Hello
Today's topic is entrepreneurial strategy
I actually majored in strategy management during my master's degree
and I've been teaching
undergraduate courses on strategy management
for over 10 years in and out of the country
I think that this field is quite familiar to me
Strategy can be thought of
as a broad framework or approach
It's about coordinating various functions
to achieve optimal goals in a company
These are kind of topics considered
at the CEO level within the company
But think about it in the case of a startup
Once you launch your business
you essentially become a manager from day one
That's why strategic decision-making is very important
for any entrepreneur
It's a very important area
So shall we get started?
By the way, is there anyone here
who knows how to play blackjack?
Look at the pictures
Blackjack is a very popular game in casinos
To be honest with you,
I've never been to a casino
but I always start my strategy class with a blackjack game
In fact, I once took a course in my PhD program
from a very famous strategy professor
and he started his class with a blackjack game
I just copied his class
The blackjack is a game played between
a casino dealer and a gambler
The dealer gives out a card
and also receives the card him or herself
Before we start, I will explain some kind of
a rule of the blackjack game in a little bit more detail
Blackjack is a game in which a player
with a card close to 21 wins
You can count your number on a number card as it is
and if you have a picture card like a king and queen
then you can count as just 10
If you have an ace card
it could be either 1 or 11
It means you have an option if you have an ace
So usually when people play a game
they just guess or make a random decision
Then I ask people
What do you think you would do
if you are not just a gambler,
you are a professional gambler?
Then what are you going to do?
Are you going to decide a random number then?
In this case, it's kind of a different story
because if you are a professional gambler
you should make a lot of money from this blackjack game
You cannot make your decision based on your random numbering
This is your life, okay?
So you must think about it
This is no joke
Why? Because you are a professional gambler
What would you do?
If I were you,
I would purchase a book first and then I'd read it
If you look here,
there is a book called The Theory of the Blackjack
You need to read this book
and you try to memorize the contents of the book
But think about it
Reading a book is not enough
Actually, games are kind of a real game
in a way, you have to be aware of lots of cases
And you have to respond right away
It is not a joke, it is real
You don't have too much time to take a book again and read the book
In casino, you don't have the time
you don't have to have those kind of time
Then what are you going to do?
You have to always carry
these blackjack strategy cards around
and memorize them whenever you have time
Go to casino and practice
It's much better than nothing
I think this is kind of a first step
in understanding the concept of the strategy
throughout the blackjack game
What it is?
What is the concept of the strategy?
In order to understand the concept of the strategy
you need to understand that
the situation is always complex
There are a lot of different situations and different cases
You need to understand
Second, you are not alone
and there are always competitors
Even in blackjack game, t here is a dealer as a competitor
Third, in order to win the game
you need to understand the rule of the game first
and you need to figure out how to win the game
in the blackjack game
I suggest you to carry out
the blackjack strategy card always and memorize it
This is a kind of example about the way how to win
Another way could be kind of a practice
There is all the same
Practice makes perfect
This is kind of your idea how to win in this game
same thing happened to the strategy
You know what?
The business itself is very similar to gaming casino
The best players may understand the game being played
and they put them in a position to win
The successful players are very good at two things
The first one, they are good at choosing where to play
Second, they are good at figuring out
how to win on their selected playing ground
Let's watch the short video clip
It is a documentary film about American War of Independence
I expect you guys to understand the concept of strategy very well
after watching the short video clip a little bit
Let's watch together
How was it?
Let me add a few more things
The United States and the UK
The UK went to war as you saw in the movie
The first war took place in Manhattan
If you go to Manhattan and you will find out Wall Street
it said that the American people built the wall to stop the British soldiers
That's why there is a Wall Street
At that time, the UK had well-trained soldiers
They are well-organized, they are structured
and Navy ships keep coming into Manhattan
The UK soldiers, they are professional armies
The America, on the other hand was farmers
There were no regular troops
and they were not organized very well
and they just organized into so-called militias
The British army didn't know much about
geography of America
they used Native Americans
as the guardians, the commanders, lord forces
What about America?
