1 00:00:00.450 --> 00:00:01.450 Hello 2 00:00:01.650 --> 00:00:04.800 Today's topic is entrepreneurial strategy 3 00:00:06.200 --> 00:00:11.300 I actually majored in strategy management during my master's degree 4 00:00:11.450 --> 00:00:12.950 and I've been teaching 5 00:00:12.950 --> 00:00:16.000 undergraduate courses on strategy management 6 00:00:16.000 --> 00:00:20.000 for over 10 years in and out of the country 7 00:00:20.400 --> 00:00:24.600 I think that this field is quite familiar to me 8 00:00:26.950 --> 00:00:29.350 Strategy can be thought of 9 00:00:29.350 --> 00:00:33.000 as a broad framework or approach 10 00:00:33.000 --> 00:00:37.700 It's about coordinating various functions 11 00:00:37.745 --> 00:00:41.945 to achieve optimal goals in a company 12 00:00:42.900 --> 00:00:46.500 These are kind of topics considered 13 00:00:46.645 --> 00:00:48.995 at the CEO level within the company 14 00:00:49.000 --> 00:00:52.000 But think about it in the case of a startup 15 00:00:52.350 --> 00:00:54.150 Once you launch your business 16 00:00:54.313 --> 00:00:58.963 you essentially become a manager from day one 17 00:01:00.000 --> 00:01:04.700 That's why strategic decision-making is very important 18 00:01:04.815 --> 00:01:06.615 for any entrepreneur 19 00:01:07.250 --> 00:01:10.000 It's a very important area 20 00:01:10.150 --> 00:01:13.000 So shall we get started? 21 00:01:14.550 --> 00:01:17.400 By the way, is there anyone here 22 00:01:17.400 --> 00:01:20.000 who knows how to play blackjack? 23 00:01:20.100 --> 00:01:21.850 Look at the pictures 24 00:01:21.850 --> 00:01:25.000 Blackjack is a very popular game in casinos 25 00:01:26.600 --> 00:01:27.800 To be honest with you, 26 00:01:27.800 --> 00:01:29.000 I've never been to a casino 27 00:01:29.000 --> 00:01:34.950 but I always start my strategy class with a blackjack game 28 00:01:36.200 --> 00:01:41.550 In fact, I once took a course in my PhD program 29 00:01:41.556 --> 00:01:44.806 from a very famous strategy professor 30 00:01:44.806 --> 00:01:47.600 and he started his class with a blackjack game 31 00:01:47.600 --> 00:01:50.000 I just copied his class 32 00:01:51.250 --> 00:01:55.250 The blackjack is a game played between 33 00:01:55.283 --> 00:01:58.683 a casino dealer and a gambler 34 00:02:00.500 --> 00:02:03.826 The dealer gives out a card 35 00:02:03.876 --> 00:02:07.076 and also receives the card him or herself 36 00:02:08.550 --> 00:02:12.801 Before we start, I will explain some kind of 37 00:02:12.801 --> 00:02:15.901 a rule of the blackjack game in a little bit more detail 38 00:02:16.000 --> 00:02:19.686 Blackjack is a game in which a player 39 00:02:19.732 --> 00:02:23.182 with a card close to 21 wins 40 00:02:23.641 --> 00:02:27.450 You can count your number on a number card as it is 41 00:02:27.450 --> 00:02:31.750 and if you have a picture card like a king and queen 42 00:02:31.864 --> 00:02:35.964 then you can count as just 10 43 00:02:36.000 --> 00:02:39.450 If you have an ace card 44 00:02:39.609 --> 00:02:43.009 it could be either 1 or 11 45 00:02:43.609 --> 00:02:47.000 It means you have an option if you have an ace 46 00:02:47.450 --> 00:02:50.400 So usually when people play a game 47 00:02:50.510 --> 00:02:54.710 they just guess or make a random decision 48 00:02:59.750 --> 00:03:01.450 Then I ask people 49 00:03:01.800 --> 00:03:04.650 What do you think you would do 50 00:03:04.650 --> 00:03:09.250 if you are not just a gambler, 51 00:03:09.250 --> 00:03:11.900 you are a professional gambler? 52 00:03:13.600 --> 00:03:15.350 Then what are you going to do? 53 00:03:15.350 --> 00:03:19.000 Are you going to decide a random number then? 54 00:03:21.850 --> 00:03:24.250 In this case, it's kind of a different story 55 00:03:24.275 --> 00:03:27.675 because if you are a professional gambler 56 00:03:28.450 --> 00:03:33.750 you should make a lot of money from this blackjack game 57 00:03:34.200 --> 00:03:40.000 You cannot make your decision based on your random numbering 58 00:03:40.000 --> 00:03:42.000 This is your life, okay? 59 00:03:42.000 --> 00:03:44.000 So you must think about it 60 00:03:44.000 --> 00:03:46.000 This is no joke 61 00:03:46.300 --> 00:03:49.000 Why? Because you are a professional gambler 62 00:03:49.000 --> 00:03:51.000 What would you do? 63 00:03:51.000 --> 00:03:53.000 What would you do? 64 00:03:53.700 --> 00:03:55.050 If I were you, 65 00:03:55.450 --> 00:03:59.000 I would purchase a book first and then I'd read it 66 00:03:59.950 --> 00:04:01.500 If you look here, 67 00:04:01.500 --> 00:04:05.000 there is a book called The Theory of the Blackjack 68 00:04:06.950 --> 