strategy. Show all posts

Friday, June 5, 2015

Opening Communication Lines for Better Decision Making

Charles Dickens said in the Tail of Two Cities, “A wonderful fact to reflect upon, that every human creature is constituted to be that profound secret and mystery to every other.” Communication is a process sharing information from one person to the next that lowers this mystery. Problems arise in organizations when communication is not accurate or reflective of actual events. Ensuring lines of communication are open is essential for creating more functional companies through better decision making.

Poor communication wastes intangible assets and creates inefficiencies among resources (Mazzei & Ravazzani, 2015; Hola & Pikhart, 2014). Intangible assets form the nucleus of the company and include relationships, intellectual capital, and decision making. What makes one company different from the next are the internal soft mechanics often ignored because they are not easy to define.

Misinformation can be intentional or unintentional. For example most of us have been subject to rumor or conjecture at one point in our careers. Despite lacking substance, false information can create havoc in our lives and damage work relationships. A corporate culture of rumor mongering is a sure way to destroy productivity in a company quickly.

An inability to solicit and respect multiple perspectives is a sign of short-sighted strategic development. It is easy to make decisions when you have no competing information; try sticking your fingers in your ears next time you don't want to hear something. The problem is that those decisions are based on skewed information and alternatives have not afforded proper weight. Managers expand their channels to ensure they are receiving all of the information needed to make appropriate decisions.

Information is the lifeblood of solid decision making and those who keep their communication lines open are better able to capitalize on that information. Organizations that seek to create productive communication among organizational members find that decisions are well rounded and more holistic in their approach. Short-sighted and self-seeking decisions are a sure way to limit the growth potential of any organization. Open information lines keeps your sonar active and your mind sharp.

Saturday, February 7, 2015

Using Evolutionary Game Theory to Deter Competitor Market Entry

Companies that innovate lead the market but often attract market chasers that seek to gain financial benefits of producing similar products. For organizations that have invented new products and services this can be an annoying aspect of doing business if high profits must now be shared with other market entry companies. To avoid easy access by competitors a company may desire to use a deterrence or shakeout strategy.

A study in the Journal of Academy of Marketing Science discusses how evolutionary game theory is used to understand whether a deterrence strategy and a shakeout strategy are more successful in keeping new businesses of out the market (Homburg, et. al, 2013). The method a company uses will determine whether or not they will be effective in ensure the costs are too high for other firms to pursue.

A deterrence strategy seeks to block potential competitors from entering the market. Strategies may include limit pricing, raising switching costs, new innovations, blocking access to suppliers and sales channels. Through this method the organization seeks to lock up the potential cost effective methods of conducting even before the new company moves into the market.

Shakeout strategy seeks to squeeze out competitors once they have entered the market. This strategy use predatory pricing, luring customers with deals, comparative advertising, soaking up market share and other methods that leave the market unprofitable for the competitor. When this occurs over time the competitor may opt to move out of the market and adjust their investment strategies. 

The shakeout strategy appeared to be more cost effective by helping to ensure that company expenses once entering the market are high and their profit margins lower. This effectiveness is based on the optimal costing strategy of comparative effectiveness of the two strategies. The use of deterrence is still a solid strategy but only under circumstances where maneuvers can create cost effectiveness. 

Homburg, C. et. al. (2013). Incumbents’ defense strategies: a comparison of deterrence and shakeout strategy based on evolutionary game theory. Journal of the Academy of Marketing Science, 41 (2).

Saturday, November 1, 2014

Starbucks Blazes New Trails With Coffee Delivery Service

Starbucks recently announced they will be offering delivery services for their food and beverage items in select locations. To date, details about where products can be delivered, its costs, and how it is going to function have been withheld. Experts are confused as to how any company could offer low cost personalized differences. They do seem to agree that if it works Starbucks will be blazing some new trails in logistics that will be adopted by others.

