Welcome back to entrepreneurship strategy session
This is the second session of the entrepreneurial strategy
In this session
we are going to practice in strategy canvas
What is the strategy canvas?
Strategy canvas is a very useful tool
and I want to introduce this tool
and you'd better practice this tool a lot
Before we go into the main topic about the strategy canvas
I would like you guys to watch this case study through the video
This video will explain about the businesses
Let's watch together
How about the businesses in the previous video?
This video illustrates how the Yellow Tail spread out in America
and how two companies came up with some new idea
and how they differentiate Yellow Tail from the traditional wine market
We will use this case as a practice
in the strategy canvas later
What is the strategy canvas?
Strategy canvas is a central
diagnostic tool from Blue Ocean Strategy
Look at this book
This book is Blue Ocean Strategy
which is the best-selling book written by a Korean professor in INSEAD
And strategy canvas is a powerful tool
that helps businesses differentiate themselves from their competitors
And strategy canvas offers a very clear
and visualized representation of companies' landscape
I will show you how it works
In order to make a strategy canvas
We'd better draw the graph
First one, you draw the y-axis
The y-axis represents the value
This value is something that consumers perceive
the consumers perceive the value
If consumers perceive your product or service is really good
then consumers' value is high
And if consumers perceive your product and service is not good
then consumers' value is low
The consumers' value ranges from high to low
It's pretty simple, Isn't it?
And intuitive
And right now, you draw the x-axis
In the x-axis, you just write down your attributes
Attributes associated with your product
Attribute 1, Attribute 2, Attribute 3, 4, 5, 6, 7, 8, 9
It depends on your assessment
Then later, what happens?
You assess your competitors
in terms of chosen attributes
I don't know what Attribute 1 is
but you assess your competitors based on this Attribute 1
Let's say, according to your analysis
your competitor's score for Attribute 1 would be just in the middle
Just in the middle
What about Attribute 2?
Attribute 2 is kind of in the middle
and Attribute 3 is kind of below the middle
and Attribute 4 is very high
For Attribute 4,
consumers will perceive it very high for your competitors
Then you draw the line between the dots
Then you put your competitors over there
So now, it's your turn
You assess attributes based on your product and service
What about Attribute 1?
When you assess your product based on Attribute 1
then the score is a little bit higher than the middle
What about Attribute 2?
Attribute 2 is less than the average
Attribute 3? Yes
When I assess Attribute 3 based on my product and service
it could be very high
And what about Attribute 4?
Attribute 4 is a little bit similar or relatively low than your competitors
Then again, you draw the blue line between the dots
or some other color line, put your company
You've done
You've done in a straight canvas
What is the important thing?
You can easily understand
what attributes differentiate yourself from your competitors
What is it?
Yes, Attribute 3
Attribute 3, there is a huge and significant difference
between you and your competitors
From this strategy canvas we intuitively understand
what differentiates myself from my competitors
Let's practice strategy canvas with yellow tail case in the video
Again, there is the same graph
Y-axis represents the consumer value
X-axis, there are many attributes
What kind of attribute related to the wine?
Let's say the price, quality
or accessibility and easy to use
And probably there are many more attributes
But we will focus on these four attributes
Price, quality, accessibility and easy to use
Then later, you will examine
the score about your competitors
Your competitors based on the chosen attribute
In this case, your competitors is the traditional wine
What about the price for the traditional wine?
Price is kind of expensive
If consumers see the expensive priced wine
then they perceive kind of low value
So the price is set kind of low and middle
And what about quality?
Traditional wine provide high quality wine
So that's why the quality level is kind of high
What about accessibility?
You can purchase wine at anywhere
You can purchase wine Costco
You can purchase wine specialized, Rico store
So the accessibility is middle and above the middle
Easy to use
You feel easy to use when you drink traditional wine
To me, it's always difficult
I don't know the terminology
I don't know the taste
The wine is still difficult for me
So the consumer feel, low value
or zero value because it's very difficult
So you can draw the line between the dots
This is a traditional wine
Right now, it's time to analyze your Yellow Tail case
What about Yellow Tail's price?
Yellow Tail's price is relatively cheaper than traditional wine
If we provide a cheaper product
then probably consumer feel higher value
so the consumer perceive the higher value than traditional wine
It is kind of middle and above
What about quality?
