Differentiate Your Business

What Can Save The Greek Tourist Industry?

Paul Simister — Wed, 28 Mar 2012 09:31:31 +0000

Imagine that five years ago you owned a hotel in Greece.

Times were good.

Occupancy rates were high. You were making a lot of money.

You wanted to make more.

So what strategic options did you have?

Strategic Options For A Greek Hotel Business

The obvious strategic options are:

To expand the hotel
To buy another hotel in the same resort
To buy another hotel in another resort in Greece
To buy another hotel in another country
To buy a restaurant or similar business which can cross-promote your hotel business
Don’t invest – bank the money and save it for a rainy day

At the time, option 3 buy a hotel in another country looks the most difficult and the least attractive. Option 6, put the spare cash safely into a bank also looks very dull.

But that’s probably because you didn’t do a rigorous enough PEST Analysis.

You may have gone through the motions but you probably wouldn’t predict the Greek financial crisis which, with hindsight, is the inevitable result of a crazy economic system.

Even worse, being locked into the Euro means that currency deflation won’t automatically re-balance the economy.

What Can Be Done To Save The Greek Tourist Industry?

For the last couple of weeks I’ve been thinking about how leisure businesses in Greece can save their future when things look so bleak.

The Euro rate of €1.10 to €1.20 to £1 means that holidays in Greece are expensive to the British when a few years ago the euro was consistently around $1.50.

The currency issue is not there for other Euro countries but the austerity measures imposed on Greece mean that the Germans are hated. And the Spanish, Italians, Portuguese and Irish don’t have any money to fritter on holidays.

The civil unrest doesn’t help either. We’ve seen the rioting on the TV. We can understand why the workers want to go on strike.

But it makes people even less likely to visit because Greece can no longer promise a nice, relaxing holiday.

Then there’s the local issues like the volcano in Santorini that’s giving off alarming signs that an eruption is likely.

So what can be done for the Greek tourist industry?

Well if you had a time machine, you could go back and reverse the strategic decisions you made five years ago. Cash in the bank suddenly looks very good because it provides a buffer against these difficult times. Diversification outside Greece also sounds good.

If only the PEST Analysis had been combined with scenario planning.

The Options For Greek Leisure Businesses

Sometimes it is good to know when you’re in a situation that can only lose you money so you can get out early and save what cash you can. It reduce competitive rivalry and helps to rebalance supply and demand. This stops the everyone slashing prices on the marginal costing logic.

If you’ve got the money, you could help your competitors to get out of the market by removing exit barriers.

The government could step in to support the tourist industry to prevent unemployment growing as hotels and restaurants close… but the Greek government doesn’t have the money to provide any funding and is having to make alarming cutbacks in its expenditure.

It’s tough.

Communities can group together to stop civil unrest before it starts by making sure that everyone understands that scaring away the tourists will only make things much worse.

Local area tourist organisations can promote their area and make sure that it’s not forgotten. Pooled money on a general attraction campaign often goes much further than many individual businesses spending their own cash and promoting their own brand and differentiating factors.

The weather is reliable – hot and sunny.

Greece has still got its tourist attractions from amazing history and culture to terrific beaches.

People still want holidays and the sterling / Euro problem applies to France, Spain, Italy and many other popular destinations for British tourists.

If hotel companies have built up email lists of former guests, they can make sure that the right messages get out to the people who are most likely to buy. Of course, they need to confront what’s on the mind of people and reassure them

Can they make irresistible offers?

Cutting prices is obvious but tough to do. Low prices are often combined with poor service as companies economise to save money to make money.

Adding value is an option although it can’t cost too much. Increasing variable costs when you know you have the guests is much better than pushing up your fixed costs.

The challenge for Greek tourist businesses will remain very tough.

The Profit Tipping Point & the Five Pathways To Profit

In my free report, the Profit Tipping Point, I explain the five pathways to profit:

Working in an attractive market
Having competitors who are sensible and don’t over-compete and drive prices down to destroy industry profitability
Having a competitive advantage that either gives you a way to magnetically attract some customers to your business or that gives you an operational advantage
Having excellent management, planning and control skills – talk to any insolvency practitioner and they will emphasise the importance of good management
Having a strong inner game where the business owner is committed, focused and clear on his or her priorities.

