How can you keep your competitors from easily copying your strategy?

Generating GrowthUsing the company you have selected for your Strategy Development Project, describe one idea to generate substantial top line revenue growth. As you describe and assess this potential move, refer specifically to Figure 4.1 (p. 77) in Chapter 4 of Sherman and to the other readings from this week to support your response.

  • Do you predict your idea will generate short-term growth, long-term sustainable growth, or both?
  • How can you keep your competitors from easily copying your strategy?
  • What costs, systems, or capabilities are necessary for this growth to occur?

Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates’ initial posts by Sunday, midnight of your

1st person to respond to

Brad

RE: Week 3 DiscussionCOLLAPSE

Hello Dr G and fellow classmates-

Using the company you have selected for your Strategy Development Project, describe one idea to generate substantial top line revenue growth. As you describe and assess this potential move, refer specifically to Figure 4.1 (p. 77) in Chapter 4 of Sherman and to the other readings from this week to support your response.

One revenue-generating idea our team is working on for the 2023 Baseball/Softball season is to focus on a list of key items we are calling our never-out list.  The plan is to go deep in inventory on some key items and instill confidence in our customers that these items will always be available.  We are focused on items in our top 5% of revenue and margin $ as well items our customers expect us to always have in stock like black helmets.  These items fall in line with Leonard Sherman’s focus in his book, If You’re in a Dogfight, Become a Cat!, that they will drive operating margin, ROIC, and ultimately bottom-line profitability (1).  By focusing on margin and not just revenue we will ensure we are executing on items that drive both top and bottom-line results, not just top-line.  This strategy will require an inventory investment that will affect short-term cash flow and could add to Days on Hand (DOH) for inventory levels.  While this may hurt short financials it should have a long-term payoff in driving revenue and building confidence with our customers in our core products (JWMI 540, 2).

Do you predict your idea will generate short-term growth, long-term sustainable growth, or both?

With the key-item focus strategy, I believe we will generate both short-term and long-term growth assuming our products keep us with consumer trends and needs plus we are picking the correct items.  Reviewing the TOWS analysis article this week an organization must find its weaknesses and turn them into opportunities (3).  One of Rawlings and Easton’s weaknesses over the year has been maximizing their inventory and running out of key, high-demand items while having too much inventory in slower-moving items.

How can you keep your competitors from easily copying your strategy?

There is nothing we can do to keep our competitors from following our key item strategy.  The defense in this area is executing a strong offense by ensuring our key products are superior in performance and in meeting consumer demands.

What costs, systems, or capabilities are necessary for this growth to occur?

There are several areas we need to align to be able to execute this strategy.  The first area of focus is ensuring our suppliers can execute and have the capacity for the volume we will need to ensure we can have enough units in inventory.  We also need to work with our CFO and finance team to ensure we can afford the inbound receipts and cash flow necessary to drive the desired inventory levels.  Our team will also need to monitor and report weekly how these items are performing and work quickly to address any inventory concerns.

References:

  1. Leonard Sherman.  2017.  If You’re in a Dogfight, become a cat!
  2. JWMI 540 Week 3 Lecture Notes.
  3. TOWS Analysis.  https://online.visual-paradigm.com/knowledge/strategic-analysis/tows-analysis-guide/

2nd person to respond 2

Chad

Hello Dr. G. and Class,

Leonard Sherman teaches us that in order to create an ongoing stream of meaningfully differentiated products and services, continuous innovation is an absolute must (1).  In addition, business alignment of all resources, departments, and processes need to be rock-solid in order to support a company’s strategic intent (1).  Top Line growth is defined as increasing revenue through selling more products or services (JWI, 2).  I have chosen Netflix for my Strategy Development Project. One idea to generate substantial top-line revenue growth is to create different tiers of subscription models.  The company is already trialing a similar strategy where it is charging a $2-$3 additional fee for added account profiles or password sharing (Variety, 3).  This is expected to add $1.6 Billion to Netflix’s top line (Variety, 3).  What if the company took that model one step further with tiered platforms for the full Netflix package which includes all streaming content options, and a lighter version for Netflix only branded content which carries a smaller monthly subscription fee of $9.99 versus the $15 per month current fee.  This strategy would fall under the pricing/account management, channel management, and operating efficiency business levers as they are ways to improve margins and increase the return on invested capital (Sherman, 2).  I would also argue that it could be considered an organic growth strategy as it is really a way to market differently using the same content with the goal of reaching new markets (Sherman, 2).

Do you predict your idea will generate short-term growth, long-term sustainable growth, or both?

Mary Hart stresses the importance of knowing your customer as well as your competition when it comes to increasing top-line growth.  Netflix understands the streaming content market is becoming increasingly saturated with lower monthly subscription rates (Disney+ and Amazon Prime).  Competitors are eating away at profits and creating exceptional content that is stealing subscribers (Forbes, 5).  By creating an additional revenue stream at a lower price point, it can potentially capture and keep subscribers looking for a lower price point, but also wanting Netflix-only branded content.  This could generate both short-term growth and long-term sustainable growth by offering options to consumers in a deeply saturated market.  Short-term growth could result in new subscribers opting to try the service out at a lower price point.  Long-term growth could result in organically growing the subscription base by adding new customers and keeping existing ones that may want to decrease their streaming spend, or allow them to diversify with other options but not cancel completely.

How can you keep your competitors from easily copying your strategy?

Unfortunately, no.  Competitors can easily introduce this type of pricing model, however, the key differentiator is Netflix’s in-house content.  That is something no other competitor can touch, so by continuing to produce quality content desired by consumers, Netflix can stay ahead of the curve and keep competitors out of their subscription base (or at least partially).  This also speaks to Mary Hart’s argument about the importance of knowing your brand.  Netflix was one of the pioneers in this space and has been creating more and more in-house content unavailable anywhere else.  Know your customers, what they want in terms of content, and continue to produce it with high-quality results (3).

What costs, systems, or capabilities are necessary for this growth to occur?

The initial cost to implement this growth system would be to create a new subscriber base model.  That would require an investment into the infrastructure of Netflix and how the subscriber base model works.  It would also require back-end development to create a Netflix Light style of interface.  Yet, the streaming provider is already doing this with its various categories, one being, Netflix only branded content.  So the growth strategy should be relatively seamless from an implementation standpoint.  The continued costs will be in investing in unparalleled production values, stories, and content.  Forbes lists Netflix with the highest monthly subscription rate (5), so the company must continue to invest in content to make the subscription rate worthwhile to consumers.

Regards,

Chad

Source List:

  1. Leonard Sherman.  2017.  If You’re in a Dogfight, Become a Cat!
  2. JWI 540.  2022.  Week Three Lecture Notes.
  3. Mary Hart.  2020.  Learn Hub.  16 Ways to Grow Your Top Line and Bottom Line Revenue.
  4. Todd Spangler.  2022.  Variety.  Netflix Could Reap $1.6 Billion per Year by Charging Password-Sharing Users Extra Fees, Analysts Say.  https://variety.com/2022/digital/news/netflix-charge-fee-password-sharing-revenue-1235212426/
  5. David Trainer.  2022.  Forbes.  Netflix Is Still Overvalued By At Least $114 Billion.  https://www.forbes.com/sites/greatspeculations/2022/01/27/netflix-is-still-overvalued-by-at-least-114-billion/?sh=2202d6b16fc3

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