00:04:09.850 You need to read this book 69 00:04:09.933 --> 00:04:13.533 and you try to memorize the contents of the book 70 00:04:14.300 --> 00:04:16.000 But think about it 71 00:04:16.000 --> 00:04:18.000 Reading a book is not enough 72 00:04:18.000 --> 00:04:22.000 Actually, games are kind of a real game 73 00:04:22.000 --> 00:04:27.150 in a way, you have to be aware of lots of cases 74 00:04:27.158 --> 00:04:30.158 And you have to respond right away 75 00:04:30.272 --> 00:04:33.022 It is not a joke, it is real 76 00:04:33.022 --> 00:04:38.000 You don't have too much time to take a book again and read the book 77 00:04:38.000 --> 00:04:40.000 In casino, you don't have the time 78 00:04:40.000 --> 00:04:44.000 you don't have to have those kind of time 79 00:04:44.000 --> 00:04:46.000 Then what are you going to do? 80 00:04:48.350 --> 00:04:51.350 You have to always carry 81 00:04:51.530 --> 00:04:54.830 these blackjack strategy cards around 82 00:04:55.000 --> 00:04:58.000 and memorize them whenever you have time 83 00:04:58.000 --> 00:05:01.000 Go to casino and practice 84 00:05:01.000 --> 00:05:03.000 It's much better than nothing 85 00:05:03.000 --> 00:05:06.000 I think this is kind of a first step 86 00:05:06.000 --> 00:05:08.000 in understanding the concept of the strategy 87 00:05:08.600 --> 00:05:10.250 throughout the blackjack game 88 00:05:11.050 --> 00:05:12.000 What it is? 89 00:05:12.550 --> 00:05:16.000 What is the concept of the strategy? 90 00:05:17.600 --> 00:05:21.200 In order to understand the concept of the strategy 91 00:05:21.400 --> 00:05:24.300 you need to understand that 92 00:05:24.497 --> 00:05:28.897 the situation is always complex 93 00:05:29.950 --> 00:05:34.000 There are a lot of different situations and different cases 94 00:05:34.000 --> 00:05:36.000 You need to understand 95 00:05:36.000 --> 00:05:40.000 Second, you are not alone 96 00:05:40.000 --> 00:05:42.000 and there are always competitors 97 00:05:42.200 --> 00:05:46.000 Even in blackjack game, t here is a dealer as a competitor 98 00:05:46.000 --> 00:05:50.000 Third, in order to win the game 99 00:05:50.800 --> 00:05:53.900 you need to understand the rule of the game first 100 00:05:54.500 --> 00:05:59.000 and you need to figure out how to win the game 101 00:05:59.000 --> 00:06:01.000 in the blackjack game 102 00:06:01.000 --> 00:06:03.800 I suggest you to carry out 103 00:06:03.800 --> 00:06:07.313 the blackjack strategy card always and memorize it 104 00:06:07.350 --> 00:06:11.000 This is a kind of example about the way how to win 105 00:06:11.250 --> 00:06:15.000 Another way could be kind of a practice 106 00:06:15.000 --> 00:06:16.400 There is all the same 107 00:06:16.450 --> 00:06:18.000 Practice makes perfect 108 00:06:18.400 --> 00:06:23.350 This is kind of your idea how to win in this game 109 00:06:23.550 --> 00:06:25.750 same thing happened to the strategy 110 00:06:28.700 --> 00:06:30.550 You know what? 111 00:06:30.550 --> 00:06:35.000 The business itself is very similar to gaming casino 112 00:06:35.750 --> 00:06:40.000 The best players may understand the game being played 113 00:06:40.000 --> 00:06:43.000 and they put them in a position to win 114 00:06:46.000 --> 00:06:51.000 The successful players are very good at two things 115 00:06:51.000 --> 00:06:55.000 The first one, they are good at choosing where to play 116 00:06:55.700 --> 00:06:59.781 Second, they are good at figuring out 117 00:06:59.781 --> 00:07:04.531 how to win on their selected playing ground 118 00:07:07.000 --> 00:07:09.900 Let's watch the short video clip 119 00:07:09.900 --> 00:07:14.600 It is a documentary film about American War of Independence 120 00:07:15.050 --> 00:07:19.350 I expect you guys to understand the concept of strategy very well 121 00:07:19.350 --> 00:07:23.000 after watching the short video clip a little bit 122 00:07:23.300 --> 00:07:25.000 Let's watch together 123 00:07:31.450 --> 00:07:32.950 How was it? 124 00:07:33.400 --> 00:07:36.000 Let me add a few more things 125 00:07:36.000 --> 00:07:40.000 The United States and the UK 126 00:07:40.000 --> 00:07:45.300 The UK went to war as you saw in the movie 127 00:07:45.300 --> 00:07:48.000 The first war took place in Manhattan 128 00:07:48.000 --> 00:07:52.000 If you go to Manhattan and you will find out Wall Street 129 00:07:52.300 --> 00:07:57.650 it said that the American people built the wall to stop the British soldiers 130 00:07:58.000 --> 00:08:00.000 That's why there is a Wall Street 131 00:08:01.900 --> 00:08:06.950 At that time, the UK had well-trained soldiers 132 00:08:07.000 --> 00:08:10.000 They are well-organized, they