SOLUTION: JWI 540 Healthcare Industry and Resources Questions

JWI 540: Strategy
Week Two Lecture Notes
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JWI 540 (1192)
Page 1 of 6
WHAT IS THE PLAYING FIELD?
What it Means
Jack defines strategy as making “clear-cut choices on how to compete.” In order to develop a winning
strategy, you must first identify the boundaries that define your market and identify the forces at work within
that market. Understanding your competitive environment (i.e., your playing field) is crucial to your
organization’s success.
Why it Matters

Defining the playing field is the first step in the strategy development process. If you don’t make a
decision on what is (and is not) within the scope of your business, your ability to make effective
strategic choices will be severely compromised.

Setting an appropriate industry scope (not too small and not too large), allows you to better assess
the future opportunity for growth.

Clearly mapping out your current and potential competitors enables you to start better “what if?”
questions.
“You can’t be detailed enough about
knowing the playing field…
too often, people like to call themselves
the market leader, so they end up limiting
the scope of their playing field to make
that happen.”
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 (1192)
Page 2 of 6
DEFINING YOUR PLAYING FIELD
Developing a winning strategy begins with a thorough understanding of your playing field. That means
defining what is and is not part of your potential market.
The smaller your definition of your market, the easier it is for you to be the top player, which can lead to a
false sense of accomplishment as well as, unintentionally, limit your potential for growth. Instead, try to cast
your net wider because as you broaden the vision of your market, your opportunities for growth expand as
well.
Jack asks us to consider a simple, but powerful example of how market scope could be defined.
Imagine how shifting your perception of the market dramatically changes your perception of the overall size,
number, and type of competitors. Imagine you are in a typical meeting room, and sitting on a typical office
chair with armrests and wheels. Imagine that you are the manufacturer of that chair. Is your target market
only for business chairs? If you broaden your vision, your market may be any type of chair. Change
perspective again and your market could be all business furniture.
As you define your playing field, there are three areas you will want to focus on:
1. The characteristics of the environment
2. The most important customers
3. Your competition
Let’s start with a focus on the environment. Consider the following questions:

What are the characteristics of this business? For example, is it a commodity market, a high-end
specialized market, or somewhere in between?

Does it have a long selling cycle or a short one?

What are the growth characteristics in the particular market?

Where is the product or service on the adoption curve?

What drives the market?

What are the drivers of profitability?
THE CHARACTERISTICS OF YOUR INDUSTRY
Companies that understand their environment are better prepared to compete and identify opportunities to
disrupt the marketplace to their advantage. It is essential that you undertake this exercise with a candid
perspective.
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JWI 540 (1192)
Page 3 of 6
If your industry is part of a commodity market, make sure that your approach either addresses it as such, or
creates a plan to change the game and differentiate. Often, sales and marketing organizations are in denial
that they play in a commodity business. In reality, there is little incentive in believing you play in a highly
differentiated industry if your customers are not willing to pay a premium for what you can deliver.
Conversely, if there are certain minimum requirements for any product or service being sold, then there may
be very little opportunity to deliver a suboptimal solution and try to come to the market at a lower price point.
By answering these questions for your business, you will have a better perspective on the macro drivers of
your industry. You can then start zooming in on your customers and competitors. To do that, look at your
customer base and ask yourself:





Who are the key customers? Are they the ones that you have and the ones that you want?
What are the typical characteristics of these customers? What do they value?
How dependent are customers on the products you and your competitors provide?
What has been the growth rate and evolution of your customer base?
How do buyers perceive your product, service, and organization?
Your customers will ultimately determine if your new direction succeeds or not; “best-in-class” organizations
remain focused on the underlying customer needs and how to better serve them.
UNDERSTANDING THE PLAYERS AND THE GAME
All games, like all industries, have players and rules. They have boundaries establishing the nature or field of
play. The players score points or gain field position by employing tactics designed to give them an
advantage over their rivals.
PARTS is an acronym for one framework that can help you understand the game already underway in your
competitive arena, and also help to define potentially game-changing levers that may be manipulated as part
of your strategy (Brandenburger & Nalebuff, 1997). For example, you will view the game differently if you
define the players in your game as not just competitors, but also distributors and customers. The interest in
games like Who Wants to Be a Millionaire in part comes from a contestant’s ability to ask the audience or
phone a friend – thereby expanding the group of players.
We’ll use the retail book business in 2000 as a well-known example to illustrate this framework, and to show
how the game can quickly change.
THE PARTS FRAMEWORK
PLAYERS
The first component of the PARTS framework is players, those individual participants or groups that can take
actions to create value and ultimately have a chance to be one of the game’s winners. In 1997, established
players in the retail book industry were Borders, Barnes & Noble, and independent booksellers. A rising
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be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University.
JWI 540 (1192)
Page 4 of 6
player by the name of Amazon had been in the game for only a few years.
Look at your industry. Do players team up to collaborate, or is it every man for himself? Can the number of
players change, either by encouraging a company to join or to leave the game? In the book-retailing
business, should an established player have asked Amazon to partner with it in the early days? Such a
move would have changed the way that game developed.
ADDED VALUE
The next element of the PARTS framework is a way to keep score in your industry. Say you are a distributor.
Storing, shipping, and tracking the items that your customer manufactures, and performing these activities in
a reliable, timely, and cost-effective way, adds value to the manufactured goods. The degree that these
activities meet the needs of your customer, or the manufacturer, determines your score.
In the book business, Amazon challenged the added value of the old-style booksellers head-on. Until then,
adding value meant offering a diverse assortment of titles in convenient brick-and-mortar locations. With an
inventory that included virtually every book, and the convenience of browsing on the Internet, Amazon
shifted the game. All the players had to adapt to a new definition of added value.
RULES
The third element, rules, defines what can and cannot be done in a strategic game. In the most literal sense,
regulators or legal entities set the rules. A bookseller must not reproduce copyrighted books without the
proper authority and payments, for example. Some of the most important rules in an industry, however, are
not of the legal kind.
Throughout the 1990s, book retailers ordered books to stock their shelves based on their market research
and marketing plans. Their inventory decisions were a major part of their strategies. The books that didn’t
sell might be marked down to lower prices, and if they still didn’t sell, returned to the publishers to be
destroyed without being paid for. There was no rule that legally required this unusual form of inventory
management, which dates back to the Depression, as a strategy to take the risk out of the extremely
common problem of unsold books, but it was the industry standard.
Think about the unwritten rules your business has with its customers, employees, and others. You may find
existing rules you would like to break or new rules you want to put in place. Often, of course, you need to
adapt to the current rules of the game. Even within these limits, however, you might be able to gain the
equivalent of a home-court advantage or even put your rivals on the defensive with a full-court press. And
merely thinking about who makes the rules (and what it would take for your company to become the one
who sets them) can generate new ways of thinking about, and playing in, your industry.
TACTICS
The fourth component of the framework is the methods that companies use to gain a better position on the
strategy game board, or to score points with stakeholders, suppliers, or customers. In recent years, book
retailer Barnes & Noble has reinforced its strategic commitment to the total customer experience by creating
a generous loyalty program and opening in-store cafes where customers can relax and browse magazines.
These tactics increase the customer’s perceived value of what it offers without increasing the perceived cost
of a book. This helps them move below the value equivalence line—that is, its perceived cost is lower than
its perceived value that we discussed in an earlier lecture.
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be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University.
JWI 540 (1192)
Page 5 of 6
SCOPE
The last PARTS framework element, scope, refers to the boundaries of the game in your industry. Is this a
stand-alone game, or is it linked to other games? Could you gain an advantage if you provided that link? For
example, for a long time, Borders and Barnes & Noble simultaneously competed against each other in a
game of location, to gain prime retail locations in malls, and in a game of merchandising, to get customers
who were strolling past their stores to make impulse purchases. Amazon, with its Internet retail business
model, linked these two games, creating a single location in which people could browse without having to
wander the aisles.
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be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University.
JWI 540 (1192)
Page 6 of 6
JWI 540: Strategy
Week Seven Lecture Notes
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JWI 540 (1192)
Page 1 of 5
IDENTIFYING GAME WINNING MOVES
What it Means
Building a winning strategy is energizing and can provide insight into the future. With focus, it should take
anywhere between a few days and a month to create it. After that, it’s time to act. It’s time to make your
game changing move that will enable your organization to win. A winning strategy is a chosen direction that
is executed with passion. The readings and exercises from the previous weeks have probably resulted in
generating a number of possible winning strategies for your organization’s future. Now it’s time to focus on
determining which ones you are ready to pursue.
Why it Matters

Being open to lots of new ideas is essential for the “what if?” portions of strategy development, but
having too many initiatives going at once will lead to clutter and lack of focus.