I believe that weakness in one of two areas must be compensated by excellence in the others.

Do You Have Ideas For Ways To Stimulate The Greek Tourist Industry?

I’d be very interested to hear if you have any ideas for stimulating the tourist trade in Greece so please leave a comment.

It’s a great example of what happens when the external environment turns against you very sharply.

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The Well Timed Strategy by Peter Navarro

Paul Simister — Sun, 27 Nov 2011 10:02:45 +0000

The Well Timed Strategy : Managing the Business Cycle For Competitive Advantage by Peter Navarro is an important book which many business leaders will wish they’d read before the 2007 credit crunch and the 2008/9 recession.

For too long, talk about the wider business environment through PEST analysis and scenario planning was seen as an irrelevance to the main job of making money.

The Well Timed Strategy Review

The Well Timed Strategy book takes a different view to strategy than most strategy books.

Normally the focus is on what to do.

The examples and case studies in The Well Timed Strategy make it clear that “when to do it” is a vital element of success. Strategies that make sense at certain stages of the business cycle can be extremely damaging in other stages.

The book defines a Master Cyclist as someone who manages the business with a perceptive view of what’s happening in the business cycle, steering the business carefully through the major decisions.

Chapter 2 to 7 of The Well Timed Strategy look at the difference business cycle timing has on:

Capital expenditure decisions – many businesses get caught adding capacity when the cycle is about to take a nose-dive, the master cyclist adds capacity in anticipation of the next upturn.
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Acquisition decisions – common sense says buy low, sell high but too often shareholder value is wasted as businesses make acquisitions in the wrong part of the business cycle and pay too high a price-earnings ration on inflated profits.
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Human resource decisions – careful staff policies can avoid lay-offs in the downturns and the damaging impact on morale.
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Inventory and supply chain decisions – companies who ignore the business cycle have too much inventory leading to expensive write-offs when the trade cycle dips and suffers shortages as the business cycle picks up.
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Marketing – an easy cost to cut back when times are tough but the beneficial impact of effective marketing is much stronger during a recession because competitors cutbacks reduce the clutter and noise in the market.
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Pricing and accounts receivables

The Well Timed Strategy then goes on to look at oil price spikes, interest rate hikes and exchange rate risks and the use of hedging to manage risks. It then looks at the economic shocks on war, terrorism, drought and disease.

Finally it takes a look at forecasting tools for the business cycle.

My Thoughts On The Well Timed Strategy

This is an important book because it puts proper emphasis on the business cycle which can have such a big impact on many businesses and for that reason, I think anyone with profit responsibility for a business – large or small – should read it.

However I must admit that I did find The Well Timed Strategy irritating.

It’s well written and very readable but I found myself challenging many of the interpretations, ideas and premises in the book although I can’t dispute the ideas that you must manage a business with an eye on the business cycle.

First I found it a bit smug since it was using the benefit of hindsight to look at decisions. Some of the examples in the book were plain stupid, others I thought unlucky. It didn’t help that many looked at the recession in the USA in 2001 but this wasn’t a recession I could emphasise with since the UK continued to grow. I have much stronger memories of the 1981 recession (when I was leaving university and looking for a job) and 1990/91 when I was a member of the senior management team of a business which in hindsight was complacent.

Second, my own research into business decline and failure shows that businesses get into financial difficulty for many reasons which combine to create a perfect storm. The book tends to be simplistic – A caused B – and I’m not sure that’s the whole truth.

Third, the book tended to take a negative view of bean-counters. As an accountant by training, perhaps I’m over-sensitive but criticising people who want to cut costs and generate cash flow doesn’t seem over-helpful. Sometimes what has to be done, has to be done – it’s a TINA situation – there is no alternative. A weak business has to follow defensive strategies since offensive strategies can lead to bankruptcy e.g. acquisitions at the wrong stage in the cycle.

I think we can understand the argument that marketing in a recession can have a big impact on brand awareness and preference as the business cycle shifts upwards. But there’s no point worry about next year if the business can’t pay the salaries next month.