Quality, the Yellow Tail wine provides a decent quality
It's very similar to the traditional wine but slightly less in my opinion
So I think it's the middle at best and accessibility
Yellow Tail wine
distributed this product throughout the Costco
if you are able to purchase wine throughout the Costco
the accessibility, there is no problem
So the accessibility is high or close to the high
And what about easy to use attribute?
When you drink Yellow Tail, it can be very easy
There is a picture of kangaroo, there is no jargon
There is no difficulties
So it looks like you drink beer, it's the same
The easy to use for this attribute
Yellow Tail score very high
Then you draw the line between the dots
Then you put, it is a Yellow Tail
Then you can find out the two sides
very significant differences
between Yellow Tail and traditional wine
And the bigger difference is found in the easy to use area
What differentiates Yellow Tail from the traditional wine?
It's easy to use
From this strategy canvas
we are able to understand the different factors right away
This is the power of strategy canvas
And I recommend you guys to practice a lot
in your business, in your idea
Let's take another example to create another strategy canvas
This example is Cirque du Soleil
Have you heard about Cirque du Soleil?
Cirque du Soleil is one of the successful circus companies
Then in order to understand the circus company
and we understand the circus industry in 1980s
What happened in circus industry at that time?
Circus industry was in trouble
Why? Because there are a lot other, entertainment available
For example, TV, movie, and sports
And these other form of entertainment company
took consumers away from the circus company
Traditionally circus company
has offered the animal shows as well
This is a typical kind of picture of the circus company
There is a crown, there is a tent
and there is the elephant, lion, tiger, something like that
So many circus companies follow just the traditional, structure
But only one guy had a different idea
His name was Guy, one guy, Guy
Guy is a street performer in Canada
And he thought that, why should we keep animals?
Why?
People are not interested in seeing elephants
People are not interested in seeing tigers and lions
They can see the tigers and lions, elephants in zoo, not in circus
in circus, we can provide better quality of the show
we can provide some kind of creative show
And we can provide some kind of extraordinary, experiences
If we are able to provide,
extraordinary experience is really great show
then people are willing to pay, expensive prices
This is his idea
Let's eliminate the elephant
Just tent, just crown, just acrobat
We can offer not only fun and thrills,
but also artistic richness
In other words, so we can make this circus art
like a theater, like a movie
like a drama, something like that
No elephant at all
we will get rid of the elephant
If we eliminate the elephant, then we can save the money
because in order to keep the elephant
you should pay a lot of money in order to feed them
transport them, care for them
And medical fee, housing fee, insurance fee, and transportation fee
if we decide to eliminate the elephant
and other animals, then we can save the money
With this saved money, then we upgrade our venue
Like this, this venue is glamorous
And we can make a higher level of comfort
we can provide this higher level of comfort to our consumers
a glamorized tent
The Cirque du Soleil can provide higher level of art
Look at this picture
This clown and the circus performer
wear some specialized costume
Why they wear different costume?
Because it's very similar to the movie
It's very similar to the drama
It's very similar to the theater
The Cirque du Soleil tried to break down
the boundaries of theater and circus
Basically, this company applied
the theme and genre into the circus
Think about the movie and we have a different genre
it's a comedy movie or a horror movie or a thriller movie
Based on genre of the movie and we expect the different
same thing happened to the circus
The Cirque du Soleil emphasized on extreme creativity
So, what happened?
I want to show you the difference between
Cirque du Soleil and the traditional circus company
Let's look at the picture
On left side
this is the Cirque du Soleil's best-selling performance which is the Death of Will
There is a person in a round bottle
it looks like someone is chasing
and someone is being chased
And others in the bottom are watching this scene
it feels like kind of a scene of a movie
But on the other hand look at the right picture
The same performance done in
the Dongchun Circus Company in Korea
The performance is basically the same
but I don't feel any art here
I don't feel it's a movie
It is not a movie, it is not art
It is kind of sports
it is kind of Olympic game
I don't know why they are doing
They just it looks like a competition
You see the differences?
On the left side same performance in the Cirque du Soleil
It looks like art because they wear the specialized costume
and there could be the music and the consumers feel thrilled a lot
compared to the right performance
which is exactly the same that of real performance
But you see the differences
I will give you another example
Look at the picture on the left side
This is a juggling act
and you can see the three red clothes, some performers
and red clothes performers are rolling kind of yellow beans
and the green clothes guys
approaching behind this red clothes guy
I think it's like a fire ant in the middle
fire ant is the red clothes guy
probably the green clothes guys are grasshopper
Grasshopper who try to steal from something behind
I think, what about the yellow bean?