are structured 133 00:08:10.000 --> 00:08:13.300 and Navy ships keep coming into Manhattan 134 00:08:14.750 --> 00:08:20.000 The UK soldiers, they are professional armies 135 00:08:20.450 --> 00:08:25.000 The America, on the other hand was farmers 136 00:08:26.200 --> 00:08:28.200 There were no regular troops 137 00:08:28.200 --> 00:08:31.300 and they were not organized very well 138 00:08:31.750 --> 00:08:36.000 and they just organized into so-called militias 139 00:08:36.850 --> 00:08:40.000 The British army didn't know much about 140 00:08:40.000 --> 00:08:41.600 geography of America 141 00:08:42.400 --> 00:08:44.650 they used Native Americans 142 00:08:44.650 --> 00:08:48.000 as the guardians, the commanders, lord forces 143 00:08:49.450 --> 00:08:50.800 What about America? 144 00:08:50.800 --> 00:08:52.500 Instead of being organized 145 00:08:52.500 --> 00:08:55.600 the American people knew the way around 146 00:08:55.742 --> 00:08:59.342 and they had some new types of weapon 147 00:08:59.500 --> 00:09:03.000 which is the long rifle 148 00:09:03.650 --> 00:09:07.850 The American people used sniper strategy 149 00:09:07.850 --> 00:09:11.000 because they had a long rifle 150 00:09:11.550 --> 00:09:17.400 Basically, they hide in a tree and waited 151 00:09:17.650 --> 00:09:21.000 and then shoot a guardian first 152 00:09:21.650 --> 00:09:26.000 It looks like that they eliminated the eyes of the enemy 153 00:09:26.500 --> 00:09:30.073 And then they target to he commander on the horses 154 00:09:31.950 --> 00:09:34.750 It seemed like they want to 155 00:09:34.750 --> 00:09:37.150 take the head of the enemies 156 00:09:37.300 --> 00:09:38.700 Think about it 157 00:09:39.700 --> 00:09:43.450 You have no eyes and you have no brain, no head 158 00:09:44.950 --> 00:09:48.700 No matter how strong your arm and legs are, 159 00:09:48.700 --> 00:09:50.150 it is useless 160 00:09:50.500 --> 00:09:52.850 As a result, America beat the UK 161 00:09:53.650 --> 00:09:57.750 This is the really good example of 162 00:09:57.840 --> 00:10:01.390 the strategy from the history 163 00:10:04.000 --> 00:10:07.600 So, what is the strategy? 164 00:10:08.550 --> 00:10:10.650 In a business situation, 165 00:10:10.650 --> 00:10:14.700 the strategy is a company's choice of where to play 166 00:10:14.900 --> 00:10:18.800 Remember, it's where to play and how to win 167 00:10:19.600 --> 00:10:23.850 That is your idea, plan, and your choice 168 00:10:23.850 --> 00:10:25.050 where to play and how to win 169 00:10:25.050 --> 00:10:27.000 This is the strategy 170 00:10:27.600 --> 00:10:29.000 Pretty simple, isn't it? 171 00:10:30.050 --> 00:10:32.750 I want to give you some 172 00:10:32.750 --> 00:10:35.150 the real-world example from our history 173 00:10:35.350 --> 00:10:37.000 This is Ford 174 00:10:37.450 --> 00:10:39.100 Let's go back to 175 00:10:39.100 --> 00:10:44.000 the early 1900 automobile industry 176 00:10:45.150 --> 00:10:47.050 Early 1900 in America, 177 00:10:47.050 --> 00:10:51.000 people saw the first types of car 178 00:10:51.700 --> 00:10:54.650 The people perceived this car as 179 00:10:54.950 --> 00:10:57.000 a horseless carriage 180 00:10:58.150 --> 00:11:03.350 This is a kind of automated carriage 181 00:11:03.400 --> 00:11:07.050 But think about the people had at that time 182 00:11:07.100 --> 00:11:12.000 people had horses and people had carriages 183 00:11:12.400 --> 00:11:15.150 Probably people asked the car makers, 184 00:11:16.700 --> 00:11:18.550 why we need a horseless carriage? 185 00:11:18.650 --> 00:11:21.500 Because if we have horses, we have a carriage 186 00:11:21.500 --> 00:11:25.150 Probably car makers responded to this question 187 00:11:25.750 --> 00:11:31.000 Yes, sir, good question, but it could be fun 188 00:11:31.550 --> 00:11:33.250 Yeah, it could be fun 189 00:11:35.050 --> 00:11:36.750 It makes sense 190 00:11:36.750 --> 00:11:39.750 the people perceived at that time 191 00:11:39.923 --> 00:11:44.873 horseless carriage as a kind of toys 192 00:11:45.000 --> 00:11:48.000 Which is not necessary toy 193 00:11:48.000 --> 00:11:50.000 Which is a very expensive toy 194 00:11:50.000 --> 00:11:54.200 Only available to the people who can afford to it 195 00:11:55.000 --> 00:11:57.500 which they are wealthy people 196 00:11:57.850 --> 00:12:03.111 That's why, many automakers were 197 00:12:03.161 --> 00:12:09.511 building luxurious car for just wealthy people 198 00:12:10.450 --> 00:12:14.100 So, not other people cannot afford to it 199 00:12:14.600 --> 00:12:20.000 the car is about toy for the wealthy people at that time 200 00:12:20.700 --> 00:12:25.950 But around