The Penta Model of Strategic Choices (summary)
•Download as PPTX, PDF•
0 likes•337 views
The document outlines a framework for developing a competitive advantage with two main components: where to focus and how to compete. For where to focus, there are 10 options across 5 categories that analyze market segments, customer convenience, integration opportunities, alternatives/expansion areas, and emerging areas. For how to compete, there are also 10 options across 5 categories related to developing the best product, bonding with customers, controlling transactions, leveraging unique advantages, and innovating. The framework is intended to be used as a cognitive reference model to strategically define choices and positioning across the various options presented for where to focus efforts and how to compete in the market.
Recommended
More Related Content
What's hot
What's hot (20)
Similar to The Penta Model of Strategic Choices (summary)
Similar to The Penta Model of Strategic Choices (summary) (20)
More from Mihai Ionescu
More from Mihai Ionescu (20)
Recently uploaded
Recently uploaded (20)
The Penta Model of Strategic Choices (summary)
- 1. Where and How to build a Competitive Advantage?
- 2. Segmentation Customer Convenience Integration Alternatives & Expansion Emergents A2 Market Edges B1 Proximity Where To Focus? ⍺ D1 Substitutes D2 Expansion C2 Adjacents C 1 V a l u e S t r e a m B 2 S a l e s C h a i n A 1 M i d - M a r k e t E 2 N e w M a r k e t s E1 Trend M arkets F2 Product Differentiation G1 Customer Intimacy How To Compete? I1 Proprietary Ecosystem I2 Unique Enablers H2 Dom inant Exchange H 1 E x c l u s i v C h a n n e l G 2 A d d e d V a l u e F 1 C o s t L e a d e r s h i p J 2 C o n c e p t u a l I n n o v a t i o n J1 Disruptive Innovation Best Product Customer Bonding Transaction Control Unique Advantage Innovative Value Where To Focus? How To Compete?
- 3. Where to Focus for building a Competitive Advantage? The 10 choices.
- 4. Segmentation A1 Mid-Market Focus on a niche market segment of specific customer needs that are underserved. Option 1: Choices about Where To Focus?
- 5. Focus on either a few high-end customer needs, or on the commodity needs of the many. Option 2: Segmentation A2 Market Edges Choices about Where To Focus?
- 6. Focus on whoever needs easy and quick access to your products, or to your locations. Option 3: Customer Convenience B1 Proximity Choices about Where To Focus?
- 7. Focus on the sales channel, to reach more customers via proxies, or to bypass customer proxies. Option 4: Customer Convenience B2 Sales Chain Choices about Where To Focus?
- 8. Extend business upstream or downstream, for better integration and new customers. Option 5: Integration C1 Value Stream Choices about Where To Focus?
- 9. Focus on other needs of your current customers and get a bigger share of their wallet. Option 6: Integration C2 Adjacents Choices about Where To Focus?
- 10. Focus on needs of new customers that can be satisfied by adapted versions of your products. Option 7: Alternatives & Expansion D1 Substitutes Choices about Where To Focus?
- 11. Focus on needs of customers in new territories with same needs as those of current customers. Option 8: Alternatives & Expansion D2 Expansion Choices about Where To Focus?
- 12. Focus on overserved needs of marginal customers requiring more simplicity and affordability. Option 9: Emergents E1 Trend Markets Choices about Where To Focus?
- 13. Focus on needs of non-customers that they were unaware of before you addressed them. Option 10: Emergents E2 New Markets Choices about Where To Focus?
- 14. Now, look again: Segmentation Customer Convenience Integration Alternatives & Expansion Emergents Problems To Solve ⍺ A2 Market Edges Vanity, Top-tier Market Problem: Exceptional class belonging Commodity, Long-tail Market Problem: Afordability to buy B1 Proximity Physical Proximity Virtual Proximity Problem: Quick & easy buyer’s access D1 Substitutes Industry Cross-Adoption Problem: Imperfect legacy solutions Customer Jobs Replacement Problem: Obsoleting legacy buyer needs D2 Expansion Globally-Local Markets Problem: Foreign buyer needs intimacy Global Sales Channel Expansion Problem: Foreign buyer needs C2 Adjacents Complementary Customer Jobs Problem: Related buyer needs Counter-Disruption Engine 2 Problem: Defend against disruption C1 Value Stream Upstream Integration Downstream Integration Problem: VS cost reduction B2 Sales Chain Sales Chain Refocus Problem: Deproxying buyer relations Franchise Network Problem: Proxy-focused scaling A1 Mid-Market Specialty & Affinity Segmentation B2B or B2C Problem: Niche buyer needs E2 New Markets New Customer Jobs Problem: New needs innovation BOS Marginal Buyers Problem: Mostly unsolved needs E1 Trend Markets Over-served Customer Jobs Problem: Unsophisticated buyer needs Technology Early Adopters Problem: Novelty quest needs 10 Strategic Choices categories: Where to focus?
