Evaluating Strategies - Essay Example

Name Class Unit Executive summary This report is agrees with the statement that a mediocre strategy well executed is better than a great strategy poorly executed. This is discussed based on the video case study of the duck and the lemonade stand. In the video, the duck walks to a lemonade stand and asks the owner for grapes. The owner tells the duck there is no grapes only the lemonade juice. This goes on for several days until the lemonade stand owner becomes frustrated. It turns out that the duck is not also interested in grapes. The analysis shows how lack of strategy as well as poor execution makes it hard to do business. Most businesses have strategies which they rarely implements. The report explains that strategy planning and execution are different but interdependent. The report explains use of Abell’s framework in defining business and its importance in defining strategy. There are also different strategies for dealing with customers that could have helped the stand owner in dealing with the duck. In most cases, poorly implemented strategy or lack of implementation leads to demise of business and loss. The report also analyses the game theory and its use in shaping business strategy. The report concludes by explaining on strategy formulation and execution. Through the analysis, the report is able to prove that it’s better to have a mediocre strategy well executed is better than a great strategy poorly executed. Table of Contents Executive summary 2 Introduction 3 Details on discussion 4 Abell’s framework 5 Strategies for dealing with customers 7 Poorly executed strategy 8 Game theory 8 Strategy implementation 9 Conclusion 13 References 14 Introduction In a business, it is true that mediocre strategy well executed is better than a great strategy poorly executed. A strategy becomes important through execution in a business. In a business, poor performance is not brought about by strategy planning but execution (Hunger & Wheelen, 2003). In most cases, business fails to implement a strategy successfully leading to failure. To make a strategy work is hard than making plans. Strategy execution is a disciplined and logical process with connected activities that makes a strategy to work. Coming up with the logic to make the strategy work is a major challenge to the management (Okumus, 2001). A video case study on the “Duck and lemonade stand” gives insight into strategy formulation and implementation. The case shows how the man selling lemonade in the stand gets frustrated by the duck request until one day he comes up with a strategy to deal with the duck who is annoying customer. It’s after the stand owner stops to fight against the customer request and comes with a strategy that he is able to deal with the duck (YouTube, 2015). Despite this, he poorly implements the strategy which leads to loss of time and money. This report analyses the case study on “Duck and lemonade stand” based on the statement that better a consistently applied mediocre strategy, than a series of ad hoc brilliant strategies. Details on discussion Analysing the video case study of “Duck and the lemonade stand”, it is possible to see that lack of strategy can lead to waste of time and resources. A strategy may be available but not implemented by the business (Neilson, Martin & Powers, 2008). In this case, the business man selling the lemonade saw the duck as an annoying customer instead of strategizing on how to satisfy his needs. In daily business life, it is important to see the customers as individuals with unique needs rather than annoyance (Chrisman, Hofer & Boulton, 1988). The business man failed to apply the strategy at first which would have saved him time. He instead got agitated and did not have any strategy that would have enabled him to deal with the duck annoying requests for grapes in a lemonade stand. Lack of strategy makes it hard to carry out business (Hrebiniak, 2013). When the business man came up with a strategy to take the duck to store and buy him grapes, he was able to get rid of his annoyance. He was also able to know that the duck did not really want grapes. In this case, the duck is asking for a specific need which is grapes. Instead of the businessman trying to ask him why he needs the grapes, he tries to force him buy the lemonade. This approach fails severally and the duck walks away. This shows how vital having a strategy is in a business. The stand owner lacked any strategy that could have helped him deal with the duck request. He never takes time to know why the duck requires the grapes instead wastes time and money to buy him grapes which he refuses (YouTube, 2015). Abell’s framework When running a business, it is vital to use able framework for defining business. The marketer is expected to have an analysis of both internal and external environments for the company (Abell, 2006). The most important analysis is based on the customer. This is the customer value proposition, business model and the macroenvironmet. Abell shows that defining the business is the fast step in strategic market planning. Abell shows that the business should be defined through three main dimensions; customer group being served, function the business is offering to fulfil for the customer groups and technologies used to meet these functions (Chrisman, Hofer & Boulton, 1988). Abell’s framework can be looked at through three main ways. These are target customers, business offerings and how to accomplish the offerings (Abell, 2006). In the case of the duck and the lemonade stand, the stand owner had not used Abell’s framework properly. This is due to fact that the stand owner had no strategies to deal with customers with unique needs such as the duck. He did not have a strategy to deal with customers with unique needs (Alkhafaji, 2011). This made it hard to make a strategic decision when confronted with a customer who needed grapes instead of lemonade. The first most vital question that a marketer must ask themselves is who our customers are. In the case study, the customers were lemonade users. Despite this, customers’ needs vary despite the fact that they may be in same group (Frigo, 2003). For example, in the case, the duck asks for grapes but when provided with them, he asks for lemonade. It is important to know the different types of customers in a targeted group. The customers in a given group may have diverse needs hence requires varying approaches (Grimshaw et al., 2004). The market definition does not only look at what the company is selling but also the need being fulfilled. This is by looking at why the customers would buy the goods and services being offered. The