Yellow bean looks like corns
The red ant playing play with corn
and grasshopper try to steal the corn from the red ant
This performance is called as insect
We feel the theme
We feel some kind of image
On the other hand,
you can see the exactly same performance done in Jeju Island
The content is exactly the same
Performance is exactly the same
But there's no theme
Over there, there's no theme
and we don't know why they do the juggling act
And why they wear this uniform
It looks like they are practicing in kind of a kung fu
It looks like a kung fu masters, they practice their kung fu
We don't know why they did that
you see the differences between these two exactly same performance
That's why the kind of the art differentiate Cirque du Soleil
from the other traditional circus company
What about the result?
Cirque du Soleil achieved rapid growth
in even declining industry which is a circus company
The value of this company exceeded two billion dollars
and the other traditional circus company went to bankruptcy
For example, Ring Ring Brothers which is
the previously successful traditional circus company shut it down
Although, during COVID-19, Cirque du Soleil was in trouble
but the company overcame the difficulties these days
Now, you understand the difference between
Cirque du Soleil and the traditional circus company
Let's practice with Cirque du Soleil case in strategy canvas
Again, the y-axis are value perceived by consumers
and x-axis are attributes related to your service
In this case, what kind of attribute could be relevant?
What about price, animal show, venue, and art or theme?
Let's say those four attributes are very important
to represent your circus and your company
We'd better evaluate the score
evaluate the traditional circus company's score on price
animal show, venue, and art and theme
What about price?
The prices are traditional circus company
provide very cheap ticket prices
The consumers feel kind of high value,
the middle or above high
Middle or high
What about animal show?
Traditional circus company provide
elephant show or tiger or lion show
the consumers feel valuable
in this case, it's middle and high
What about venue?
Traditional circus company didn't care for the comfort venue
They, why?
Because they need money to care for the animal
that's why they don't have any money to upgrade their tent
the venue is a little bit low value
And what about art and theme?
Traditional circus company,
there is no theme, there is no art, there is nothing
They just show the acrobatic
there is no art and theme
We draw the line between the dot
and put the traditional circus company
We are going to assess the Cirque du Soleil based on the attribute
What about price?
The ticket price of the Cirque du Soleil is higher
and expensive than traditional circus company
The consumers perceive the low value in the prices
the value of the price is low
What about animal show?
Circuitous soleil didn't provide any animal show
there is no value
Venue
Circuitous soleil has great tent
the consumer feel comfortable
from this great venue, great tent
The consumer value in the venue area which is high
What about art and theme?
There is very different types of theme
As I already mentioned that there is a theme of insect
If you go to Vegas, there is a theme of water
theme of fire and theme of something
there are a lot of different themes
It looks like a different movie
If we watch the Cirque du Soleil,
consumers perceive the high value on art and theme
It is very high
We draw the line between the dots and put the Cirque du Soleil name
Immediately, we can see
what area differentiates the Cirque du Soleil from the traditional circus company
And I can find out three areas
Animal show, venue and probably art and theme
the biggest area that differentiates too much would be the art and theme
This is the power of strategy canvas
Again, I suggest you guys to practice in strategy canvas many times
I want to give you another and the last example
This is the Walmart case
Walmart is discount retailing businesses
But interesting thing is
this concept of discount retailing business was not new
and Walmart didn't start this concept for the first time
The discount store concept was already popular during 1950s
Look at the picture
These are all popular discount retailing stores during 1950s
During 1960s, there are 10 largest discounters
And those 10 largest discount retailing stores focused on
the large metropolitan area
like New York City, Chicago, LA, something like that
They focused on the big city because there are many people living in big city
They tried to sell private label goods
What is private label goods?
Private label goods is store-specific brand product
For example, if you go to Kmart
and there is a Kmart-specific branded product
If we go to Costco
there is a Costco-specific private label goods such as Kirkland
Kirkland is Costco's private label product
The discount retailing stores focused on private label goods
they focused on second-tier product
For example they don't sell Levi's jeans
Instead, they sell some kind of no-name jeans
Why they focused on second-tier brand product?
Because they want to save the cost
They want to cut the prices
this is the only way to cut the prices
The discounters provide price promotion to the consumers
What about price promotion?