For a book that puts its emphasis on “when to do what” I found its guidance on assessing the business cycle weak. Managers who don’t recognise the business cycle are setting themselves up for trouble but turning points in the trade cycle are tough to recognise. It’s even tougher to make decisions that can make or break the business and go against convention wisdom.

It was pretty clear to me that the world economies were increasingly unbalanced and we were as a society building up big debt problems with asset bubbles inflating house prices, stock markets and commodities and I found it increasingly difficult to invest my pension contributions from about 2006 onwards. But I didn’t get the timing right or take the decisive actions that I should have done with hindsight.

The Well Time Strategies recommends two big signals:

The yield curve
The stock market

Both are being manipulated through central bank actions in the current financial crisis with quantitative easing and unnaturally low interest rates.

It also talks about the Index of Leading Economic Indicators which is flawed because of the high number of false signals it has created and the ECRI dashboard which has a better record.

These are helpful but at times you have to back your gut instinct and accept the uncertainty. Some things make sense whatever the business cycle, others are going to be bets – some you win, some you lose.

Have You Read The Well Timed Strategy by Peter Navarro?

If you’ve read this book, then I’d like to know what you think.

I believe it does a great job of emphasising why a business manager needs to think about the business cycle but it may not lead to any specific changes in action.

Paul Simister is a business strategy coach who helps small business owners to profit from differentiating their businesses, by being distinctive in the eyes of their customers and standing out in a crowded marketplace.Similar Posts:

Financial Strength In The SPACE Matrix

Paul Simister — Thu, 24 Nov 2011 05:18:02 +0000

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for financial strength.

Financial Strength In The SPACE Matrix

According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Financial Strength:

Return on investment (low to high)
Leverage (debt to equity ratio) (inbalanced to balanced)
Liquidity (access to quick money when needed) (inbalanced to solid)
Capital required versus capital available) (high to low)
Cash flow (low to high)
Ease of exit from market (difficult to easy)
Risk involved in the business (much to little)
Inventory turnover (slow to fast)
Use of economies of scale and experience (low to high)

The factors for Financial Strength are marked from 1 to 6 and a high score is good, a low score indicates financial weakness.

Interpreting Financial Strength In The SPACE Matrix To Your Situation

This is the most generic of the dimensions in the SPACE matrix. High profit margins and access to cash to invest when you want it are valuable in any business.

Several of the financial measures are not black and white:

Leverage ranges from imbalanced (bad) to balanced (good) on the basis that equity finance is more expensive than moderate levels of debt so the business should aim for the lowest weighted average cost of capital. Finance theory is beyond the scope of this blog so I won’t go into details. In my accountancy training I was taught that a debt to equity ratio of around 1:1 was good but it is much more dangerous to be highly geared (high debt to equity) than under. Over the last twenty years many private equity deals have been done on the basis of high debt ratios and while the credit crunch has made access to funding difficult, the record low interest rates have prevented many bankruptcies.
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Liquidity also ranges from imbalanced (bad) to balanced (good) because high levels of cash will depress returns on investment while liquidity problems will mean the business struggles to pay creditors as they fall due and may mean the business is technically insolvent. Going back to my days as an accountancy trainee, a current ratio of 2:1 (current assets to current liabilities) and a quick ratio of 1:1 (debtors plus cash/creditors) was considered good.

Businesses have different financial needs in terms of:

asset intensity – some businesses need large investments in capital equipment
working capital cycles – a supermarket will be paid in cash by customers well before it has to pay its suppliers while a distributor may have to hold high levels of stocks/inventories, finance trade debtors and even pay for imported goods before they are despatched.

The Impact On Strategic Direction For Different Levels Of Financial Strength

Financial strength is used to offset any environmental instability on the y-axis of the SPACE matrix diagram.

A strong score on financial strength backed up with reasonable environmental stability suggests that either an aggressive strategy or conservative strategy is appropriate depending on the position for competitive advantage and industry attractiveness.

A poor score without remarkable environmental stability indicates that either a competitive strategy or defensive strategy is required.

Differentiation And Cost Leadership Or Cost Leadership?