Instead of being organized
the American people knew the way around
and they had some new types of weapon
which is the long rifle
The American people used sniper strategy
because they had a long rifle
Basically, they hide in a tree and waited
and then shoot a guardian first
It looks like that they eliminated the eyes of the enemy
And then they target to he commander on the horses
It seemed like they want to
take the head of the enemies
Think about it
You have no eyes and you have no brain, no head
No matter how strong your arm and legs are,
it is useless
As a result, America beat the UK
This is the really good example of
the strategy from the history
So, what is the strategy?
In a business situation,
the strategy is a company's choice of where to play
Remember, it's where to play and how to win
That is your idea, plan, and your choice
where to play and how to win
This is the strategy
Pretty simple, isn't it?
I want to give you some
the real-world example from our history
This is Ford
Let's go back to
the early 1900 automobile industry
Early 1900 in America,
people saw the first types of car
The people perceived this car as
a horseless carriage
This is a kind of automated carriage
But think about the people had at that time
people had horses and people had carriages
Probably people asked the car makers,
why we need a horseless carriage?
Because if we have horses, we have a carriage
Probably car makers responded to this question
Yes, sir, good question, but it could be fun
Yeah, it could be fun
It makes sense
the people perceived at that time
horseless carriage as a kind of toys
Which is not necessary toy
Which is a very expensive toy
Only available to the people who can afford to it
which they are wealthy people
That's why, many automakers were
building luxurious car for just wealthy people
So, not other people cannot afford to it
the car is about toy for the wealthy people at that time
But around that time, only one man had different idea
His name was Henry Ford
He said that
I will build the motor car for the great multitude
It will be so low in price that
no one will be unable to own it
His sentence is complicated
I try to interpret it
His idea was
if I make a cheap car, will be so low in price
If I make a cheap car,
then no one will be unable to own it
Everyone owns it
If I'm able to make a cheap car,
then everyone will own it
That is his idea
It's a great idea
Great perspective
So far, the car is luxurious toy or the wealthy people
But right now, we change the perspective
If I make a cheap car, then everybody will have it
That is Henry Ford's idea
In order to do so,
we'd better make a lot, mass production needed
And also we will charge
small profit on each item
we make a lot,
then we target many people
Then although we charge small profit,
we can make a great profit
This is his idea
How to make mass production possible?
In order to do so, he adopted conveyor belt system in 1913
Thanks to this conveyor belt system
He can reduce the production time
from 14 hours for one car to 1.5 hours for one car
After 10 years later, the productivity increased
How much? Increased four times
Which is a huge success
From this effort
Henry Ford was able to provide
the cheap car as he already mentioned that
Look at the dot
There are a lot of dots over there
The dot represents the prices of the car in 1922
You see the upper top dot it exceeds $12,000
More than 100 years ago
More than 100 years ago,
the car price was more than $12,000
It's an expensive one
Then, where is the Ford cars?
You see the red dot, which is the bottom
which is very, very low in prices
How much?
Look at the picture
This is a flyer of the Henry Ford car in around 1922
The Ford cars' price was $393
Today's money, $5,373, which is cheap
still cheap compared to current car
And at the same time,
average prices from all cars was $2,500
And today's money, $34,000
So think about it, Henry Ford provided very cheap cars
What happened?
After then, so many people can afford two cars
there are 13 million registered cars
And among many car makers
Ford accounted for 52% of the market share in America
It means one out of two cars is Ford's
No one beat Ford, until this man came out
No one compete Ford
until this man initiate a new idea
His name is Alfred Sloan
He is a CEO of General Motors
He saw the situation changing
He argued that
right now, so many people already had a car
Previously, they emphasized on price,
but their incomes is increasing
It's a time to replace their old car
When they replace their old car,
do they want to have another Ford car?
Or do they want to have a new types of car?