that time, only one man had different idea 201 00:12:26.050 --> 00:12:29.000 His name was Henry Ford 202 00:12:29.000 --> 00:12:31.000 He said that 203 00:12:31.000 --> 00:12:35.150 I will build the motor car for the great multitude 204 00:12:35.250 --> 00:12:38.750 It will be so low in price that 205 00:12:38.750 --> 00:12:41.350 no one will be unable to own it 206 00:12:42.100 --> 00:12:44.000 His sentence is complicated 207 00:12:44.000 --> 00:12:46.000 I try to interpret it 208 00:12:46.000 --> 00:12:48.000 His idea was 209 00:12:48.000 --> 00:12:53.200 if I make a cheap car, will be so low in price 210 00:12:55.050 --> 00:12:57.550 If I make a cheap car, 211 00:12:57.550 --> 00:13:00.450 then no one will be unable to own it 212 00:13:00.450 --> 00:13:03.000 Everyone owns it 213 00:13:04.400 --> 00:13:07.950 If I'm able to make a cheap car, 214 00:13:07.950 --> 00:13:10.550 then everyone will own it 215 00:13:10.700 --> 00:13:12.100 That is his idea 216 00:13:12.350 --> 00:13:14.000 It's a great idea 217 00:13:14.000 --> 00:13:15.250 Great perspective 218 00:13:15.450 --> 00:13:21.100 So far, the car is luxurious toy or the wealthy people 219 00:13:21.250 --> 00:13:24.150 But right now, we change the perspective 220 00:13:24.350 --> 00:13:28.050 If I make a cheap car, then everybody will have it 221 00:13:28.100 --> 00:13:30.000 That is Henry Ford's idea 222 00:13:30.650 --> 00:13:32.800 In order to do so, 223 00:13:32.800 --> 00:13:35.000 we'd better make a lot, mass production needed 224 00:13:35.000 --> 00:13:38.150 And also we will charge 225 00:13:38.150 --> 00:13:41.000 small profit on each item 226 00:13:41.250 --> 00:13:44.350 we make a lot, 227 00:13:44.350 --> 00:13:47.000 then we target many people 228 00:13:47.350 --> 00:13:49.350 Then although we charge small profit, 229 00:13:49.350 --> 00:13:51.650 we can make a great profit 230 00:13:51.650 --> 00:13:53.300 This is his idea 231 00:13:54.000 --> 00:13:58.000 How to make mass production possible? 232 00:13:58.700 --> 00:14:04.000 In order to do so, he adopted conveyor belt system in 1913 233 00:14:04.500 --> 00:14:08.000 Thanks to this conveyor belt system 234 00:14:09.000 --> 00:14:12.000 He can reduce the production time 235 00:14:12.015 --> 00:14:17.515 from 14 hours for one car to 1.5 hours for one car 236 00:14:17.900 --> 00:14:22.000 After 10 years later, the productivity increased 237 00:14:22.000 --> 00:14:24.000 How much? Increased four times 238 00:14:24.000 --> 00:14:27.000 Which is a huge success 239 00:14:28.650 --> 00:14:30.450 From this effort 240 00:14:30.450 --> 00:14:33.200 Henry Ford was able to provide 241 00:14:33.200 --> 00:14:35.250 the cheap car as he already mentioned that 242 00:14:35.300 --> 00:14:37.000 Look at the dot 243 00:14:37.000 --> 00:14:39.000 There are a lot of dots over there 244 00:14:39.000 --> 00:14:44.250 The dot represents the prices of the car in 1922 245 00:14:45.350 --> 00:14:52.000 You see the upper top dot it exceeds $12,000 246 00:14:53.500 --> 00:14:56.000 More than 100 years ago 247 00:14:57.050 --> 00:14:58.800 More than 100 years ago, 248 00:14:58.800 --> 00:15:03.000 the car price was more than $12,000 249 00:15:03.000 --> 00:15:04.350 It's an expensive one 250 00:15:04.350 --> 00:15:06.150 Then, where is the Ford cars? 251 00:15:06.400 --> 00:15:09.650 You see the red dot, which is the bottom 252 00:15:09.758 --> 00:15:12.858 which is very, very low in prices 253 00:15:13.000 --> 00:15:14.000 How much? 254 00:15:14.700 --> 00:15:15.700 Look at the picture 255 00:15:15.750 --> 00:15:22.450 This is a flyer of the Henry Ford car in around 1922 256 00:15:22.600 --> 00:15:26.650 The Ford cars' price was $393 257 00:15:26.750 --> 00:15:32.300 Today's money, $5,373, which is cheap 258 00:15:32.300 --> 00:15:34.950 still cheap compared to current car 259 00:15:35.550 --> 00:15:36.750 And at the same time, 260 00:15:36.750 --> 00:15:42.300 average prices from all cars was $2,500 261 00:15:42.350 --> 00:15:44.550 And today's money, $34,000 262 00:15:45.400 --> 00:15:50.000 So think about it, Henry Ford provided very cheap cars 263 00:15:50.000 --> 00:15:53.000 What happened? 