Paul Simister — Sun, 20 Nov 2011 15:48:38 +0000

In his book Competitive Strategy, Michael Porter introduces the idea of generic competitive strategies and says that a business must choose between differentiation and cost leadership or risk being “stuck in the middle”, missing on the high profitability that an effective strategy for one or the other.

Differentiation Or Cost Leadership

Porter argues that businesses face a choice – differentiation or cost leadership over a broad or narrow market – if the firm wants to avoid low profitability that comes from confused customers and employees from a “blurred corporate culture”.

This is because achieving cost leadership normally involves eliminating all those little bits of extra product functionality and customer service that bump up customer value in the eyes of customers looking for a differentiated product because they cost money.

This makes a lot of sense.

Business managers intuitively know that to give the customer more, it’s going to usually cost more.

But then examples started to appear which showed successful businesses which had established a cost leadership position but which were also differentiated.

Quality Is Free

Just as Michael Porter argued that cost leadership and differentiation involved trade-offs that meant you couldn’t do both, it used to be thought that businesses had to choose between low cost and good, consistent quality.

But the total quality movement popularised by Edwards Deming, Philip Crosby and Joseph Juran showed that cost of quality had an inverse relationship. As quality improves, costs didn’t increase as had been thought but reduced.

Differentiation And Cost Leadership

In Michael Porter’s next book, Competitive Advantage,he still warned about the dangers of being stuck in the middle.

“Becoming stuck in the middle is often a manifestation of a firm’s unwillingness to make choices about how to compete. It tries for competitive advantage through every means and achieved none, because achieving different types of competitive advantage usually requires inconsistent actions.” (page 17).

On the next two pages of the book, he softens his stance by admitting that reducing costs does not always means sacrificing differentiation because using more effective methods and technology may reduce costs and improve differentiation. he goes on to point out that reducing costs from a high position is not the same as achieving a cost leadership position. He looked at this in more detail in What Is Strategy?

He identifies three conditions where a business can achieve differentiation and cost leadership:

When competitors are stuck in the middle and don’t force the business to the point where differentiation and cost leadership are inconsistent. This may be more often than you would expect in local, fragmented markets where businesses don’t have opportunities for big differentials in input costs for materials and labour.
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The downside is that weak competitors can make the firm complacent and leave it vulnerable to new market entrants that are better managed.
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When cost is strongly determined by market share or interrelationships. Large economies of scale can give the business a big enough cost advantage to allow it to spend some of its cost savings on elements to differentiate the products and still achieve cost leadership. Interrelationships may arise between elements of the industry value chain which one competitor can take advantage of and the others can’t.
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The business pioneers a major innovation. Innovative new process technologies may lower production costs that allow the business to invest in differentiation factors or product innovation may deliver both cost leadership and differentiation of customer value attributes. Sustaining this innovation advantage is vital because wants it gets into the general market, the business is forced into the differentiation or cost leadership trade-off. It may even find itself at a disadvantage if rival competitors improve the innovation specifically to lower costs or to create extra differentiation.

The Danger Of the Lure of Differentiation And Cost Leadership

A business that achieves differentiation and cost leadership is in a very strong position and should be much the most profitable firm in the industry.

This is precisely why I believe that creating a strategy to achieve both is dangerous.

The lure is strong but so are the traps and being stuck in the middle remains a clear and present danger.

I agree with the conclusion Michael Porter came to in Competitive Advantage.

“A firm should always aggressively pursue all cost reduction opportunities that do not sacrifice differentiation. A firm should also pursue all differentiation opportunities that are not costly. Beyond this point, however, a firm should be prepared to choose what its ultimate competitive advantage will be and resolve the tradeoffs accordingly.” (page 20 Competitive Advantage by Michael Porter)

The Value Chain And Competitive Advantage

The value chain was created to help businesses find competitive advantage and while the value chain can be criticised, the technique is very useful to look in detail at your business at the activity level and challenge each activity:

How does this help differentiate our business from competitors in ways that matter to customers?
How can we reduce costs in this activity without reducing customer value and service?

Exit Barriers Intensify Competitive Rivalry

Paul Simister — Fri, 18 Nov 2011 05:58:30 +0000

Exit barriers intensify competitive rivalry by stopping businesses that are losing money from leaving the industry when there is little or no hope of future profitability.

