Kellogg on Strategy Book Report
Book Review
On
Kellogg on Strategy - Concepts, Tools, and Frameworks for Practitioners
By
David Dranove and Sonia Marciano
Kellogg on Strategy is the book that provides many tools and templates that are useful for practitioners like MBA students, managers or business executives to conduct strategic analysis and identify and choose the optimal strategic options. This book presents basic strategic concepts and serves as a practical guide to show people how to apply strategies effectively to make the business successful. The main ideas the authors discussed in this book are as follow: * Evaluate the firm’s strategic position * Identify the symptoms of competition * How to cure the cancer of competition * Coping with new entrants * Establish a long-term sustainable competitive advantage.
Evaluate the Firm’s Strategic Position A firm must have a superior position in the industry to generate superior profits (15). The main concept in the positioning analysis the authors focused on is the “B Minus C” framework. B Minus C framework defines that B equals to the benefit or happiness of the products given to the customers in monetary term, and C equals the production costs of the products (32). The amount of value the firm created is B – C (B minus C). A firm must have a higher B – C value than its rivals to outperform them. If a firm can offer higher B – C value than its rival, it will be able to offer more benefits to the customers than the competitors and generate higher profit and obtain more market share.
The quantitative assessment of B – C needs be performed to determine a firm’s B – C value. Cost advantage of the firm can be measured by accounting tools such as activity based costing (ABC). However, intangible benefits of the products, such as perception of quality and branding, are much harder to be quantified. The authors used the method of “Willingness to Pay” to measure the intangible benefits. B part of the B – C can be done
On
Kellogg on Strategy - Concepts, Tools, and Frameworks for Practitioners
By
David Dranove and Sonia Marciano
Kellogg on Strategy is the book that provides many tools and templates that are useful for practitioners like MBA students, managers or business executives to conduct strategic analysis and identify and choose the optimal strategic options. This book presents basic strategic concepts and serves as a practical guide to show people how to apply strategies effectively to make the business successful. The main ideas the authors discussed in this book are as follow: * Evaluate the firm’s strategic position * Identify the symptoms of competition * How to cure the cancer of competition * Coping with new entrants * Establish a long-term sustainable competitive advantage.
Evaluate the Firm’s Strategic Position A firm must have a superior position in the industry to generate superior profits (15). The main concept in the positioning analysis the authors focused on is the “B Minus C” framework. B Minus C framework defines that B equals to the benefit or happiness of the products given to the customers in monetary term, and C equals the production costs of the products (32). The amount of value the firm created is B – C (B minus C). A firm must have a higher B – C value than its rivals to outperform them. If a firm can offer higher B – C value than its rival, it will be able to offer more benefits to the customers than the competitors and generate higher profit and obtain more market share.
The quantitative assessment of B – C needs be performed to determine a firm’s B – C value. Cost advantage of the firm can be measured by accounting tools such as activity based costing (ABC). However, intangible benefits of the products, such as perception of quality and branding, are much harder to be quantified. The authors used the method of “Willingness to Pay” to measure the intangible benefits. B part of the B – C can be done