264 00:15:54.350 --> 00:15:59.950 After then, so many people can afford two cars 265 00:16:01.000 --> 00:16:06.000 there are 13 million registered cars 266 00:16:07.000 --> 00:16:09.500 And among many car makers 267 00:16:10.122 --> 00:16:14.722 Ford accounted for 52% of the market share in America 268 00:16:15.000 --> 00:16:21.000 It means one out of two cars is Ford's 269 00:16:22.000 --> 00:16:28.550 No one beat Ford, until this man came out 270 00:16:29.700 --> 00:16:33.450 No one compete Ford 271 00:16:34.052 --> 00:16:37.102 until this man initiate a new idea 272 00:16:38.050 --> 00:16:40.650 His name is Alfred Sloan 273 00:16:40.650 --> 00:16:44.000 He is a CEO of General Motors 274 00:16:44.900 --> 00:16:49.000 He saw the situation changing 275 00:16:49.000 --> 00:16:50.700 He argued that 276 00:16:50.700 --> 00:16:54.350 right now, so many people already had a car 277 00:16:55.550 --> 00:16:59.500 Previously, they emphasized on price, 278 00:16:59.500 --> 00:17:01.950 but their incomes is increasing 279 00:17:02.000 --> 00:17:06.300 It's a time to replace their old car 280 00:17:06.600 --> 00:17:09.500 When they replace their old car, 281 00:17:09.500 --> 00:17:12.000 do they want to have another Ford car? 282 00:17:12.000 --> 00:17:15.000 Or do they want to have a new types of car? 283 00:17:15.200 --> 00:17:18.150 He said that my answer would be 284 00:17:18.150 --> 00:17:22.400 the people will choose or will be looking for 285 00:17:22.400 --> 00:17:23.850 a new types of car 286 00:17:23.900 --> 00:17:25.650 So what are we going to do? 287 00:17:25.650 --> 00:17:30.900 We will prepare something beyond 288 00:17:31.050 --> 00:17:34.976 simple transportation, something beyond Ford car 289 00:17:35.550 --> 00:17:39.600 Right now, we'd better stop the price competition 290 00:17:40.072 --> 00:17:44.172 Instead 291 00:17:44.172 --> 00:17:46.272 we are going to provide 292 00:17:46.272 --> 00:17:50.300 some better quality cars in a great variety 293 00:17:50.700 --> 00:17:52.250 Let's do this 294 00:17:55.550 --> 00:17:58.650 He tried to make a stylish car 295 00:17:59.000 --> 00:18:00.300 Look at this 296 00:18:00.500 --> 00:18:05.000 It's round and orange and the design is different 297 00:18:05.700 --> 00:18:11.000 To make a stylish car, he hired artists and designers 298 00:18:11.000 --> 00:18:12.000 Think about it 299 00:18:12.000 --> 00:18:14.952 These days, it's normal for the car makers 300 00:18:14.952 --> 00:18:18.402 to hire designers and artists to make a stylish car 301 00:18:18.450 --> 00:18:21.000 But this is the first time in the world 302 00:18:21.750 --> 00:18:26.200 He tried to sell cars 303 00:18:26.200 --> 00:18:28.000 in many different markets 304 00:18:28.050 --> 00:18:31.800 and many different models and many different colors 305 00:18:32.500 --> 00:18:35.850 There are several different models and there are several different markets 306 00:18:36.550 --> 00:18:39.800 Poor market, middle market, and rich market 307 00:18:39.800 --> 00:18:41.550 and also the colors 308 00:18:41.550 --> 00:18:43.800 Think about right side picture 309 00:18:44.450 --> 00:18:48.750 The car has orange colors and the shape is round 310 00:18:49.000 --> 00:18:52.298 But for the Ford car 311 00:18:52.298 --> 00:18:57.498 there is only black and only scale types 312 00:19:00.400 --> 00:19:05.400 This is a different model produced by GM 313 00:19:05.550 --> 00:19:08.550 GM prepared several different types of cars 314 00:19:08.550 --> 00:19:11.000 for several different types of markets 315 00:19:11.500 --> 00:19:16.000 A car for every kind of income level 316 00:19:16.000 --> 00:19:19.700 For example, if your income level is below the average, 317 00:19:19.700 --> 00:19:21.450 then Chevrolet is your car 318 00:19:21.550 --> 00:19:27.050 If your income level is above the average 319 00:19:28.299 --> 00:19:32.349 the Buick or Cadillac would be your car 320 00:19:33.149 --> 00:19:35.500 This is a kind of a segmentation 321 00:19:35.650 --> 00:19:39.700 He segmented the market from the entry level Chevrolet 322 00:19:39.906 --> 00:19:42.906 to luxury line Cadillac 323 00:19:43.450 --> 00:19:48.550 He changed the model annually 324 00:19:48.650 --> 00:19:50.400 This is the annual model changes 325 00:19:50.450 --> 00:19:54.050 and these days, so many car makers already adopted this initiative 326 00:19:54.900 --> 00:19:58.600 But this is the first time in human history 327 00:19:59.500 --> 00:20:01.400 And then what about financing? 328 00:20:02.100 --> 00:20:06.000 You don't purchase a car with cash only right now 329 00:20:06.000 --> 00:20:08.550 you purchase a car with credit 330 00:20:08.600 --> 00:20:11.100 It means you can purchase a car right now 331 00:20:11.148 --> 00:20:14.598 and you can pay monthly to the car makers 332 00:20:14.600 --> 00:20:16.450 This is the consumer financing 333 00:20:16.600 --> 00:20:19.000 Who started this consumer financing? 