Message Board 3: Applying Value Innovation Techniques to the SBA Apply the concepts and techniques learned in this module to answer the following questions: 1. Widener’s School of Business...

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Message Board 3: Applying Value Innovation Techniques to the SBA Apply the concepts and techniques learned in this module to answer the following questions: 1. Widener’s School of Business Administration (SBA) competes in the business education industry in the Greater Philadelphia metropolitan market. This is a highly competitive market that includes Ivy League schools like Wharton, state schools like West Chester, and private schools like Drexel. Apply the concepts and techniques learned this week to develop value curves for Widener’s SBA and for each of its competitors listed above. 2. (a) Apply the six value innovation approaches learned this week to identify new market spaces and value-adding opportunities that Widener’s SBA could pursue. (b) Based on the results of this exercise, what additional dimensions would you add to Widener's value curve that you developed in Question #1? Post your answers to these questions by 11:55pm EST on Friday of this week. Also, post at least one follow-up comment to the answers posted by another class member. Your comment should provide your peer with a constructive evaluation and recommendation aimed at improving her/his answers. Post your follow-up comment by 11:55pm on Sunday. Creating New Market Space Managing for Results through Value Innovation How to Achieve Superior Results by Creating New Market Space Blue Ocean Strategy 1 Learning Objectives Understand the concept of value innovation & how it differs from conventional competitive logic https://youtu.be/clp-IMpuwaQ (Mauborgne: 6:02) Understand the various approaches to the creation of new market space (i.e. value innovation approaches) https://youtu.be/2N3XqyuOwIM (2:26) Learn how to plot value curves and how to use the 4-Action framework to create a new value curve for the firm 2 1. What is Value Innovation? Create products/services for which there are no direct competitors by staking out new market spaces Why? Constraints of conventional competitive logic Convergence of strategy as a result of ↑ competition ↑ competition lowers profitability Limited perspective of who customers are & what they value Value innovators can break away from the competitive pack Instead of fighting over cost/differentiation advantages, stake out new market space where competitors have not ventured The Blue Ocean 3 Value Innovation vs. Convention Conventional approachValue Innovation Industry assumptionConditions are givenConditions can be changed Strategic focusBeating the competitionMaximize value to customers CustomersExisting target marketsNew target markets Capabilities and assetsLeverage existing onesLess of a constraint Product/service offeringsWithin traditional boundariesEstablishing new boundaries 4 2. Value Innovation Approaches Break free from the conventionally defined boundaries of competition – look for new market spaces across: Substitute industries Ex: Home Depot & Intuit Strategic groups Ex: Ralph Lauren & Sony Walkman Buyer groups Ex: Bloomberg & Philips Lighting Complimentary products Ex: B&N & Dyson Functional-emotional orientations Ex: Starbucks & Body Shop Time (decisive, irreversible, & clear trajectory) Ex: Cisco Southwest 5 Example: Virgin Atlantic Value innovation & creating new market space across complimentary products/services for business travelers Eliminated first class Focused on improving business class Sleeper seats Added new amenities The total solution for the busy executive Lounges with relevant services: showers, apparel services, office services, massages Transportation to/from airport Maximize value for customers → Business travelers Extending boundaries & developing new capabilities/resources 6 3a. Value Curves A value curve is a graphic depiction of the way a firm or industry configures its offering to customers by plotting the level of a firm’s product/service relative to other alternatives along key success factors Here value innovation can occur along 3 platforms Product platform – physical offering Service platform – support, maintenance, skills Delivery platform – logistics, channel 7 Example: Airline Industry Value Curves 8 3b. Creating New Value Curves: The 4 Actions Framework Ask four questions – to challenge industry norms and the firm’s business model What features should be reduced well below the current industry standard? What taken-for-granted features should be eliminated because they add no value? What features should be raised well above the current industry standard? What new factors should be created – features that the industry has never offered before? 9 An Example: Creating New Value Curves & the 4 Actions Framework Virgin Atlantic What features should be reduced well below the current industry standard? # of classes & locations served What taken-for-granted features should be eliminated because they add no value? First class seating What features should be raised well above the current industry standard? In-flight & airport lounge amenities What new factors should be created – features that the industry has never offered before? Transportation 10 Airline Industry Value Curve with new Virgin Atlantic value curve 11 An Example of Value Innovation: Yellow Tail Winery The wine industry is not an attractive one Intense global competition – flat demand in US Mounting price pressure → Increasing bargaining power of retail/distributors (i.e. buyers) Threat of substitutes – beer, malt beverages & spirits Many new entrants – low barriers to entry Agricultural input/product (i.e. suppliers) Key Question How do you break out of the vicious competition and find uncontested market space? Consider value innovation approaches? Consider the 4 actions framework to create a new value curve? 12 Segmentation in the Wine Industry Premium wines High on price, terminology, marketing, aging, legacy, complexity, range Budget (table or jug) wines Low on all these features Wine is promoted as a unique beverage for a sophisticated consumer for special occasions 13 Industry Value Curve: Wine Industry competes on following dimensions: Price Marketing – retail incentives Esoteric terminology & labeling Appellation, chateau, vintage, & varietal Prestige/legacy of winery Aging as a sign of quality Complexity – e.g. tannins, oak, minerals 14 Creating a New Value Curve – Yellow Tail Winery Yellow Tail used the 4 Actions framework Reduced/eliminated factors that did not add value and which in fact intimidated potential customers Tannins, complexity, aging, jargon Raised/added factors not normally offered by wine that attracted consumers of substitute products Ease of selection, fun labels, smooth taste/fruitiness, retail ambassadors Found opportunities for value creation by targeting consumers of substitute products, facilitating buying decisions, adding function https://www.youtube.com/watch?v=_uVTsle9AIA 15 Value Curves in the Wine Industry 16 Results of Yellow Tail’s Value Innovation Strategy Within 2 years, Yellow Tail became #1 wine in U.S. Instead of stealing customers from other wine makers, it created new market space: Attracted 6 million new customers – those who consumed substitutes (beer, cocktails, coolers) Increased consumption levels among novices Drink wine more frequently, not just special occasions Encouraged jug wine drinkers to trade up 17 Where did Yellow Tail create new market space? Between substitutes – attracted consumers who wanted simplicity & fun as well as sophistication Between strategic groups – less of a trade-off between price & quality Across “buyers” - targeted influencers (retail salespeople) Combined emotion & functionality of the purchase Tapped into trends of global affluence – higher global consumption brought economies of scale 18 Appendix Value Innovation Approaches & Examples from “Creating New Market Spaces” 19 New Space Between Substitutes Understand why/how customers choose between substitutes & offer a product that eliminates the need for trade-offs Examples Home Depot – expertise of contractor market vs. cost of hardware stores & DIY Southwest – speed of flying vs. low cost of driving Intuit – speed & accuracy of computers vs. simplicity & low cost of pencils 20 New Space Between Strategic Groups Understand why customers move from one group to another & offer a product that eliminates need for trade-offs Examples Lexus & Schwab – quality at an affordable price Sony Walkman – boom-box acoustics with portable (transistor) radio size Ralph Lauren – traditional style with haute couture appeal 21 New Space Across “Buyer” Groups Understanding the different perception of value across purchasers, users, & influencers to uncover new targeted “buyers” Example Bloomberg – IT managers and traders defined value differently & Bloomberg targeted traders Pharmaceutical firms – Shift in focus from influencers (physicians) to users (patients) 22 New Space Across Complements Understanding the total solution that buyers seek & offering a product that meets other needs related to your product Examples Virgin Atlantic – additional services for traveling executives Borders – additional opportunities/ambience for readers Dyson – eliminated the need for bags 23 New Space Across Emotional and/or Functional Orientation Understand that customers may value functionality and/or emotional appeal & offering a product that also addresses the other dimension Examples Swatch – added style to a budget watch Starbucks – added ambience/an experience to a commodity product 24 New Space Across Time Understand significant & irreversible trends to offer a product that meets the needs created by such trends Trends must be decisive, irreversible, & have a clear trajectory Examples Google – Using the Internet for information Cisco Systems – the need to high-speed data exchange 25 High Legacy LowLCC price locations # classes amenities Legacy and LCC High Legacy LowLCC pricelocations# classesamenities Virgin Atlantic Ex High Virgin Legacy LowLCC pricelocations# classesamenitiestransportation Sheet3 High Virgin Legacy LowLCC price locations # classes amenities transportation
Answered 2 days AfterApr 04, 2022