The Five Forces model from Michael Porter is an important way to understand the competitive pressures within an industry and at the centre is competitive rivalry.

What Are The Major Exit Barriers?

I’ve split the discussion of exit barriers into two sections for rational barriers backed up with economic logic and emotional barriers which create commitment beyond the level where it makes sense financially.

Rational Exit Barriers

Specialised assets – some industries require specialised assets and capabilities which cannot create value in other markets. Assets that can be re-used elsewhere or those that are easily adapted make it easier for a business to move from one market where it is struggling to another where prospects look brighter.
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Contractual arrangements – the business may have entered into contracts with customers and suppliers where breach of contract creates punitive damages which the business cannot afford. Even if there is nothing in writing, a business may be unwilling to break its commitments because of relationship and reputation damage that could affect other parts of the business or group.
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Vertical integration with other business units – a group may have a number of subsidiaries connected in the industry value chain. While one may be losing money (although transfer pricing makes it difficult to get a realistic arms-length assessment), damage may be done to the other businesses.

Emotional Exit Barriers

The business may come under political or social pressure to keep an important factory unit open because it is a key part of the local economy. Sometimes financial help may be available but more often the business fears damage through bad publicity.
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The owner or senior managers may have an emotional commitment to the business which makes it unwilling to concede defeat even when the economic justification for exit is compelling. Perhaps the business was where it all began and therefore there are heritage reasons to keep the business going which link into the core story. Perhaps there is loyalty to employees or fear for what it means for their own personal positions.

The Impact Of Barriers To Exit

Whatever the cause of the barriers to exit, the end result is that firms stay in the market when it is better for them and their competitors that they leave in an orderly manner.

It therefore makes sense for the market leader or someone determined to win the “last man standing” strategy in a declining market to help struggling firms to leave and take out the excess capacity.

The worst that can happen is for the business to go bankrupt and to be bought for a song by an ambitious management team with an idea to shake-up the industry with a strategic innovation and the financial backing to make it happen.

More often, the existing management and shareholders find the finance to buy the business back in a pre-pack administration deal, free of the high levels of debt and contingent liabilities that stopped an effective turnaround taking place. It may lead to a viable business or the industry economics may cause future problems.

Competitive Advantage In The SPACE Matrix

Paul Simister — Thu, 17 Nov 2011 05:50:55 +0000

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for competitive advantage.

Competitive Advantage In The SPACE Matrix

Market share (small to large)
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Product quality (inferior to superior)
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Product life cycle (late to early)
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Product replacement cycle (variable to fixed)
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Customer loyalty (low to high)
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Competition’s capacity utilisation (low to high)
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Technological know-how (low to high)
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Vertical integration (low to high)
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Speed of new product introductions (slow to fast)

Each variable within the competitive advantage dimension of SPACE is assessed from 1 to 6 with high scores good, low scores bad.

Interpreting Competitive Advantage In The SPACE Matrix To Your Situation

While the list of potential sources of competitive advantage is interesting, this dimension more than any other in the SPACE matrix needs to be adapted to your business sector.

The competitive advantage matrix shows that even market share isn’t necessarily a strong cause of advantage in some situations.

For more general sources of competitive advantage (or disadvantage) I’d look to the PIMS database and Porter’s generic strategies.

However to best assess competitive advantage to use in the SPACE matrix, you need to look in detail at your business, your customers and competitors to see who is providing the best customer value.

The following strategy techniques will help:

Value chain analysis

Customer value attribute maps

Key Success Factors

This may mean that using SPACE analysis at different stages of your strategic planning work will generate different conclusions as you better get to understand the sources of competitive advantage.

The Impact On Strategic Direction For Different Levels Of Competitive Advantage

The competitive advantage rating will either reinforce or counteract the rating for industry attractiveness as they are on the same axis in the SPACE matrix.

A strong rating on the Industry Attractiveness / Competitive Advantage axis points to an aggressive strategy or a competitive strategy.

A weak rating indicates that a Conservative strategy or defensive strategy is appropriate.