He said that my answer would be
the people will choose or will be looking for
a new types of car
So what are we going to do?
We will prepare something beyond
simple transportation, something beyond Ford car
Right now, we'd better stop the price competition
Instead
we are going to provide
some better quality cars in a great variety
Let's do this
He tried to make a stylish car
Look at this
It's round and orange and the design is different
To make a stylish car, he hired artists and designers
Think about it
These days, it's normal for the car makers
to hire designers and artists to make a stylish car
But this is the first time in the world
He tried to sell cars
in many different markets
and many different models and many different colors
There are several different models and there are several different markets
Poor market, middle market, and rich market
and also the colors
Think about right side picture
The car has orange colors and the shape is round
But for the Ford car
there is only black and only scale types
This is a different model produced by GM
GM prepared several different types of cars
for several different types of markets
A car for every kind of income level
For example, if your income level is below the average,
then Chevrolet is your car
If your income level is above the average
the Buick or Cadillac would be your car
This is a kind of a segmentation
He segmented the market from the entry level Chevrolet
to luxury line Cadillac
He changed the model annually
This is the annual model changes
and these days, so many car makers already adopted this initiative
But this is the first time in human history
And then what about financing?
You don't purchase a car with cash only right now
you purchase a car with credit
It means you can purchase a car right now
and you can pay monthly to the car makers
This is the consumer financing
Who started this consumer financing?
Of course, GM initiated this consumer financing
GM said that buy now, pay later
This is car on time?
Possibly, car on time
Don't worry, when you don't have money
you can purchase a car right now and you can pay later
This is the consumer financing in 1920s
But Ford, what about Ford?
Ford never accepted this consumer financing until when?
Until 1959
Then what happened?
GM surfaced Ford models in sales in late 1920s
GM won the game
In 1954, GM achieved market share more than 50%
So the situation is opposite
This is a story about the strategy between GM and Ford
Let's look at another example, this is Walt Disney
Right now, Walt Disney is a global company
It's a multinational mass media and entertainment conglomerate
We love Walt Disney
Walt Disney generated revenue
around $91 billion last year, 2024
the profit achieved $32 billion in 2024,
which is a huge success
But what about the mid-1980s?
Mid-1980s, Walt Disney was in trouble
The company was struggling to maintain the profit
Let's look at the data
At that time, the revenue of Walt Disney
was just $1.5 billion
the profit was $294 million
The Disney in 1984
was not the Disney in the current Disney
Look at him, his name is Michael Eisner
He's the CEO of Walt Disney from 1984
You know what happened?
Walt Disney was in trouble in 1984
the board member of Walt Disney
tried to overcome these difficulties
So they tried to find out some new CEO
they found Michael Eisner, hired him as a new CEO
Michael Eisner came from the TV side
But when he was hired as a CEO, he focused on movie
He's very clever and he analyzed the core business of Disney
He thought that our core business of Disney is movie making
in order to maintain our market leadership
we'd better make a great movie again and again
But so far right now, we didn't make a movie
At that time, just Disney made one movie around three or five years
it was not good
That's why he emphasized on making movie
After then, he tried to make 12 movies a year
How to make 12 movies a year?
In order to make a lot of movies,
he invested money on the movie studio
from $2.4 million in 1984
The budget of movie making increased by
$845 million in 1994, 10 years later
From his effort,
Walt Disney produced best-selling movies
For example, Little Mermaid, Beauty and the Beast
Aladdin, and The Lion King
These movies were produced around the 1990s
These movies saved Walt Disney Company
Then he looked at the future
He thought that the future of entertainment would be
home entertainment
So we should prepare for home entertainment
How?
