The 3C’s model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main players must be taken into account:
A. The
Corporation
B. The Customer
C. The
Competitors
Only
by integrating these three C’s (Corporation, Customer, Competitors) in a
strategic triangle, a sustained competitive advantage can exist. Ohmae refers
to these key factors as the three C’S or strategic triangle.
The Corporation
- The Corporation needs strategies aiming to maximize
the corporation’s strengths relative to the competition in the functional
areas that are critical to achieve success in the industry.
- Selectivity and sequencing The Corporation does not
have to lead in every function to win. If it can gain decisive edge in one
key function, it will eventually be able to improve its other functions
which are now average.
- Make or buy In case of rapidly rising wage costs, it
becomes a critical decision for a company to subcontract a major share of
its assembly operations. If its competitors are unable to shift production
so rapidly to subcontractors and vendors, the resulting difference in cost
structure and/ or in the companies ability to cope with demand
fluctuations may have significant strategic implications.
- Cost-effectiveness improving the cost-effectiveness can be done in three ways. First by reducing basic costs, second by exercising greater selectivity (orders accepted, products offered, functions performed) and third by sharing certain key functions with a corporation’s other businesses or even other companies.
The Customer
Clients
are the base of any strategy according to Ohmae. Therefore, the primary goal
supposed to be the interest of the customer and not those of the shareholders for
example. In the long run, a company that is genuinely interested in its
customers will be interesting for its investors and take care of their
interests automatically. Segmentation is helping to understand the customer.
- Segmenting by objectives the differentiation is done
in terms of the different ways that various customers use a product.
- Segmenting by customer coverage this segmentation
normally emerges from a trade-off study of marketing costs versus market
coverage. There appears always to be a point of diminishing returns in the
cost versus coverage relationship. The cooperation’s task is to optimize
its range of market coverage, geographical and/ or channel wise.
- Segmenting the market once more In a fiercely
competition, competitors are likely to be dissecting the market in similar
ways. Over an extended period of time, the effectiveness of a given
initial strategic segmentation will tend to decline. In such situations it
is useful to pick a small group of customers and reexamine what it is that
they are really looking for.
A market segment change occurs where the market forces are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change means that the allocation of corporate resources must be shifted and/ or the absolute level of resources committed in the business must be changed.
The Competitors
The
Competitors Competitor based strategies can be constructed by looking at
possible sources of differentiation in functions such as: purchasing, design,
engineering, sales and servicing. The following aspects show ways in order to
achieve this differentiation:
- Power of image when product performance and mode of
distribution are very difficult to distinguish, image may be the only
source of positive differentiation.
- Capitalizing on profit- and cost structure
differences Firstly, the difference in source of profit might be
exploited, from new products sales etc. Secondly, a difference in the
ratio of fixed costs and variable costs might also be exploited
strategically. A company with lower fixed cost ratio can lower prices in a
sluggish market and hence gain market share.
- Hito-Kane-Mono A favorite phrase of Japanese business planners is hito-kane-mono, standing for people, money and things. They believe that streamlined corporate management is achieved when these three critical resources are in balance without surplus or waste. For example: Cash over and beyond what competent people can intelligently expend is wasted. Of the three critical resources, funds should be allocated last. The corporation should firstly allocate management talent, based on the available mono (things): plant, machinery, technology, process know-how and functional strength. Once these hito (people) have developed creative and imaginative ideas to capture the business’s upward potential, the kane (money) should be given to the specific ideas and programs generated by the individual managers.