334 00:20:19.000 --> 00:20:22.800 Of course, GM initiated this consumer financing 335 00:20:23.150 --> 00:20:25.750 GM said that buy now, pay later 336 00:20:25.800 --> 00:20:27.550 This is car on time? 337 00:20:27.700 --> 00:20:28.900 Possibly, car on time 338 00:20:29.800 --> 00:20:33.950 Don't worry, when you don't have money 339 00:20:33.950 --> 00:20:36.650 you can purchase a car right now and you can pay later 340 00:20:37.000 --> 00:20:40.150 This is the consumer financing in 1920s 341 00:20:40.750 --> 00:20:43.350 But Ford, what about Ford? 342 00:20:43.350 --> 00:20:47.300 Ford never accepted this consumer financing until when? 343 00:20:47.350 --> 00:20:49.900 Until 1959 344 00:20:50.200 --> 00:20:51.650 Then what happened? 345 00:20:55.150 --> 00:21:00.000 GM surfaced Ford models in sales in late 1920s 346 00:21:00.000 --> 00:21:02.350 GM won the game 347 00:21:04.700 --> 00:21:10.600 In 1954, GM achieved market share more than 50% 348 00:21:10.750 --> 00:21:13.250 So the situation is opposite 349 00:21:13.450 --> 00:21:19.850 This is a story about the strategy between GM and Ford 350 00:21:22.800 --> 00:21:25.800 Let's look at another example, this is Walt Disney 351 00:21:25.850 --> 00:21:29.350 Right now, Walt Disney is a global company 352 00:21:29.500 --> 00:21:33.600 It's a multinational mass media and entertainment conglomerate 353 00:21:35.000 --> 00:21:37.200 We love Walt Disney 354 00:21:38.900 --> 00:21:41.450 Walt Disney generated revenue 355 00:21:41.450 --> 00:21:45.750 around $91 billion last year, 2024 356 00:21:46.500 --> 00:21:51.100 the profit achieved $32 billion in 2024, 357 00:21:51.100 --> 00:21:53.250 which is a huge success 358 00:21:53.600 --> 00:21:59.250 But what about the mid-1980s? 359 00:21:59.300 --> 00:22:03.950 Mid-1980s, Walt Disney was in trouble 360 00:22:04.250 --> 00:22:07.400 The company was struggling to maintain the profit 361 00:22:07.600 --> 00:22:09.100 Let's look at the data 362 00:22:09.200 --> 00:22:11.650 At that time, the revenue of Walt Disney 363 00:22:11.650 --> 00:22:14.000 was just $1.5 billion 364 00:22:14.600 --> 00:22:18.000 the profit was $294 million 365 00:22:18.700 --> 00:22:21.950 The Disney in 1984 366 00:22:21.950 --> 00:22:24.650 was not the Disney in the current Disney 367 00:22:25.850 --> 00:22:30.300 Look at him, his name is Michael Eisner 368 00:22:30.350 --> 00:22:35.250 He's the CEO of Walt Disney from 1984 369 00:22:35.650 --> 00:22:37.000 You know what happened? 370 00:22:37.000 --> 00:22:39.850 Walt Disney was in trouble in 1984 371 00:22:40.150 --> 00:22:42.550 the board member of Walt Disney 372 00:22:42.550 --> 00:22:44.700 tried to overcome these difficulties 373 00:22:44.800 --> 00:22:47.959 So they tried to find out some new CEO 374 00:22:48.491 --> 00:22:52.900 they found Michael Eisner, hired him as a new CEO 375 00:22:53.650 --> 00:22:56.550 Michael Eisner came from the TV side 376 00:22:56.900 --> 00:23:03.350 But when he was hired as a CEO, he focused on movie 377 00:23:04.000 --> 00:23:08.650 He's very clever and he analyzed the core business of Disney 378 00:23:09.350 --> 00:23:13.250 He thought that our core business of Disney is movie making 379 00:23:13.300 --> 00:23:16.000 in order to maintain our market leadership 380 00:23:16.000 --> 00:23:18.500 we'd better make a great movie again and again 381 00:23:18.650 --> 00:23:21.200 But so far right now, we didn't make a movie 382 00:23:21.350 --> 00:23:26.000 At that time, just Disney made one movie around three or five years 383 00:23:26.000 --> 00:23:27.500 it was not good 384 00:23:27.600 --> 00:23:31.450 That's why he emphasized on making movie 385 00:23:31.650 --> 00:23:36.100 After then, he tried to make 12 movies a year 386 00:23:36.300 --> 00:23:39.000 How to make 12 movies a year? 387 00:23:39.000 --> 00:23:41.100 In order to make a lot of movies, 388 00:23:41.100 --> 00:23:44.200 he invested money on the movie studio 389 00:23:44.200 --> 00:23:48.400 from $2.4 million in 1984 390 00:23:49.150 --> 00:23:52.777 The budget of movie making increased by 391 00:23:52.777 --> 00:23:58.277 $845 million in 1994, 10 years later 392 00:24:00.450 --> 00:24:01.950 From his effort, 393 00:24:01.950 --> 00:24:07.050 Walt Disney produced best-selling movies 394 00:24:07.050 --> 00:24:12.350 For example, Little Mermaid, Beauty and the Beast 395 00:24:12.632 --> 00:24:14.932 Aladdin, and The Lion King 396 00:24:15.082 --> 00:24:18.150 These movies were produced around the 1990s 397 00:24:18.600 --> 00:24:23.000 These movies saved Walt Disney Company 398 00:24:24.200 --> 00:24:27.300 Then he looked at the future 399 00:24:27.300 --> 00:24:30.800 He thought that the future of entertainment would be 400 00:24:30.800 --> 00:24:32.000 home entertainment 401 00:24:33.000 --> 00:24:36.000 So we should prepare for home entertainment 402 