He tried to begin synchronizing the company's old movies and TV shows
He tried to release home videos
and he acquired a TV company, which is ABC
ABC had ESPN in 1995
In order to purchase ABC company with ESPN
he spent $19 billion
So at that time, people said you are crazy
There are huge criticisms out there, but he was persistent
He finally acquired ABC, including ESPN
But this acquisition became the goose that laid the golden eggs
The profit from the movie in 2004 was just $662 million
But profit from ESPN only reached $1.9 billion in 2004
So his acquisition turned out to be a great decision
He tried to expand the area of the company
to hotels, retail stores, sports teams, cruise lines
publishing, consumer products, licensing, etc
At his tenure as CEO
Disney grew dramatically
For example, revenue level from $1.5 billion in 1984
to 30.8 billion dollars, it is a 20 times bigger
And what about profit?
Profit increased from 294 million dollars to 4.5 billion dollars
which is 16 times bigger
And market capitalization increased 30 times, which is a huge success
We read some successful case, which is the Disney case
We thought that everybody can achieve these types of outcome
But it is not true
Increasing revenue 20 times, increasing profit 16 times
and increasing market capitalization 30 times, it is almost imposible
Increasing profit just 10% is also difficult
Increase revenue about 10% is also very difficult
Think about your life
Can you lose your body weight by 10%?
It is almost impossible
Please try it and check how long it will take
It is almost impossible to even decrease your body weight to 10%
But how to decrease the cost 10%?
Or how to increase the profit and revenue 20 times
and 16 times and 30 times?
It is almost impossible story
So that's why Michael Eisner became the legend of the businesses
He became the guru of kind of managers
Let's look at another example
This is a Korean case
Look at the picture
This company is Nongshim
The Nongshim is number one brand
in instant noodle market in Korea and globally
Have you heard about the Nongshim instant noodle?
The famous instant noodle produced by Nongshim was Shin brand
Have you heard that?
1990s, Nongshim decided to enter the Chinese market
The CEO of Nongshim
made a decision to make its own factory in China
Then later what happened?
Nongshim's record 40 times increased
in sales in 20 years
since its entry into China from 1996
Personally, I met the person
who is in charge of the Nongshim factory in China
I interviewed him and
I listened to the hidden story about
the Nongshim's strategy going into the China
Before the Nongshim entered the Chinese market
the executives in future Nongshim factory in China
I asked the CEO of the Nongshim about the brand name
I have a question, what about our brand name?
Should we keep the brand name Shin
or should we change the brand name?
Because the Chinese people are not familiar with
our Shin brand name
What do you want to do?
The CEO of Nongshim said that, pretty simple
Keep the brand name
That's simple, keep brand name Shin
Then the executive asked one more question
I have one more question
What about taste?
I know that Chinese people are not familiar with spicy food
but our Shin ramen is very spicy
What should we do?
Should we our taste or should we keep the taste?
CEO of Nongshim said that, keep the spice taste
Great, keep the spice taste
One more I'm sorry, I had one more question
What about the image and price?
Many Chinese people cannot afford to
our Shin instant noodle, Shin ramen
Why? Because our brand name, our brand is premium
and our price is a little bit expensive for them
What should we do?
Should we raise down our price or should we keep the price?
CEO of Nongshim said that, it's pretty simple
Keep the premium image
and do not raise the price and keep the price level
We can keep the price level
What if nobody can afford to our product?
Then CEO said that, it's pretty simple
You target to the people who can afford to it
Let's go to the wealthy area
It's pretty simple
Let's give up just normal area
and we will go to the wealthy area
So the problem solved
The CEO of Nongshim suddenly add one more thing
Do not forget about it
You get the cash first
This is a cash-only business
Do not forget about it
Cash-only policy when contracting with the local distributor
Do not give the product with the consumer credit
Please get the cash first which is a pretty simple policy
Simple strategy
With these four very simple policy about brand name
keeping the brand name, keeping the taste,
and keeping the brand image, keeping the prices
and cash-only policy made
the Nongshim's expansion to the China successful
This is the kind of power of strategy
Again, what is the strategy?
Strategy is company's thought, the company's idea
company's plan about where to play and how to win
Let me summarize it
Again, strategy is the company's theory about where to play and how to win
If you remember this quote, then it is worthwhile
Thank you