things which the goods and services perform to the customers are a major key in meeting the customer needs. Goods and services being offered by the company should be able to change undesirable situation to a desirable one (Pryor, Anderson, Toombs, & Humphreys, 2007). In this case, it is clear that the duck did not require the grapes. It is also apparent that the duck was also not interested from the lemonade being sold by the stand owner. If the stand owner had defined his business based on Abell’s framework, he could have discovered that he could not meet the duck’s needs. This would have helped him deal with the duck in a way that would ensure he did not lose time and money. He lacked a strategy that could have helped him identify the customer needs that his business could offer (YouTube, 2015). Strategies for dealing with customers In a business, the most important thing is to make the customer happy. Customers will always tell more if they had a bad experience in a certain business (Colgate & Danaher, 2000). Difficult customer situations have a great effect on the worker’s morale as seen in this case. The stand owner experience with the duck was frustrating and annoying. He became agitated and even threatened the duck for asking for grapes in the lemonade stand. When one is confronted by rude or annoying customer, reverting to self-protective responses may lead to responses that make the other party even angrier (Yang, Sun & Epple, 2009). In business it is also common to meet indecisive customers. These are customers who cannot make a decision or seem not to know what they need. Indecisive customers such as the duck takes a lot of business time and may make it hard to assist other customers well. It is important to be aware that some of the customers may just be checking out sales or passing time. This requires having a strategy that will help in determining whether the buyer really wants to make a purchase or the cause of indecisiveness (Okumus, 2001). Lack of this strategy may lead to loss of time and money as in the case of the duck and lemonade stand. The first step when dealing with an indecisive customer is being patient. This is due to fact that indecisive customers can be frustrating. It is also important to use open ended questions. This helps in gaining the background information from the customer (Okumus, 2001). The more one is able to gain the customer background information, they better one is able to evaluate their situation. In the case of the duck, using open ended questions would have helped to determine the needs and also evaluate the situation. The strategy also involves listening carefully and actively (Kaplan & Norton, 2001). The verbal communication is vital in determining the emotions, concerns and interests. The seller is also expected to suggest other options that may help the customer to make decision. In this case, the stand owner came up with an option for looking for grapes in the store. The seller was also expected to guide the duck in making the decision. This can only be done assertively but not aggressively. The stand owner in this case made a mistake in making a decision for the duck instead of helping in making it. If the customer finds the seller is pushing the preference on them, they may become dissatisfied (Slater & Olson, 2001). Poorly executed strategy The strategy to meet the customer needs by excellent services on the lemonade stand is brilliant but poorly executed. The strategy is to meet all customers’ needs yet it does not generate positive results when dealing with a difficult customer. A strategy can only be successful if the outcomes are exemplary (Beer & Eisenstat, 2000). The fact that the lemonade stand owner suffered loss as he handled duck needs shows that the strategy was a failure. Every time an employee meets a customer, they are making choice on how to represent the business. The business is supposed to make choices based on what is best for the customers. Having a strategy is not alone able to make the business win but the ability to execute it (Pearce & Robinson, 2000). Game theory Game theory is very vital in understanding conflict and cooperation in a situation. This is where the actions of the agents involved are interdependent. The essence of business success is based on whether one is playing the right game. Through use of the game theory, it is possible to shape the business strategy. The game of the business is creating the value and capturing it. It is vital for the business to look at who are the customers, suppliers, complementors and substitutors. In the case of the duck and lemonade stand, the stand owner missed to understand the customers. There is also need to understand when to change the game. This is through changing the approach of treating the customers. Utilising the game theory requires one to be a strategic thinker (Frigo, 2003). In this case, the stand owner takes time to come up with a strategy that could help in solving the situation. Strategy implementation It is clear that the lemonade stand owner had a drafted strategy which he failed to implement in his business. The main reason why the strategy implementation is hard is due to fact that there are many hurdles (Homburg, Krohmer & Workman, 2004). There are differences in planning and execution tasks despite the fact that the two are highly interdependence. The stand owner is the planner and executer of the strategy. In this case, there was greater interaction between the two tasks. It is also important to note that execution of strategy takes longer than its planning. The business owner may come up with a strategy but take long time to implement it (Pearce & Robinson, 2000). Based on porter forces analysis, there are five forces that shape a business strategy. For a business to sustain long term profit, they are expected to respond in a strategic manner to competition (Hrebiniak, 2013). The company must look beyond the direct competitors. It’s important to note that substitute offering can lure the customers’ away. There are also threats from new entrants, while suppliers and buyers bargaining power have an effect on business performance (Richardson, 2008). In the case of “Duck and lemonade stand”, the seller did not respond in a strategic manner to the possible competition offered by the grapes. As seen in the case, the duck apparently wants grape in the lemonade stand. The grapes in this case can be viewed as a competition to lemon juice. The stand owner should have been well prepared to tackle such a challenge. To successfully execute a strategy, it is vital to ensure that the needs and demands for the consumers are met. The needs for the