00:24:36.000 --> 00:24:37.000 How? 403 00:24:38.200 --> 00:24:43.550 He tried to begin synchronizing the company's old movies and TV shows 404 00:24:44.250 --> 00:24:47.250 He tried to release home videos 405 00:24:47.250 --> 00:24:52.000 and he acquired a TV company, which is ABC 406 00:24:52.000 --> 00:24:56.200 ABC had ESPN in 1995 407 00:24:57.000 --> 00:25:02.000 In order to purchase ABC company with ESPN 408 00:25:02.000 --> 00:25:05.400 he spent $19 billion 409 00:25:05.400 --> 00:25:09.000 So at that time, people said you are crazy 410 00:25:09.000 --> 00:25:14.000 There are huge criticisms out there, but he was persistent 411 00:25:15.000 --> 00:25:19.450 He finally acquired ABC, including ESPN 412 00:25:19.650 --> 00:25:24.550 But this acquisition became the goose that laid the golden eggs 413 00:25:25.750 --> 00:25:30.650 The profit from the movie in 2004 was just $662 million 414 00:25:30.700 --> 00:25:37.150 But profit from ESPN only reached $1.9 billion in 2004 415 00:25:37.150 --> 00:25:42.000 So his acquisition turned out to be a great decision 416 00:25:44.000 --> 00:25:48.000 He tried to expand the area of the company 417 00:25:48.800 --> 00:25:54.350 to hotels, retail stores, sports teams, cruise lines 418 00:25:54.350 --> 00:25:58.000 publishing, consumer products, licensing, etc 419 00:25:59.000 --> 00:26:03.000 At his tenure as CEO 420 00:26:03.000 --> 00:26:07.000 Disney grew dramatically 421 00:26:07.000 --> 00:26:12.450 For example, revenue level from $1.5 billion in 1984 422 00:26:15.064 --> 00:26:20.144 to 30.8 billion dollars, it is a 20 times bigger 423 00:26:20.644 --> 00:26:22.314 And what about profit? 424 00:26:22.327 --> 00:26:27.677 Profit increased from 294 million dollars to 4.5 billion dollars 425 00:26:28.064 --> 00:26:30.583 which is 16 times bigger 426 00:26:31.203 --> 00:26:38.303 And market capitalization increased 30 times, which is a huge success 427 00:26:40.253 --> 00:26:44.723 We read some successful case, which is the Disney case 428 00:26:44.873 --> 00:26:51.374 We thought that everybody can achieve these types of outcome 429 00:26:51.424 --> 00:26:53.403 But it is not true 430 00:26:53.953 --> 00:26:59.275 Increasing revenue 20 times, increasing profit 16 times 431 00:26:59.275 --> 00:27:04.224 and increasing market capitalization 30 times, it is almost imposible 432 00:27:06.124 --> 00:27:12.764 Increasing profit just 10% is also difficult 433 00:27:13.735 --> 00:27:20.035 Increase revenue about 10% is also very difficult 434 00:27:21.644 --> 00:27:22.963 Think about your life 435 00:27:23.585 --> 00:27:27.885 Can you lose your body weight by 10%? 436 00:27:28.063 --> 00:27:30.764 It is almost impossible 437 00:27:31.124 --> 00:27:35.824 Please try it and check how long it will take 438 00:27:36.274 --> 00:27:41.864 It is almost impossible to even decrease your body weight to 10% 439 00:27:42.553 --> 00:27:44.803 But how to decrease the cost 10%? 440 00:27:44.814 --> 00:27:49.963 Or how to increase the profit and revenue 20 times 441 00:27:50.043 --> 00:27:52.643 and 16 times and 30 times? 442 00:27:52.813 --> 00:27:55.274 It is almost impossible story 443 00:27:55.390 --> 00:27:59.040 So that's why Michael Eisner became the legend of the businesses 444 00:27:59.890 --> 00:28:03.153 He became the guru of kind of managers 445 00:28:04.541 --> 00:28:07.491 Let's look at another example 446 00:28:07.743 --> 00:28:09.693 This is a Korean case 447 00:28:10.043 --> 00:28:11.274 Look at the picture 448 00:28:12.640 --> 00:28:14.690 This company is Nongshim 449 00:28:16.157 --> 00:28:19.507 The Nongshim is number one brand 450 00:28:19.507 --> 00:28:23.407 in instant noodle market in Korea and globally 451 00:28:23.557 --> 00:28:25.934 Have you heard about the Nongshim instant noodle? 452 00:28:26.084 --> 00:28:31.423 The famous instant noodle produced by Nongshim was Shin brand 453 00:28:31.423 --> 00:28:32.733 Have you heard that? 454 00:28:34.208 --> 00:28:40.108 1990s, Nongshim decided to enter the Chinese market 455 00:28:40.483 --> 00:28:43.283 The CEO of Nongshim 456 00:28:43.283 --> 00:28:47.954 made a decision to make its own factory in China 457 00:28:48.623 --> 00:28:50.373 Then later what happened? 