Answer To: Message Board 3: Applying Value Innovation Techniques to the SBA Apply the concepts and techniques...

Rudrakshi answered on Apr 07 2022
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Title: Message Board 3: Applying Value Innovation Techniques to the SBA
Contents
1. Value Curves    3
Widener University    3
Drexel    3
West Chester University    4
Wharton Business School    5
2. Six
-Value Innovation Approaches    6
(a) Six Value Innovation Approaches    6
(b) Additional Dimensions on Value Curve of Widener    7
Works Cited    9
1. Value Curves
Widener University
Last one is the comparison of Widener University against the five parameters is identified with its pricing through which it is determined that the University has low pricing strategy. The infrastructure parameter of the university is high when it is compared to other Universities.
Next is the environment, which is low as only Wharton Business School has high environment university. Next is the career-relevant education of the University through which it is determined that University offers high career-relevant education facility. Last is the promotion, which is also analyzed that it is having high promotional facility.
Drexel
Based on the various parameters of the blue ocean strategy difference can be seen in the graph. Where the price compared to all the other universities was low except for the Drexel University. When it comes to the infrastructure parameter the competitors of the Drexel University has low infrastructure except for Widener University (Lim et al.).
Next is the environment, which is low of the university and even the competitors having low environment except for Wharton Business School. Another parameter is the career-relevant education and it can be seen from the curve that Drexel University has low parameter when compared to other competitors. Last is the promotion, which is high in case of Drexel University.
Graph 1: Drexel vs. Widener University
West Chester University
When it comes to the comparison of West Chester Prices are low when it is compared to any other University. However, Wharton Business School and Widener University also offers low prices but where chest a University has some other parameters that are comparable to these universities. When it comes to the infrastructure parameter, it is also low in the case of this university as well as Wharton Business School.
Next is environment parameter which is low is well in this university case however on the other hand the university offers high career-relevant education to every...
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