Customer Power by David Swaddling & Charles Miller

Paul Simister — Tue, 15 Nov 2011 06:34:14 +0000

Customer Power : How To Grow Sales And Profits In A Customer-Driven Marketplace is by David Swaddling and Charles Miller. At the time of writing the book, they were President and Senior VP of Insight-MAS, a consulting firm specialising in the measurement and management of Customer Perceived Value.

I found their website when I became interested in customer value concepts and I used to enjoy receiving their monthly newsletter. I don’t know what happened to Insight-MAS but David Swaddling is currently Executive Professor at Capital University.

Customer Power Review

Focus On Customers and Buyers, and not Marketing and Sales

The Customer Power book starts off by posing the question, why write another book about customers when there are already more than 900 hundred in print.

I’ve always thought it ironic how few books there are about customers when it is customers who decide whether a business will be successful. Their vote (with their money) is the only one that matters.

I went to Amazon.com and typed customer into the search box and it came back with 37,828 items. I did the same with marketing and came back with 553,597 items. I did the same with sales and came back with 270,997.

The same test with buyer only came back with 17,046 items.

This to me shows why books like Customer Power are so important. If we want to attract and convert more customers (the purpose of marketing and sales), we need to think about and think like customers. For all the talk about being customer focused, the simple Amazon statistics show that the main focus is on what the selling business wants.

I’ve got a book to read and review called Stop Acting Like a Seller and Start Thinking Like a Buyer: Improve Sales Effectiveness by Helping Customers Buy. That title sums up the issue very well.

Rant over. I’d better get back to reviewing Customer Power.

Customer Power is split into three sections:

Understanding customer perceived value (chapters 1 to 3)
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Using customer perceived value (chapters 4 to 10)
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Listening for customer perceived value (chapters 11 and 12)

The individual chapter titles are:

It’s the age of the customer
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What is customer perceived value?
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Delivering on CPV
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CPV and business strategy
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CPV and market segments
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CPV and product innovation
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CPV and pricing
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CPV and channels
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CPV and marketing communications
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CPV and operations
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Monitoring CPV
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Payback on CPV

As you can see, Customer Power is a very broad review of customer perceived value and what it takes to implement an effective customer perceived value strategy.

Customer Power includes a look at the potential gaps in the customer perceived value cycle:

Research gap – the difference between customers perceptions and management assumptions
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Strategy gap – the difference between management assumptions and the goals, priorities and strategies of the business.
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Process gap – the difference between the goals, priorities and strategies and what the business processes consistently deliver
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Management gap – the difference between business processes and customer perceptions.

I think this is a very useful way to think about customer value issues, both why a thorough review is needed and as a guide to implementing a customer value strategy.

Overall Thoughts On Customer Power

If you are interested in using customer value concepts in your strategic management and planning, I recommend you read Customer Power.

It’s well written and will make you think about customer value in a comprehensive way so you can see where it needs to impact on your business.

The Boston Consulting Group On Strategy

Paul Simister — Sat, 12 Nov 2011 06:25:29 +0000

The Boston Consulting Group On Strategy : Classic Concepts and New Perspectives has been edited by Carl W. Stern and Michael S. Deimler.

The Development Of Strategy

What we know about strategy has come from three different sources:

Business leaders and entrepreneurs doing what seems right and sensible to win in their markets
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Academics who have studied business success and failure and then created new theories
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Consultants who link the two separate worlds as expert advisers.

One of the leading strategy consultants is The Boston Consulting Group who have devised many strategy ideas that are still taught today in business schools around the world.

I’ve blogged about the experience curve and the competitive advantage matrix and I’m sure I’ll cover other Boston Consulting Group topics in the future.

The Boston Consulting Group On Strategy Review

This book is a collection of short articles from a variety of Boston Consulting Group consultants including its founder Bruce Henderson from 1970 forward to 2005.

