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Are You Sure You Have a Strategy?. STRATEGIC MANAGE J . 5 Elements of Strategy. Arenas Vehicles Differentiation Staging Economic Logic. Arenas. Where will we be active? What product categories? What market segments? What geographic areas? What core technologies

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5 Elements of Strategy

  • Arenas

  • Vehicles

  • Differentiation

  • Staging

  • Economic Logic


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Arenas

  • Where will we be active?

    • What product categories?

    • What market segments?

    • What geographic areas?

    • What core technologies

    • What value creation stages?

  • How much emphasis will each area receive?

    • Which areas are most important?

    • Which areas are peripherally important?


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Vehicles

  • How will we get to the Areas we have selected?

    • Internal Development?

    • Joint Ventures?

    • Licensing?

    • Franchising?

    • Acquisitions?


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Differentiation

  • How will we win consumers in the Areas?

    • Image?

    • Customization?

    • Price?

    • Style?

    • Reliability?

    • Overall Value?


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Staging

  • What will be our speed and sequence of moves into Areas?

    • Speed of expansion?

      • Heavily impacted by Vehicles

      • May be different in different Areas

    • Sequence of initiatives?

      • Impacted by priority of Areas

      • May be impacted by Vehicles


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Economic Logic

  • How will we obtain our returns?

    • Lowest costs through scale advantages?

    • Lowest cost through scope and replication advantages?

    • Premium prices due to unmatched service?

    • Premium prices due to proprietary product features?

    • Fees paid as a result of licensing or franchising?


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  • http://www.enviveit.com

  • New Startup Company: Media Center PCs

  • Development Began: January 2006

  • Public Site Launch: August 2006

  • First Products Available: August 2006


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Envive’s Strategy

  • Arenas

    • Focus exclusively on Home Theater PCs

    • Focus on Middle and Upper Class consumers, especially technology oriented young consumers

    • US market only (international restrictions on technology sales)

    • Sell complete PCs, Relevant Accessories, and both Readily Available and Proprietary Software

    • Do not manufacture components, just assemble them into a final product


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Envive’s Strategy

  • Vehicles

    • Initial use of internal deployment exclusively

    • Initial sales online only, with one Demo room set up in Dallas, TX

    • Eventual deployment into Home Theater stores


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Envive’s Strategy

  • Differentiation

    • Unique offerings, i.e. the fastest available micro PC as of today

    • Develop proprietary software

    • Exclusive licensing for hardware

    • Develop unique solutions to common Home Theater problems (like TiVo did)


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Envive’s Strategy

  • Staging

    • Expansion speed reflects the speed of sales, with joint ventures and licensing as a potential accelerant

    • Sequence impacted by likely strong markets (urban areas) and geography

  • Economic Logic

    • Premium prices compared to major computer lines due to unmatched features

    • Lower cost compared to other premium Home Theater PC developers


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McDonald’s

  • Most people are already familiar with McDonald’s Arenas, Differentiations, and Staging.

  • McDonald’s has made money by using the other two elements to their maximum advantage: Vehicles and Economic Logic.


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McDonald’s Vehicle

  • One word: FRANCHISING

  • Franchising is a highly adaptable method for rapid expansion.

  • A Franchisor creates a system, which they sell to a Franchisee for a Franchise Fee and a percentage of operating profits.

  • This model differs many start up costs to the Franchisee.

  • By finding many Franchisees, a Franchisor can roll their system out into many markets simultaneously with a minimal cost.


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McDonald’s Economic Logic

  • Economies of Scale play into profit.

  • The key, however, is the vehicle.

  • Franchisors make money through attracting the most Franchisees and giving them a successful system.

  • McDonald’s made the most of franchising to expand as fast a possible, and because the system was solid, the franchises made money.


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