Most organizations can’t effectively manage more than two or three key strategic initiatives at once.
If the strategies are large-scale or are a significant departure from the way things have been done in
the past, that number may be reduced to a single core initiative.

Selecting a clear, straightforward plan of action makes it easier to explain to your organization where
the company is going (and why), and to rally everyone’s support.
“Good business leaders create a vision,
articulate the vision, passionately own the
vision, and relentlessly drive it to
completion.”
Jack Welch
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be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University.
JWI 540 (1192)
Page 2 of 5
IDENTIFYING YOUR GAME WINNING MOVE
We’ve looked at a lot of different components of strategy development since our course began.

We’ve spent time assessing the market segment in which we want to compete.

We’ve looked at what our competitors are really good at and not so good at.

We’ve looked at how our core competencies measure up as potential sustainable advantages
relative to our competitors’ capabilities and market opportunities.

We’ve looked at ways to generate strategic options and to refine these options down to those
that are most likely to lead to meaningful differentiation in the market.
Now we have to narrow our focus further and choose a game winning move.
As noted previously, strategy development is iterative. That’s a nice way of saying it can be messy at
times. While some strategy models advocate a rigid step-by-step process, the reality is that even the
most linear models are intended to help you ask questions in ways that get the creative juices flowing.
This means that, despite your best efforts to “check the boxes” sequentially as you develop your
strategy, you will naturally have new discoveries at various points along the way. They might cause
you to go back and rethink something you were quite certain about when you began.
And that’s good, but still, we have to make our choices and move ahead.
To help accomplish this, we suggested in last week’s lecture notes that it’s helpful to organize your
strategic options into categories. We suggested seven of these. The use of categories is not intended
to pigeonhole your ideas, but rather, to help you better understand where your idea fits into a
framework of moves. There are two primary advantages in this:
1. These categories of winning moves have proven themselves over time and across industries.
While different strategists may organize such lists in different ways, the point is to be able to
leverage the categories as a tool to clarify what your potential moves are actually doing.
2. Reviewing your strategic options against a set of categories of moves may help to turn up
additional options that are worth considering, but which have been overlooked initially.
EVALUATE THE OPTIONS
Once you generate strategic options, evaluation is the next step. Although the more strategic options you
can generate, the better, you’ll want to eliminate weak ideas early in the process.
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be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University.
JWI 540 (1192)
Page 3 of 5
Ideally, as you consider options, you will improve them, too. Say you come up with the idea of a low-cost,
mobile fast food service targeted at young suburban office workers. What if you combined that idea with
novel approaches to ordering via mobile phones and the storing of repeat customers’ preferences, since
these workers will presumably want to call in their orders and get back to work quickly?
Details could be worked out later. But an initial evaluation of whether this newly-identified market segment
values convenient, technology-enabled ordering could transform a strategic option with modest prospects
into one with significant potential.
The initial screening of options can begin with three simple questions:
1. Is it Big?
What is the size of the potential market? This question is not intended to bog you down in detailed
analysis. But you need to quickly eliminate good ideas that have only limited potential.
2. Is it Us?
Sometimes, a strategic option is great, but doesn’t fit with the rest of your company’s strategic
activities. Or it runs counter to your history, values, or skill set. Assessing the value of the idea not in
the abstract, but with specific reference to your organization, can quickly flash a red or a green light.
3. Is it Time?
Being too early to market is sometimes worse than being too late. Ask yourself whether there is a
critical mass of eager customers ready to adopt this option. Are necessary complementary
technologies ready to support it?
Of course, most evaluations will also contain a financial component, such as a net-present-value analysis.
The farther the options you’re considering are from your core business, the less useful the traditional
evaluation tools will be. But estimates of market size and demand trends can still help narrow your choices,
even when you’re moving into unfamiliar territory.
If a plausible business model for the option can’t be identified, it should be rejected or recycled. That is, it
may need to be reconfigured in some way, either through creative insights or additional economic analysis, if
it is to have real strategic potential.
Some situations – such as when considerable uncertainty about demand, external trends, or new
technologies exists – call for the pursuit of options despite the lack of a strong business model. However,
investments should be kept small and implementation discovery-driven – that is, with the aim of gaining
more information about market size, demand, and other variables during the experimental period.
LOOP IN THE RIGHT OPTION EVALUATORS
Some people are great at generating ideas. Others are astute at choosing combinations of ideas that
reinforce each other and fit an organization’s existing skills and energies. It is these people who are
particularly valuable during the evaluation stage. There are also a number of useful roles that people can
play during evaluation.
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