458 00:28:51.354 --> 00:28:56.054 Nongshim's record 40 times increased 459 00:28:56.054 --> 00:28:58.024 in sales in 20 years 460 00:28:58.122 --> 00:29:01.522 since its entry into China from 1996 461 00:29:02.222 --> 00:29:04.622 Personally, I met the person 462 00:29:04.622 --> 00:29:07.683 who is in charge of the Nongshim factory in China 463 00:29:08.783 --> 00:29:11.583 I interviewed him and 464 00:29:12.533 --> 00:29:14.943 I listened to the hidden story about 465 00:29:14.985 --> 00:29:18.235 the Nongshim's strategy going into the China 466 00:29:19.893 --> 00:29:24.173 Before the Nongshim entered the Chinese market 467 00:29:24.323 --> 00:29:28.724 the executives in future Nongshim factory in China 468 00:29:28.816 --> 00:29:33.174 I asked the CEO of the Nongshim about the brand name 469 00:29:33.974 --> 00:29:39.734 I have a question, what about our brand name? 470 00:29:39.734 --> 00:29:42.184 Should we keep the brand name Shin 471 00:29:42.184 --> 00:29:44.063 or should we change the brand name? 472 00:29:44.063 --> 00:29:47.313 Because the Chinese people are not familiar with 473 00:29:47.313 --> 00:29:49.464 our Shin brand name 474 00:29:49.707 --> 00:29:50.907 What do you want to do? 475 00:29:50.914 --> 00:29:56.174 The CEO of Nongshim said that, pretty simple 476 00:29:56.387 --> 00:29:58.237 Keep the brand name 477 00:29:58.787 --> 00:30:01.304 That's simple, keep brand name Shin 478 00:30:01.815 --> 00:30:05.465 Then the executive asked one more question 479 00:30:05.465 --> 00:30:06.615 I have one more question 480 00:30:06.754 --> 00:30:09.514 What about taste? 481 00:30:09.948 --> 00:30:14.948 I know that Chinese people are not familiar with spicy food 482 00:30:14.964 --> 00:30:17.214 but our Shin ramen is very spicy 483 00:30:17.214 --> 00:30:18.244 What should we do? 484 00:30:18.244 --> 00:30:21.642 Should we our taste or should we keep the taste? 485 00:30:21.716 --> 00:30:26.316 CEO of Nongshim said that, keep the spice taste 486 00:30:26.501 --> 00:30:29.213 Great, keep the spice taste 487 00:30:29.230 --> 00:30:33.380 One more I'm sorry, I had one more question 488 00:30:33.563 --> 00:30:36.893 What about the image and price? 489 00:30:37.975 --> 00:30:42.925 Many Chinese people cannot afford to 490 00:30:42.925 --> 00:30:47.584 our Shin instant noodle, Shin ramen 491 00:30:47.584 --> 00:30:51.606 Why? Because our brand name, our brand is premium 492 00:30:51.606 --> 00:30:54.756 and our price is a little bit expensive for them 493 00:30:54.763 --> 00:30:56.663 What should we do? 494 00:30:56.663 --> 00:31:00.163 Should we raise down our price or should we keep the price? 495 00:31:00.943 --> 00:31:05.383 CEO of Nongshim said that, it's pretty simple 496 00:31:05.448 --> 00:31:08.098 Keep the premium image 497 00:31:08.098 --> 00:31:10.948 and do not raise the price and keep the price level 498 00:31:11.198 --> 00:31:13.823 We can keep the price level 499 00:31:14.923 --> 00:31:18.915 What if nobody can afford to our product? 500 00:31:18.965 --> 00:31:21.915 Then CEO said that, it's pretty simple 501 00:31:21.965 --> 00:31:24.794 You target to the people who can afford to it 502 00:31:25.066 --> 00:31:28.866 Let's go to the wealthy area 503 00:31:29.216 --> 00:31:30.823 It's pretty simple 504 00:31:31.177 --> 00:31:33.477 Let's give up just normal area 505 00:31:33.477 --> 00:31:35.527 and we will go to the wealthy area 506 00:31:35.989 --> 00:31:37.889 So the problem solved 507 00:31:38.373 --> 00:31:44.814 The CEO of Nongshim suddenly add one more thing 508 00:31:45.314 --> 00:31:47.064 Do not forget about it 509 00:31:50.863 --> 00:31:53.813 You get the cash first 510 00:31:53.813 --> 00:31:56.054 This is a cash-only business 511 00:31:56.111 --> 00:31:57.811 Do not forget about it 512 00:31:57.904 --> 00:32:02.904 Cash-only policy when contracting with the local distributor 513 00:32:02.957 --> 00:32:10.507 Do not give the product with the consumer credit 514 00:32:10.933 --> 00:32:15.924 Please get the cash first which is a pretty simple policy 515 00:32:16.024 --> 00:32:17.374 Simple strategy 516 00:32:17.374 --> 00:32:22.314 With these four very simple policy about brand name 517 00:32:22.314 --> 00:32:24.714 keeping the brand name, keeping the taste, 518 00:32:24.714 --> 00:32:27.344 and keeping the brand image, keeping the prices 519 00:32:27.344 --> 00:32:31.994 and cash-only policy made 520 00:32:31.994 --> 00:32:34.864 the Nongshim's expansion to the China successful 521 00:32:34.864 --> 00:32:37.783 This is the kind of power of strategy 522 00:32:37.843 --> 00:32:40.593 Again, what is the strategy? 523 00:32:40.593 --> 00:32:44.214 Strategy is company's thought, the company's idea 524 00:32:44.293 --> 00:32:48.643 company's plan about where to play and how to win 525 00:32:49.504 --> 00:32:51.934 Let me summarize it 526 00:32:52.093 --> 00:32:56.493 Again, strategy is the company's theory about where to play and how to win 527 00:32:56.493 --> 00:33:01.393 If you remember this quote, then it is worthwhile 528 00:33:01.493 --> 00:33:02.643 Thank you