I congratulate Starbucks on creating buzz in the market because there will be a lot of companies watching how they are effectively going to do this on low value purchases.  The media is ablaze about the development and its implications on e-commerce. Uniquely Starbucks is taking sales and delivery down to a micro level not yet seen on a large scale. 

Starbucks is trend setting by not only offering deliveries, but also providing pre-order cellphone applications that customers can pick up later. No one wants to wait in a long Starbucks line when they know they can grab and go with a pre-order application. Approximately 15% of all their customers’ purchases are being made through mobile devices. 

The great innovations have some theorists wondering. Some have argued that the minimum purchase price needs to be over $20 dollars to make it economically feasible. Certainly this is one possibility. The other possibility is they will require a purchase minimum like $7 and have three deliveries in the same area. Instead of one delivery you are making three within a short distance with each other. 

This would require delivery in high concentrated areas to make a return even possible. There is no doubt technology is lowering costs but to do so on a $2.25 cup of coffee is unprecedented. The only item to effectively beat economy of scale margins would be many small purchases or combining multiple services and benefits together. 

An additional benefit is that more loyalty through habit is being developed with every purchase. The consistent use of technology and applications fits within the tech savvy and trendy markets that create an image that others in society are likely to emulate. Getting customers to make the coffee as part of their working lives certainly makes a difference in longer term sales.

What Starbucks is doing is being a market leader in personalized logistics where members of society can order products and create consumer culture right from their phone. Today you may be limited to a cup of coffee from Starbucks or a bag of groceries from Amazon Fresh but tomorrow you may be having someone deliver your healthy meals three times a day. Wait…you can already sign up for this through a local service. Times have changed and so has the expectation of service.

Thursday, October 30, 2014

Does Business Strategy Have an Impact on Work-Life Balance?

Work-life balance is a common HR program that attempts to balance the needs between work and home life. That balance can be difficult to find if one is working in the service industry, consistent overtime, or in a high pressure salaried positions. Taking time to find that balance will help ensure that employees maintain a well-rounded and productive life that takes into account the whole person. The strategy a company uses to manage their business may have an impact on their desire to implement their own work-life balance programs.

A regular schedule can help people find a level of consistency that doesn’t occur if schedules are randomly changed every week. The unpredictability of work situations impacts work-life conflict, time-based conflict and strain-based conflict as measured through employee stress (Henly & Lambert, 2014). As schedules move around employees have difficulties planning activities from week to week. 

Certain sectors of the labor market have more difficulty in finding work-life balance. This is often a direct result of either too much overtime, as seen in hourly jobs in construction, or inflexible work hours in low wage occupations prevalent in the service industry. At this level, employees don’t have much control over their schedules that can cause stress when problems arise.

Executives can also have difficulty managing the demands between work and home life. When a person is responsible for a team of employees, a substantial amount of assets, and the success of a department it can be difficult to simply ignore problems to spend time with family. When an important phone call comes in it is expected that they drop what they are doing and handle the problem straight away.

The type of business strategy a company uses to guide its decisions will have an impact on their work-life balance. Those companies that follow a product leadership business strategy are more likely to adopt work-life programs when compared to those that are focused on cost leadership business strategies (Wang & Verma, 2009). 

Product leadership strategies focus more on the holistic approach to creating and selling products. Culture is one of those important components to overall success and therefore decisions to encourage work-life balance can help in encouraging higher output on an organizational level. When cost strategies take precedence it doesn’t take long to find such programs on the back burner of corporate emphasis. Decision-makers should consider the long term needs of employees in addition to the short-term financial success of the business to ensure talent is retained and fully engaged.

Henly, J. & Lambert, S. (2014). Unpredictable work timing in retail jobs: implications for employee work-life conflict. Industrial & labor Relations Review, 67 (3). 

Wang, J. & Verma, A. (2014). Explaining organizational responsiveness to work-life balance issues: the role of business strategy and high performance work systems. Academy of Management annual Meeting Proceedings. DOI: 10.5465/AMBPP.2009.44257659