consumers determine the type of the strategy that a business adopts and how it is executed (Beer & Eisenstat, 2000). For an example, in a fractured market, the business may be required to adopt multiple strategies. This makes the strategic efforts may make it more complex and difficult to execute. A business cannot survive through ignoring the customer needs and demands. This is due to fact that customers will always share their experience with others whether they are satisfied or dissatisfied. Failure to implement customer driven strategies may lead to a demise of the organisation (Simanis & Duke, 2008). The business leaders are expected to have excellent communication skills to execute a strategy. This is due to fact that good communication helps in understanding the strategy. Communication skills also determine how the management handles the customers. As seen in the case of duck and lemonade stand, the stand owners becomes agitated as the duck comes severally asking for the grapes. His agitation leads to him threatening the duck. When the communication is poor, the business cannot solve its problem (Rapert, Velliquette & Garretson, 2002). The stand owner does not solve the problems brought about by the annoying duck. His threatening does not deter the duck away from coming the following day. Research has proved that organisations which have smooth flow of communication are able to execute their strategy in a better way. This is due to fact that communication is pervasive in all steps of strategy implementation. Communication barriers have been seen to hinder the strategy implementation. Strategy implementation is thus supposed to be reinforced through communication (Pearce & Robinson, 2000). The effectiveness of strategy implementation is based on the people involved in the process. This refers to the skills, attitudes and capability of those involved in the process of implementing the strategy (Frigo, 2002). The business owner or the top management is required to have the desirable qualities that will make the process of implementing the strategy easier (Olson, Slater & Hult, 2005). The owner or management should be committed to the firm goals and strategies. This makes it easy for the business to implement the chosen strategy. For a small business like the lemonade stand, the owner should be fully committed to the strategy and goals. The owner is expected to know that successful implementation of the strategy will lead to outcome which is desirable (Grimshaw et al., 2004). A good strategy followed by good implementation leads to organisation success. Also, if a good strategy is followed by good implementation leads to failure (Thomson, Strickland & Gamble, 2001). These are lessons that can be learned from the duck and lemonade stand video. This shows how important strategy important is in a business. The economic penalties that occur due to poor strategy implementation are substantial. The strategy implementation skills become very important especially in a competitive business environment (Kaplan & Norton, 2001). Small businesses like the lemonade stand are more flexible and dynamic than large organisations. This makes strategy execution much easier as compared to large organisations (Abell, 2006). In large organisation, strategy execution involves a lot of people and requires a lot of coordination and communication. Despite this, challenges in strategy execution lies in both small and large business (Higgins, 2005). Research shows that there is a large gap between what the business intended to do and what it actually accomplishes. This shows that in most cases, business do not fully attain their ambitions. The business is thus supposed to ensure that they are able to understand the strategy and the resources available to implement it (Pearce & Robinson, 2000). From the video and the analysis, it is possible to see why a mediocre strategy well executed is better than a great strategy which is poorly executed. It is better to have a second rate strategy which is well executed than a brilliant idea which is not well implemented and managed. Having a brilliant strategy and failing to implement does not help the business (Cravens & Piercy, 2008). The video shows that the stand owner did not execute the business strategy at first hence he had no way to deal with annoying customers. This made him to use threats to chase the duck. While telling the duck off might be a good idea, the way in which it is executed does not lead to good results. The duck is not deterred by threats to come the next day. Through coming up with a strategy to take the duck to a store and buy him grapes, the stand owner is able to solve his problem. Despite this, this strategy costs him money and time since the duck refuses the grapes and ask whether the store sells (YouTube, 2015). If the stand owner had been able to listen and try to learn more about the duck needs in the first visits, he could have saved time and money (Slater & Olson, 2001). He would have been able to note that the duck was not a serious customer. Conclusion A good strategy without proper implementation leads to business failure. Also a strategy that fails to produce goods results is a failure. A good strategy must be able to attain the expected results. Based on the analysis, it is evident that a mediocre strategy well executed is better than a great strategy which is poorly implemented. The video on the duck and the lemonade stand shows how a good strategy which is poorly implemented can lead to loss of money and revenue. A successful strategy in the business must focus on customer satisfaction. Customer needs must be fulfilled by the business. It is important to have a strategy that guides one on how to deal with different types of customers. In this case, the duck at first appears to be undecided customer. The stand owner fails to implement a strategy that would have helped in dealing with the duck during the first meeting. He becomes aggressive and even threatens the duck for being rude and annoying. When he implements the strategy, he does poorly which costs him money and time. A well implemented strategy leads to business success. Despite this, a good strategy can only be known through its outcomes. A business may have a great strategy for dealing with customers but if the strategy is poorly implemented as evidenced in the case, it leads to failure. The costs of poorly implementing a strategy are high hence the need for proper implementation. References Abell, D. 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YouTube, 2015, Duck and Lemonade stand, Retrieved 27th August 2015 from, https://www.youtube.com/watch?v=MtN1YnoL46Q Read More