The Structure Of the Boston Consulting Group On Strategy

It’s split five parts:

The nature of business strategy
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The development of business strategy
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The practice of business strategy
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Business thinking
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Social commentary

The main meat is in part 3 with sections for:

The customer, segmentation and value creation
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Innovation and growth
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Deconstruction of value chains
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Performance measurement
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Resource allocation
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Organisational design
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Leadership and change

As you read through, you’ll find a mixture of ideas that have passed into conventional strategic wisdom and perspectives that didn’t catch on

Assessment of The Boston Consulting Group On Strategy Book

The consultancy firm, the Boston Consulting Group have had a huge impact on the theory and practice of strategy but the book, The Boston Consulting Group On Strategy is harder to assess.

I found it very interesting to go back and read the original germination of ideas but I also found it frustrating.

A book made up of a large collection of short articles is inevitably a patchwork. Ideas don’t flow together as you would wish and there isn’t the development of core ideas to a deeper level.

I think The Boston Consulting Group On Strategy would have been a more compelling read if it had featured fewer original articles and added an updated perspective and thoughts on how the ideas are still relevant to today’s world or reasons why they are not.

It’s not a book for someone who is new to strategy and wants to put together a strategic plan. It’s not a book for someone who wants to be at the cutting edge of strategy. In particular there is little here for typical readers of my blog who own and/or manage small to medium sized businesses.

It is a book for practitioners who want to have more understanding of where strategy has come from.

What Do You Think About “The Boston Consulting Group On Strategy”?

If you’ve read this book, I’d like to know what you think so please leave a comment.

Industry Attractiveness or Industry Strength In The SPACE Matrix

Paul Simister — Thu, 10 Nov 2011 05:56:00 +0000

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for industry attractiveness.

Industry Attractiveness In The SPACE Matrix

Growth potential (low to high)
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Profit potential (low to high)
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Financial stability (low to high)
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Technological know-how (simple to complex)
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Resource utilisation (inefficient to efficient)
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Capital intensity (low to high)
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Ease of entry into the market (easy to difficult)
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Productivity; capacity utilisation (low to high)
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Manufacturer’s bargaining power (low to high)

Industry attractiveness is on the same axis as competitive advantage and a good score is a high score.

Interpreting Industry Attractiveness In The SPACE Matrix To Your Situation

The Five Forces model created by Michael Porter should be considered to see if there are additional attributes which need to be considered for your particular situation.

I’d be looking to include some measure for competitive rivalry – although the authors may argue that it is implied in the profit potential – but I’ve seen good industries destroyed by kamikaze competition based on price wars.I’d also want to look at the ability of customers to exercise their bargaining power to squeeze the profits.

A strong rating on the Industry Attractiveness / Competitive Advantage axis points to an aggressive strategy or a competitive strategy.

A weak rating indicates that a Conservative strategy or defensive strategy is appropriate.

Who’s Reading Your English Website?

Paul Simister — Wed, 09 Nov 2011 11:31:34 +0000

I must admit that I am fascinated by my Google Analytics statistics – numbers and marketing combined – wow.

But is your target market connecting with you as well as it could?

Wikipedia lists the top English speaking countries although the numbers don’t make it clear for how many are likely to be using English to search the Internet.

Interesting though:

USA – 251 m – 215 m as the first language
India – 125 m – less than 1 m as the first language
Philippines – 90 m – 3 m
Nigeria – 79 m – 4 m
UK – 60 m – 58 m
Germany – 46 m – less than 1 m
Canada – 25 m – 18 m
France – 23 m
Pakistan – 18 m
Australia – 17 m – 15 m
Italy – 17 m
The Netherlands – 14 m
South Africa – 14m – 4 m
Spain – 12 m
Turkey – 12 m

That might help to put your website traffic numbers into more perspective.

It also helps you to decide you your website needs to be offering translations into other popular languages.

The five most popular most popular languages are:

Mandarin

Spanish

English

Hindi-Urdu

Arabic

What’s this got to do with differentiation?

You could have an advantage by presenting your business in the language which best suits your possible customers’ preferences. It reduces one of the hurdles to buying and shows that you are focused on their needs and value their convenience.

The top ten countries who read this blog are:

The UK
The USA
India
Australia
Canada
Malaysia
Singapore
Philippines
Germany
South Africa

That makes a lot of sense when the domain name, differentiateyourbusiness.co.uk helps UK based Internet searches and unfortunately hinders other parts of the world. That’s fine for me because I only provide my coaching in the UK.