Promotion means,
a certain kind of discount within a certain period of time
For example, in this month we offer 30% discount
Something like that it is time-specific
Time-specific price promotion
Now, the situation about the discount retailing industry
And most of the discount retailing companies follow this kind of rule
but only one guy had a different idea
His name was the Sam Walton
Sam Walton is a retailing group
He was a veteran from the World War two
After World War two
he saw the kind of suburban life in America
After World War two American
American suburban life was exploding
so the Sam Walton saw this phenomena
and he tried to catch up the opportunity from the suburban life
He thought that why we are located in the big city
Right now, there are suburban area exploding
and then we can go there
so let's go to rural area
Why we limited the time period of the price promotion?
Why not provide the cheap price product every day?
Every day cheap prices
which is every day low price on everything
This is his slogan and this could be a differentiator
from the other traditional discount retail in stores
He is Sam Walton and
he had remarkable business skills on retailing
He worked very hard then after World War two
he make one of the franchisee of the Ben Franklin shop
Ben Franklin shop is it's kind of $1 shop
it's a very popular at the time then later again he worked very hard
He opened up another Ben Franklin shop
at the end he managed 16 Ben Franklin shops
He became the largest Ben Franklin shops franchisee 16 stores
He had an idea about the discount retailing store
with these two concept
Let's go to the rural area
and we can provide everyday cheap prices on everything
He suggests his idea to the owner of a Ben Franklin shop
but the owner of the Ben Franklin shop didn't accept this offer
That's why the Sam Walton started his business by himself alone
He opened up the first Walmart store in a rural area
He went to the rural area
and actually opened up the first Walmart store in Arkansas
He made the flyers by himself
You can see the pictures on the right side
There are many local residents who are waiting for
the grand opening of the Walmart store
Again, Sam Walton focused on the small town
the benefit of the focusing on small town is that
the small town only supports one discounting retail stores
What does it mean by that?
If you go fast and if you go first in this area
you can occupy the market very fast
There's no incentive for the competitor to join this market
you can enjoy your monopoly power in this area
Second good thing is you don't have to pay marketing fee
Although, you don't pay anything about the marketing
the local resident already knew about you
Why? Because the event event spread out very quickly
It's a very small town
Sam Walton started his first Walmart store in Arkansas in 1962
Then over there, Sam Walton tried to cut the cost with the merchant
how he purchased bulk merchandise
and delivered it directly from farm
or from factory directly to his Walmart store
In 1980s
Walmart began working directly with manufacturers
The Walmart went to the factory directly such as the P&G
They went to the P&G factory
and got the product from the P&G factory
delivered the product from the factory to the store directly
We did these efforts with these activities Walmart can provide everyday low price
on really great branded product
What happened? Yes, of course
Walmart achieved the incredible success
By 1976
Walmart went to IPO and Walmart became
the publicly traded company
with huge success
Let's practice in strategy campus with Walmart store
It's the same, there is a y-axis value and access attribute
In this case what kind of attribute can be related to the Walmart store
Price local access and quality and variety
I think it's a great attribute
there could be something more
but we are gonna focus on those four attribute
And then right now you can access the score based on the attribute for your competitors
What about price for the traditional discount retail stores?
They provide the cheap prices
The consumers perceive this value
What about local access?
Again, the 10 largest discount stores located in big cities
there's no way to access the big city discount stores
other than just driving one hour or two hours from the rural area
The local access is a pretty low value
What about quality?
The largest and traditional discount stores
to provide some second tier brand good
and the private label good
So the quality, kind of a middle or less than the middle
What about the variety?
The varieties it's just kind of a middle or less
and then we draw the line between the dot
and put the previous discount stores
We can access the score of the Walmart based on the attribute
What about the price?
Prices are kind of similar to the discount store or higher
and the local access is really great
Because Walmart located in in rural area
so local access is great
Quality?
Walmart to pursue the high quality brand
from the factory directly
High quality, variety, in Walmart store you can find anything
Variety
You can draw the blue line between the dot
and put the name Walmart
We can see the differences between Walmart and
traditional and previous discount stores
Local access there's a huge gap between them
quality, a huge gap and variety, huge gap
so, the three big area differentiate
Walmart from the previous discount stores
That's why Walmart is very successful
So, this is the power of strategy canvassing
You'd better practice many times