- 15. How to Compete for building a Competitive Advantage? The 10 choices.
- 16. Gain an unrivaled cost advantage based on operational excellence and flexible supply chain. Option 1: F1 Cost Leadership Best Product Choices about How To Compete?
- 17. Build a significant advantage based on differentiating product attributes and features. Option 2: F2 Product Differentiation Best Product Choices about How To Compete?
- 18. Gain a significant advantage by providing a differentiating customer experience. Option 3: Choices about How To Compete? G1 Customer Intimacy Customer Bonding
- 19. Build a significant advantage through added value services or one-stop-shop horizontal breadth. Option 4 Choices about How To Compete? G2 Added Value Customer Bonding
- 20. Develop a unique advantage by raising competitive barriers, or by gaining privileged access to customers. Option 5 Choices about How To Compete? H1 Exclusiv Channel Transaction Control
- 21. Build a dominant platform to reach a critical-mass of transactions between buyers and sellers. Option 6 Choices about How To Compete? H2 Dominant Exchange Transaction Control
- 22. Build an ecosystem of value-adding complementors to your success product set as standard. Option 7 Choices about How To Compete? I1 Proprietary Ecosystem Unique Advantage
- 23. Build a new value proposition upon your differentiating capabilities or your VRIN* resources. Option 8 Choices about How To Compete? I2 Unique Enablers Unique Advantage * Valuable, Rare, Inimitable, Non-substituable
- 24. Use technology to provide a simpler, ubiquitous, more affordable alternative to an existing product. Option 9 Choices about How To Compete? J1 Disruptive Innovation Innovative Value
- 25. Build a higher-value but lower-cost value proposition with competitive factors never used before. Option 10 Choices about How To Compete? J2 Conceptual Innovation Innovative Value
- 26. Now, look again: How To Compete? 10 Strategic Choices cathegories: Solutions to Deliver Best Product Customer Bonding Transaction Control Unique Advantage Innovative Value F2 Differentiation Quality & Functionality Enhancement Solutions: Develop product differentiation Sustaining Innovations Solutions: Product innovative enhancements G1 Customer Intimacy Optimized Customer Experience Solutions: Optimize customer CX curve Advanced Customization Solutions: Serve the market-of-one I1 Proprietary Ecosystem De-facto or Industry Standard Solution: Turn product’s success into a standard Value-Adding Complementors Solution: Develop a network of complementors I2 Unique Enablers Building on Unique Capabilities Solution: Turn unique capabilities into new products Building on VRIN Resources Solution: Use the VRIN resources for new products H2 Dominant Exchange Multi-sided Platform Solution: Control the value exchange Transaction Brokerage Solution: Become the customer proxy H1 Exclusive Channel Entry-Barrier Constraints Solution: Block competitor’s access Exclusivity or Licensing Solution: Gain exclusive access G2 Value-Adding One-Stop-Shop Solution: Develop a horizontal portfolio Services to Products Add-on Solutions: Add-ons to enhance products F1 Cost Leadership Operational Excellence Solutions: Lower internal costs Lower External Costs Solutions: Lower external costs J2 Conceptual Innovation Capture New Customer Jobs Solution: Conceptually new products Break Value-Cost Trade-Off Solution: 4-way framework for new products J1 Disruptive Innovation Functional Simplification Solution: Incumbent products made accessible Lower Specifications Solution Solution: Lighter versions of existing products
- 27. This library of choices types is mostly used as a Cognitive Reference Model for defining the Strategic Choices of our Strategy. We get something like this: F1 F2 G1 G2 H1 H2 I1 I2 J1 J2 A1 A2 B1 B2 C1 C2 D1 D2 E1 E2 B2G2 D1H1 B1I2 Solutions-to-Deliver Problems-to-Solve Strategic Choices Types Strategic Positioning Mix
- 28. The Penta Model of Strategic Choices